By Luis
Fierro Carrión (*)
There is an
etymological similarity between the Spanish (or Italian) words
"quarantine" and "lent" (cuaresma).
For
Christians, Lent is a 40-day period of penance, reflection, fasting, and abstinence,
between Ash Wednesday and Holy Thursday.
Jews
commemorate Passover, which was the liberation from slavery in Egypt and the
survival of the 10 plagues, including the death of the firstborn, from which
the Jews were saved by placing lamb blood on their doorsteps, to indicate their
faith (the “Angel of Death” passed over those homes). Christians believe in the
death and resurrection of Jesus.
These
ceremonies are linked to pagan practices on death and rebirth of life,
reflecting the passage from winter to spring in the Northern Hemisphere (Easter
eggs and chocolate bunnies reflect this emphasis on fertility).
Quarantine
refers to the 40-day isolation of people and property suspected of carrying the
bubonic plague in Venice, during the 14th century pandemic (the worst pandemic
in recorded history, in terms of percentage of the population that died).
In 2020, a
forced quarantine of the population has been put into effect in many countries
of the world, starting with China. In the case of Ecuador, these measures were
taken as of March 12, with the suspension of classes, mass events and flight
restrictions; and a curfew from March 17. We have already had more than 40 days
of these restrictions (as of May 4, a system of "traffic lights" was
established by municipalities, but as of May 7th all remained in "red",
or full lockdown and curfew).
Despite the
restrictions, there were a large number of excess deaths, most of which can be
attributed to COVID-19 (perhaps a fraction correspond to people with other
illnesses or accidents who did not have access to hospitals, especially in the
provinces of Guayas and Santa Elena).
Between
January and April, in the province of Guayas there were 10,655 deaths above the
average in the same period of 2018-19. The following was Santa Elena, with 613
excess deaths; Manabi 385; Pichincha 308; and El Oro 146; in Santo Domingo de
los Tsachilas, Pastaza and Galapagos there were 2-4 excess deaths. In the other
provinces, the number of deaths decreased, probably due to fewer deaths from
accidents and homicides (for which reason it is also possible that the figure
attributable to COVID-19 exceeds 12 thousand).
Considering
a case fatality rate between 1 and 2%, this would mean that there have already
been more than 600,000 cases of COVID-19 in Ecuador (even with a high case
fatality rate of 3%, taking into account the poor health infrastructure , we
would have more than 400,000 cases). Considering that until May 6 only 81
thousand tests had been taken, the official figures for COVID-19 cases and deaths
have scant meaning.
The
economic impact of the quarantine will be devastating. According to Econ. María
de la Paz Vela in a seminar organized by the consulting firm Multiplica
and Revista Gestión, Ecuador's GDP could fall by 7% (I estimate between
11 and 15%, based on a prolonged recession that would also continue to impact
the price of oil and other exports). Adequate employment will fall from 38.8%
to 35.4%, while open unemployment would increase to 3.8% to 9%. The poverty rate,
which had already risen from 22% in 2017 to 25% in December, would now rise to
35% (reversing a decade of progress).
Tax revenue
would drop by $ 7 billion; the fiscal deficit would triple to $ 8,652 million;
financing requirements would reach $ 17 billion. This makes unavoidable a
process to renegotiate the external debt (with private and bilateral creditors),
and rollover the internal public debt. The government has proposed a
“Humanitarian Law” to raise funds from people with the higher incomes, and from
companies with profits of more than $ 1 million, but the fate of the law in the
National Assembly seems uncertain.
Exports
would fall by 26%, but imports would only decrease by 13%. Remittances from
emigrants would drop by 9%. A reduction of the international reserves is
estimated at $ 1 billion.
The IMF
approved a quick financing loan for $ 663 million; The IDB has approved $ 700
million, and $ 500 million is expected from the World Bank [plus a $ 6 million
grant] and $ 300 million from CAF [later increased to $400 million]. An
announced Chinese loan (of up to $2 billion) has not yet crystallized.
Resources
will be required for economic reactivation. The creation of a guarantee fund
for bank loans to SMEs has been proposed, with resources from IDB Invest, IFC,
CAF, EIB and other entities.
A gradual
reactivation requires making way for Internet sales, home delivery or pick up
at the door of stores, and home delivery of food and prepared food.
(*) This is
the English translation of an opinion column published on May 11th in Diario
El Universo of Ecuador:
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