I don’t know how many foreigners in Ukraine have been confined to the infectious disease ward of a hospital here. I suspect it is not that many – but I’m one of them.
Back in June, I spent a miserable week battling a fever and a stomach infection, bedridden in the quarantined infectious disease department of one of the country’s best public hospitals – Oleksandrivska in central Kyiv.
The staff members were professional, caring and attentive. But I was shocked that the entire ward and the patient’s rooms had no soap, sanitizers or even toilet paper. Patients are told to provide it themselves. Luckily my wife could deliver some to the hospital, with some edible meals.
As the novel coronavirus pandemic continues to spread globally, and the first infections are detected in Ukraine, I have complete faith in the country’s dedicated medical staff. But I really hope the level of preparedness in the health system itself is better than ever before, and that hospitals and staff are well supplied with masks, testing kits – and soap.
Let’s face facts. The disease is already here, and I worry that we could be better prepared across the board. Only today, on March 13, President Volodymyr Zelensky is chairing a meeting of the National Security and Defense Council to discuss extra provisions to pharmacies and hospitals.
He should beg, borrow and steal whatever is necessary to make sure front-line health workers are overprepared, overpaid, fully supplied, and have the total support of government and all its agencies.
But speaking of overall preparedness brings me to Ukrainian businesses and the Ukrainian people, which is what I really want to talk about.
They also need to feel assured and supported.
Businesses will be stung
The Saudi-Russian oil pricing dispute and the coronavirus pandemic have merged to form a perfect storm that has spread all over the world and engulfed the global markets.
It is inevitable that Ukraine will see more cases of the highly contagious infection, more exposure to viral-linked market turmoil and the accompanying panic. With this in mind, continuity of public services and ensuring public health is important – but so too is ensuring that the economy does not collapse.
I fear that so far, the potential economic impact on Ukraine is being repeatedly understated and underestimated by officials, including by the new Prime Minister Denys Shmygal.
Top officials keep saying that economic losses will be minimal and can be counted later, that everything is fine and that coronavirus actually presents some opportunities for Ukrainian businesses. But companies tell me they’re already hurting.
Let’s get real here. Unless you’re a producer of hand sanitizer or medical masks, your outlook should be worrisome for the short to medium term, and it should worsen if the situation does.
Supply lines are already disrupted, investor confidence is shattered by the global market sell-offs and worldwide demand for all raw commodities has plummeted to record lows. Flights into and out of the country have slowed down to a trickle and hotel occupancy is down. Multiple large business conferences have been canceled or delayed.
Ukrainian metal exports are down by 16% and agricultural producers have warned that the closure border closures will block their exports of stockpiled grain, jeopardizing a third of all Ukraine’s foreign exchange earnings.
The state defense manufacturing giant Ukroboronprom has also said it will likely miss its 2020 manufacturing and export targets.
Even IT companies – Ukraine’s glowing success story – say their projects and companies are being disrupted and their businesses are suffering, even if they see some opportunities to bounce back later.
Ukraine does not exist in a bubble and is vulnerable to external shocks, as well as volatility in its own domestic economy, which we have not seen as of yet. Already there are warning signs that the Ukrainian economy is badly exposed to a global downturn or recession.
Ukrainian leaders need to be mindful of the dangers of a denial mindset – such as the one U.S. President Donald J. Trump has been displaying – and pay attention to all these warning signs, plan for them, and be honest with the public and businesses.
Quarantine slowdown
It may well be families and small and medium-sized businesses that feel the sharpest pinch over the next three weeks (at least), as the country introduces a nationwide quarantine that bans public events, closes schools, cinemas, and entertainment venues.
These closures will surely have a knock-on effect across the Ukrainian economy and three weeks of restricted closures and partial economic slowdown in Ukraine will likely mean lost wages for some Ukrainians, who only earn on average $460 per month.
Parents are staying at home with children or arranging for childcare. Businesses can expect less footfall if a fearful public start to stay home.
Cinemas alone have warned they face millions of dollars in losses as they’re forced to close their doors until April 3, at least. If the situation worsens, the quarantine could be extended in duration and scope.
While the National Bank of Ukraine has shown some leadership in protecting the stability of the national currency (down 8% against the dollar since January), the government has not yet announced any specific economic stimulus or measures to protect Ukrainian businesses or workers.
In comparison, the worst affected countries have slashed interest rates and provided debt and mortgage relief, loans to small companies and paid sick leave for affected workers.
Support the public, businesses
Here are some ways that the government, the banks, and major employers could prepare and be ready to help the Ukrainian people through this current crisis, and if it worsens:
- Regional officials and governors who don’t follow instructions from Kyiv during a deadly pandemic should be removed from office and held accountable to the law.
- Front line medical staff who are working to halt the spread of coronavirus should be paid a cash bonus and be properly supplied and trained to safely do their jobs.
- Paid sick leave due to illness or quarantine should be guaranteed for all workers and be protected by law, or a presidential decree. Employers should be supportive of workers who can work from home, especially if they are parents or carers.
- All teachers and school staff must be paid during the quarantine period – especially if they’re teaching remotely – and should have their five-week summer holiday unaffected. Parents who need to care for their children should be given paid parental leave.
- Disinfecting the metro systems and some public buses is a good start, but the same needs to be done with the extensive, privately-owned, and widely used marshrutka taxi bus systems.
- Employers should do their best to fairly compensate workers who lose out on hourly wages during periods of quarantine. If they cannot, a government social fund should support them instead.
- Ukrainian banks, more liquid and profitable than ever before, could extend low-interest loans, debt relief and credit repayment holidays to customers or businesses that demonstrate they have been affected by the coronavirus crisis.
- Real estate developers and landlords – effectively Ukraine’s biggest providers of de-facto mortgages – could extend rent payment breaks or temporary debt relief to tenants or homeowners affected by the crisis.
- Businesses that can demonstrate they incurred losses or expenses as a result of the coronavirus crisis should be eligible for tax deductions or other fiscal support from the state, possibly from an established “coronavirus support fund”.
- Finally, the country’s oligarchs and super-rich – some of the wealthiest people in the world – should give back to the country that has enriched them so, by establishing a sovereign wealth fund for Ukraine that will mitigate the effects of the coronavirus crisis or an economic downturn in Ukraine, and support the country’s poorest people in their time of need. (Yeah I know – dream on).
