Resilience of Government
21/01/22
Article by Rajeev Basgeet, Government and Public Sector Leader.
We are close to two years of living through the pandemic, having witnessed significant disruptions across the world. These have impacted all spheres of the ecosystem, but with the global vaccine roll-out, there is a sense of gradual resumption of normalcy with preservation of livelihoods as efforts towards saving lives continue.
Citizens’ attitude towards their government’s actions, roles and decisions are critical. Amidst the uncertainty, a road map cannot be traced, and governments’ resilience will be tested. What we are witnessing today are factors that may impact a government’s decisions in the future. Some of these factors include fiscal and monetary policy, supply chain bottlenecks, inflation and labour force as outlined below.
Fiscal and monetary policy
In major parts of the world, fiscal and monetary policies have been loosened. Fiscal support acted as a “stabiliser” towards income support, and the societal goals largely sustained. Unwinding of these policies must be planned with due care whilst the economy improves.
For confidence and trust to be won, the governments need to articulate a policy of truth and honesty with its people in respect of the priorities and challenges of today for a better tomorrow.
Supply chain bottlenecks
Protracted delays in the supply chain may slow recovery and impact consumer consumption. This delay in the shipment of productive and consumer goods is being felt due to bottlenecks in the supply-chain, impacting a country’s exports and revenue. Similarly, hoarding of goods observed during the lockdown could find its way back.
Inflation
With the above scenario on supply chain bottlenecks, inflation is likely to come back, as increasing interest rates could have further impact on recovery. Households could request more through their government protective nets from the rising commodity prices. Governments’ ability to provide this support could be constrained in a decreasing revenue environment. Social effects need to be managed.
Labour force
With the vaccine roll-out, governments are anticipating that the labour force will resume work, but it appears that a sense of “fear factor” is still prevailing despite vaccines roll-out. With income support coming to an end, and with a less engaged workforce, the supply chain may further be exacerbated.
Where does this leave the governments?
Resolution of current and uncertain risks will be firefighting in nature. Policy choices need to be well considered and challenged in this unpredictable environment. Hard choices and decisions would have to be considered. Viewing this from a political mainstream may appear conflictual.
With people demanding more for less, coupled with uncertain labour force behaviours and constrained supply chain, more investment required on essential public utilities remains a challenging equation to balance. In these environments, the private sector also has a crucial role to play in not only asking for more from the governments, but also by providing support.
For confidence and trust to be won, the governments need to articulate a policy of truth and honesty with its people in respect of the priorities and challenges of today for a better tomorrow.
