That the economy will be dealt a major blow by the ongoing coronavirus outbreak is no longer in doubt and more focus should now be directed at insulating businesses and households from the impending heat.
This calls for urgent robust economic support to deal with the repercussions of the pandemic on the economy, which had already been on a slowdown.
We are glad that some action is already being taken from the fiscal policy side and more stimulus responses should be rolled out to safeguard the economy from total collapse.
A decision by the Central Bank of Kenya (CBK) to cut its benchmark rate by the largest margin in three-and-half-years and lower the amount of deposits banks must hold with the regulator is laudable.
The CBK benchmark rate was on Monday cut by 100 basis points to 7.25 percent, promising cheaper loans. The regulator also reduced the cash reserve ratio for commercial banks to 4.25 percent from 5.25 percent, saying the move will release an extra Sh35.2 billion for lending to households and small businesses expected to suffer reduced cash flow due to the virus.
Such stimulus interventions should be widened to cover other aspects of the economy such as taxation.
Several economic pundits have, for instance, already proposed for tax concessions to enable businesses to maintain reasonable cash flow during the pandemic and stay afloat, limiting the risk of closures and job sheds.
A key emergent call is for the deferment of payment of corporate return and instalment taxes for some period besides renegotiating tax payment plans until the pandemic is contained. The Kenya Revenue Authority has also been urged to clear pending unpaid income tax and value-added tax refunds owed to businesses while commercial lenders have been requested to suspend loan repayment for small and medium enterprises.
Additionally, both the national and county administrations must review their expenditure plans and cut off all non-essential items going forward.
These measures will definitely come with pain but we must not lose sight of saving the wider economy.
We can draw lessons from other jurisdictions that have weathered such turmoil and kept their economies afloat.