Lee recommends measures to cushion effects of COVID-19

Lee recommends measures to cushion effects of COVID-19

Emil Lee

PHILIPSBURG--Businessman and former Health Minister Emil Lee has made several suggestions that can be employed to help address “the challenging times” St. Maarten faces as a result of the coronavirus COVID-19 crisis.

Lee said the country can learn from its Hurricane Irma experience and made some recommendations, including some from post-Hurricane Irma. His recommendations include reintroducing the basic necessities voucher programme, extending the skills training programme, a business stimulus package and government financial aid.

“The impact of COVID-19 on St. Maarten likely will be far more devastating than the destructive impact of Hurricane Irma or prior disasters and we must act in unison, quickly and firmly,” Lee said in a press statement.

“When we compare the impact of COVID-19 to our experience with hurricanes, our country will suffer more deeply on every level. Yet, there are many lessons that I learned as Minister of Health, Labour and Social Development and that we discovered together as a country post-Irma that can be adjusted to serve as solutions today. We simply need to recognise the differences in these experiences, and take advantage of the mechanisms that we already have developed.”

He said that while economic damage from Irma has been estimated at US $2.1 billion, the country can expect even higher cost from the virus and much less financial assistance and insurance money. He said the overall economic decline resulting from closures is projected at 6 per cent minimum in the case of a one-month closure, and as high as a 30 per cent drop for extended closures.

Job loss as a result of COVID-19 will exceed our experience with Irma. The culminating loss of revenue to the island economy and government will be greater. Assistance and financial resources available to St. Maarten to manage the impact of COVID-19 will likely be much less.

“Hurricanes impact our economy differently from COVID-19. Recovery and reconstruction post-hurricane disaster are labour-intensive. We have learned from experience that while a portion of our jobs may be lost, other jobs are created. Further, while the economy is stalled temporarily, reconstruction subsequently is supported in part through an injection into the economy from insurance.

“Third-party donations from parties such as the Netherlands and non-profits also fuel our future and assist in rebuilding and relief efforts. Government revenues otherwise generated from the tourism economy are replaced by the taxes generated from this reconstruction economy,” Lee said.

He said COVID-19 stalls the global economy. “One of our country’s largest sources of income, the worldwide hospitality industry, has been switched off practically in one day. Hospitality employees are heavily impacted by loss of work and the trickle-down effect felt through our entire workforce is substantial.

“It remains uncertain whether business interruption insurance will cover any of the loss of business income caused by COVID-19, which means that there may be no injection of insurance money into the economy at all,” Lee said.

“There is no physical destruction, so there will be no new jobs, no alternate industry to employ workers who have lost their work. Government taxes that normally come from the tourism industry will not be replaced by alternate industry; therefore, government will have reduced tax revenues from lower wage taxes, room taxes, car rental taxes, ToT [turnover tax – Ed.], and more.

“Since COVID-19 has spared no country, third-party donors do not have the capacity to meet every need, and may not be able to assist St. Maarten financially. As a result, contrary to hurricane relief, there may be no financial relief arriving from other sources – donors such as the Netherlands also are struggling to respond to COVID-19 in their own countries and may not have the attention for St. Maarten that they previously had after a hurricane.”

As it relates to vouchers for basic necessities, Lee said similar to after Irma, there are people in the community who will struggle just to be able to purchase basic necessities. “In order to assist our most vulnerable population, government should reinstitute the basic-necessities vouchers which will allow people to buy food and other basic necessities.”

On the issue of government financial aid, he said a fast-track programme for temporary financial aid was instituted post-Irma to allow people who are struggling financially to access three months of financial aid from the Ministry of Health, Labour and Social Affairs VSA during the time that they apply for full financial aid benefits.

The skills training programme, he added, was “an extremely successful programme” financed by the recovery funds that allowed workers who were in danger of being laid off or having reduced hours to receive a stipend as well as medical aid in exchange for attending the training programme.

“Additional funds could be allocated now to extend and expand the programme. Given the need to avoid group settings, an on-line version could be adapted, which also would offer the opportunity both to expand the curriculum and to employ personnel. Temporary Internet access could be provided to citizens in order to facilitate the online learning,” he said.

On the suggestion for the business stimulus package, he said the reality is that many businesses have not yet recovered from the effects of Irma.

“A comprehensive stimulus package must be considered. Although government will be challenged with declining revenues, consideration for waiving or deferring taxes could be considered. Low-interest loans to help bridge the gap until the economy restarts could also be considered. Helping businesses would keep more employees on payrolls,” Lee noted.

“St. Maarten … has survived many other challenges, and we will survive COVID-19. But we only will do so if we are methodical and together in the way that we move forward. We must acknowledge the severity of the financial impact that looms ahead, and the repercussions on our entire population. We must take these recommended actions now, since if we do not do so now, the consequences for us all could be devastating to our economy, our community and our country,” Lee said.