Malta, like several other European countries, has now gone into phase two of the COVID-19 pandemic crisis management.
Shops are slowly beginning to open in the hope that consumers will quickly build up the confidence to venture out of their homes again and start spending their money. However, few harbour any illusions about a quick return to normality, especially in the tourism sector.
As the health and economic crisis evolves, the public is bombarded with theories and counter-theories of how long the medical emergency will last and what the economic cost will be for the country.
The rating agencies and the International Monetary Fund argue rather optimistically that, despite a fall in GDP this year, the country will register healthy growth next year. They are banking on a V-shaped recovery which could start as early as this summer. The Government, businesses and the workforce are united in hoping that this will be the case.
If it proves not to be, however, the economic damage will be more substantial than is being hoped for at present. This damage will come at a huge cost to public finances that will have to be paid for decades to come.
The Chamber of Commerce, Enterprise and Industry and other business lobby groups have been making a case for more public aid to private businesses to prevent job losses. Many micro-businesses and their workers also feel the pain of the economic downturn. In many cases, their voices are not heard because they work on the fringes of the official economy.
The question exercising decision-makers is how much money should be dedicated to the COVID-19 crisis and how should this money be distributed in a fair way to all those affected.
To answer this question, some fallacies about public finances, which are ingrained in the mindset of many ordinary people and entrepreneurs, need to be dispelled.
One such misconception is that governments can never go bust.
According to this theory, all that governments have to do in a time of crisis is to borrow more money.
Such borrowing should not be a problem when interest rates are so low and the European Central Bank is promising to buy the sovereign debt of countries with poor credit ratings.
There is no doubt that fiscal deficits are more of a cure than a problem in the present situation. But they will undoubtedly become a problem in the medium term when taxpayers have to start repaying capital and interest.
Another fallacy is that governments should not increase taxes even as they provide a comprehensive insurance cover against all economic risks that erupt in a national crisis like the one we are facing.
Some believe that governments can just ask the ECB to print money so that they can finance the investment in the infrastructure that the country will undoubtedly need in the next decade. Moreover, the cost of providing more subsidies to private industries to keep afloat is often grossly underestimated.
The present crisis is still evolving. No one yet knows what the final cost of cushioning its impact on the economy will be. It is important to acknowledge that the government has a very delicate balancing act to perform: how best to minimise the effect on the economy today while stopping short of hypothecating the future of the country with a debt mountain.
While existing support measures can, and should, be fine-tuned, business must fully appreciate the substantial costs involved to present and future governments in providing economic shock absorbers during these extraordinarily challenging times.