On 8 May 2020, the CAREC Institute Director Syed Shakeel Shah was invited to participate and deliver a presentation titled Covid-19 Pandemic: Challenges and Prospects Facing CAREC at the launch of the Boao Forum for Asia 2020 flagship report and symposium on Asian development prospects and challenges under the Covid-19 pandemic.
In his presentation, Mr. Shah elaborated on fiscal positions of CAREC countries as it will determine their ability to conjure up sizeable plans for mitigation of adverse economic impacts of the crisis. He informed participants that Kyrgyzstan, Tajikistan, and Georgia show relatively high public debt, above 40% of their GDPs. Crash of oil and gas prices will impact government revenues in Kazakhstan, Turkmenistan, and Azerbaijan which otherwise enjoy stronger fiscal position. Most economies have high external debt relative to total export, which can potentially lead to difficulties in debt servicing. Weakening of national currencies might further exacerbate debt servicing as external payments are not sufficiently hedged in foreign earnings in most of CAREC. Anticipated reduction in remittances due to crash in commodity prices will likely have negative impact on Kyrgyzstan, Tajikistan, Georgia, and Uzbekistan where these remittances constitute significant percentage of gross GDP.
He further highlighted that governments’ social protection programs play a significant role in impact mitigation and preserving a conducive social order to ensure public welfare and economic recovery once the situation normalizes. Mr. Shah advised that policy makers need to aim at a “V” shaped recovery curve, which means a sharp and sustained upturn in growth trajectory. It will require ensuring sustenance of the population through the worst period of the crisis, enlisting maximum external support and maintaining fiscal and external accounts within manageable limits to support the recovery process when the macro-economic situation becomes sufficiently favorable.
The CAREC Institute economic analysis of Covid-19 impact on CAREC is available here.