The impact would be ten times greater than the government's financial package, indicates the study "Covid-19: Economic and social impacts in Angola", by the Centre for Scientific Studies and Research (CEIC) of the Catholic University of Angola, which proposes a moratorium until 2021 on the payment of the Industrial Tax (II), the Labour Income Tax (IRT) and Social Security.
The alternative measures suggested by the CEIC are equivalent to a financial package 10 times greater (1.7 per cent of GDP) than that of the Government, which is around US$100 million. In the limit, "there should be a complementarity between the package defined by the latter and that proposed by the CEIC, which would correspond to a stimulus of 1.85 per cent of GDP in total," the document stresses.
According to the study, priority should be given to labour-intensive companies whose activity has suffered a large decline due to the declaration of a state of emergency, which has been in force in the country since 27 March and has been extended three times.
Sectors such as hotels, restaurants, commerce in general, construction and education could soon begin to register mass redundancies and small and medium-sized enterprises which do not go bankrupt will find it very difficult to meet their tax commitments, putting the national treasury in dire straits, the CEIC says.
"It is true that such a measure would leave the national treasury in a very complicated situation, with a debt/GDP ratio already forecast for next year above 130 per cent of GDP. But we must not lose sight of the fact that this is not the time to think about budgetary restrictions. The liquidity shock is enormous. And it can escalate rapidly to insolvency," warn CEIC experts Alves da Rocha, Francisco Paulo, Carlos Vaz, Precioso Domingos, Regina Santos and Teúrio Marcelo.
The study states that the financial package approved by the Government to be made available to companies "is innocuous", due to its size, and warns that if companies begin to file for bankruptcy, the resumption of growth could be postponed until the end of this decade.
According to researchers, if a moratorium on the payment of industrial tax is granted by the end of the year, it will allow around a billion dollars to circulate in the economy through companies.
"This would allow companies to pay only the Industrial Tax at the end of the year thus allowing them to use such funds for the payment of salaries and for reinvestment in their operations when they fully resume their activities", suggests the CEIC, estimating that the Deferral of Industrial Tax Payment from 2019 to 2021 would have an impact of 561 million dollars.
"It is true that such a decision could cause difficulties for public finances, but the stability of businesses should be higher, because it is they who contribute a lot to tax revenues and to the generation and maintenance of jobs", the authors oppose.
As for social security, deferring the payment of contributions between April and December would have an impact of 193 million dollars". The eligibility criteria for this measure could be: labour-intensive companies with serious cash flow difficulties (verifiable) and with a good track record of meeting their social security obligations.
The deferral of payment of the IRT would represent 319 million dollars in the CEIC calculations.
In total, the impact of the measures proposed by the CEIC would be 1073 million dollars.
As for the external debt, the Centre recommends that the Government take this opportunity to renegotiate with its main creditors in order to obtain a grace period of at least until the end of the year.
