Declaration of economic emergency, what are we waiting for?

The last few days have been apocalyptic due to the Coronavirus pandemic. The Government decreed a sanitary emergency and so have cities such as Bogota, forcing companies to adopt measures such as telecommuting and prohibiting meetings and congregations of more than 500 and 1000 people, respectively.

Most schools are closing their operations so that their students can study from home, which is responsible, but imposes on parents (who, for the most part work) the task of supervising their remote education, thus preventing them from fulfilling their teleworking or telecommuting obligations.

The dollar surpassed the 4,000 pesos barrier, making it almost impossible for a large part of the economy (especially importers and those who have foreign currency debt) to continue operating. The price of oil fell substantially, thus affecting the economy of a country that is still oil dependent. The stock market has also registered historic losses.

All international events and congresses have been cancelled, generating multi-million-dollar losses. Tourism and the aviation business are hit hard by massive cancellations. Breaches of contract are a daily occurrence and there is no clarity as to whether this constitutes force majeure or a fortuitous event (or an act of God) that would allow for a legitimate exemption from compliance.

To this must be added the air situation in cities such as Medellin and Bogota, where the mayor's offices took erratic measures to try to improve (somewhat) the air situation. These measures included a 24-hour peak and plate, which entails intensive use of mass transportation, which is counterproductive due to the pandemic situation we are experiencing. In this way, workers must be continuously changing their routines, which implies a greater wear and tear on their lives and the companies where they work.

The Judicial Branch, through the Superior Council of the Judiciary, has issued orders to mitigate the spread of the pandemic, such as empowering Judges and Magistrates to prevent the access of the parties or their representatives to hearings when they suspect that someone may be sick or have symptoms of fever or respiratory conditions.

And this is just the beginning...

The Government has announced some contingency measures focused on specific sectors (tourism and aviation) which, although they are correct, turn out to be insufficient, since the entire national economy is suffering or will suffer considerably given this situation. The Government's measures include special deadlines for the presentation of the declaration and payment of the private liquidation of the parafiscal contribution for the promotion of tourism and special deadlines for the payment of the VAT and income tax declaration for companies of these two sectors, as well as the (temporary) tariff reduction for some inputs related to the health and aviation sectors.

Article 215 of the Political Constitution establishes that when events other than internal commotion and foreign war occur, which disturb or threaten to disturb in a serious and imminent manner the economic order of the country, the President may declare a State of Emergency for periods of up to thirty days which, added together, may not exceed ninety days in the calendar year. In this way, decrees with the force of law may be issued exclusively to avert the crisis and prevent the extension of its effects.

There are immovable dates of compliance with certain formal and legal duties of the companies, such as renewing their commercial registration, holding their annual meetings and declaring and paying their income tax. Given that companies are living an atypical situation where they have had to bear unexpected expenses, it is also fair that compliance with certain obligations be made more flexible. Nothing will happen to the Chambers of Commerce of the country if they do not collect 80% of their operating budget (with the payment of renewals) in March but in August; nothing will happen to the country if income tax and VAT are paid in the second semester; nothing will happen to the corporate world if ordinary assemblies are allowed to be held in the months following March.

The declaration of an economic emergency is indispensable to provide the Government with tools that may allow it to adopt decisions involving the temporary suspension of legal regulations to mitigate the impact of the crisis.  Italy, for example, has designed a shock plan to curb the effects of the coronavirus consisting of suspending mortgage payments for those who lose their jobs or suffer a significant reduction in their employment. In addition, tax and social security payments for SMEs will be suspended and the entire tax calendar will be postponed. Spain has indicated that it will adopt a series of measures to guarantee liquidity to companies and will provide assistance -with public resources- to parents who must dedicate working hours to care for their children due to school closures.

The world is experiencing an atypical and unexpected situation; businessmen are adapting to it by assuming costs and expenses that they had no reason to bear at the beginning (partial closures, shortages, exponential increase of their raw materials and the cost of debt, teleworking or telecommuting, increase in the price of hiring labor) so it is only fair that the Government gives them a truce in the fulfillment of their obligations in order to continue being the engine of the economy.