Gov’t Advised to Resort to Expansionary Monetary Policy to Sustain Citizens in COVID-19 lockdown

If the Regions affected by the Coronavirus are locked down to contain the spread of the virus, how then does the economy and country survive?

Should more value be given to the economy or to the lives of Cameroonians that are stake?

The government of Cameroon in the wake of the outbreak of the coronavirus in the country has succeeded to copy preventive measures used around the world by countries facing the dreaded disease which many have referred to as an invisible monster.

Air, land and sea borders have been shutdown in addition to social distancing, washing of hands, no gathering of more than fifty persons, closure of entertainment and drinking spots as from 6pm and suspension of classes in schools all over the country and many other measures have been put forth.

What seems to be a tough measure for the government to copy, adopt and apply is the locking down of the various regions and towns that are recording cases of the virus. In view of the dilemma the government finds itself seemingly confused whether to take the decision to declare a lockdown or not.

Economic experts have advised that during the lockdown to contain the spread of the Coronavirus, the government can go in for an expansionary monetary policy and print more money to indemnify affected business enterprises and men; and also give out loans.

The government might have certainly thought of this but the fear of an inflation after things will normalize should be fuelling more fear in the minds of government officials. If this finally happens, how should the government fight the inflationary crises that are bound to hit the economy?

In an exclusive interview with an economic analyst and veteran Economics tutor, Mr Jam Joseph Mukong, he explained to this reporter what should be done during the lockdown as the option is becoming inevitable.

“Putting jobs and lives on a balance, life is preferred. Consequently it is advisable that there should be a partial lockdown. Exempted could be the suppliers of basic commodities, health facilities, military” he says.

To the expert, “during this period, government could go in for an expansionary monetary policy which could result in printing more money to bail out businesses that have shut down,give out loans to unemployed workers to finance current expenditures ,grant businessmen tax exonerations etc..”

However, while doing this, the government he notes “should be aware that inflation could follow at the end of the problem. This may not be a very serious problem because in the event of inflation the government could still come in with contractionary monetary and fiscal policies.”

“It should be noted that the Cameroon civil service is large and so if the govt grants reasonable compulsory loans to the civil servants, this money through multiple transactions will trickle down to the ordinary people” he adds.

Selective credit to him “should be granted to the agricultural sector so as to boost food production, otherwise a combination of both hunger and the Coronavirus can exterminate the human race.”

“Note that with agriculture, chances of infection are greatly reduced given that people are working far apart from each other.”

“However given that Cameroon does not independently own BEAC and cannot unilaterally order BEAC to print money”, he clarified further, “she can only do so in concert with BEAC member countries. They are all facing a common enemy, the coronavirus.
They must agree to print money as a last resort measure.”

How much to be printed for each country he explains further, “will depend on the strength of its economy. For any country to act alone it will imply that it can only work through the instruments of monetary policy like the sale of treasury bonds to the public. In this way the government can be able to realise money to finance its spending in the form of unemployment benefits.”

By Beng Humphrey Fang

MMI