It has been quoted by many people in different ways, but the message is always the same. Another version goes, “Pray for the best, prepare for the worst and expect the unexpected.”
As we approach the fifteenth (15th) month of COVID-19 pandemic, it has become obvious that this world crisis we are in is not going away quickly with the development of the vaccine as we had hoped. The world is not going to go back to “normal” life as we knew it in 2019. In fact, we realize that many of our predictions have been highly optimistic as many of us could not have imagined a world crisis of this magnitude before. Few that were alive during the WWII probably can relate to the crisis but for many of us, the reality is becoming clearer and clearer everyday that this is not something we are prepared for.
We can safely say that when it comes to health safety preparedness, Palau has lived by this mantra. We had planned and prepared for the worst-case scenario while we hoped for the best. Before WHO declared COVID-19 a pandemic, Palau had activated its Emergency protocols such as screening all incoming travelers and closing travel to and from high-risk areas. A year and two months later, Palau is one of the last five countries in the world that is still COVID-free.
In other areas, our plans may not be as well prepared. Like many around the world, we were highly optimistic that vaccine will vanquish the dreaded virus immediately and life would return to normal.
We hoped that by now, tourists will be back, employees will get back to work, and economy will be on the mend. We hoped that by now our families abroad can return to visit or we can go visit them and our graduating seniors will go to the colleges and universities of their dreams after this month’s graduation.
We had hoped that businesses will begin to rebound and investors would return to continue the projects that were halted due to pandemic.
I guess we were not alone in our optimism. Many economic experts around the world have been adjusting their predictions with International Monetary Fund and Asian Development Bank having to revise their predictions over the past year.
Perhaps no amount of planning could have prepared us for the economic devastation that has affected us.
While we have been fortunate that government employment, financial assistance through CROSS Act and CARES Act, financial assistance from allies and windfall from major construction projects have kept us afloat, we are already feeling the effects of contracting economy. Imports in the first quarter of this fiscal year dropped by 40% compared to same period last year. More than half of our budgets this year and next year are funded by borrowed money. National debt to GDP ratio has risen from 30% in 2019 to about 60% and is expected to reach 80% in the following year.
Individual cash flow is decreasing while debts are mounting. Cost of goods and services are increasing putting pressure on already dwindling cash. This is true for the nation, the business, the family and the individual.
We need to prepare as individuals, as families, as businesses and as a nation for the worst. We need to prepare for a potential covid case entering Palau and for a longer drawn-out economic recession.
Last projection by USA Graduate School during the Tax Reform Symposium this month predicted start of recovery next year but covid outbreaks increasing around us and slow roll out of vaccines in larger countries, especially in our target markets, it may be 2024 before we can start to see some recovery.
Let’s prepare for the worst while we pray for the best and expect the unexpected. (By: L.N. Reklai)

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