Spotlight: Econ Op-eds in Summary (Week ended 18th November '20)
1. Budget 2021: Gota’s Third War, but forgive me, it is our war too
By: W.A. Wijewardena
· The 2021 Budget is of utmost important not only because it is the maiden budget of the new government but also because it requires to present solutions to a number of ailments the economy currently has. In fact, the new government had inherited an ailing economy with falling growth and deteriorating external balance which exerts pressure on the currency to depreciate.
· In addition to this, the country is also a dis-saver with a considerable savings-investment gap which had been financed through borrowings. This had increased the country’s debt burden. With the country facing significant debt repayments while fighting the economic impacts of a pandemic some significant measures need to be put in place to improve the health of the economy.
· Thus, the whole nation should help the government by working harder than before, to take the country out of the present economic malaise. That is the only source of progress. Without which, the Budget 2021 will only be another document with no practical relevance.
2. Economic expectations and prospects post 2020
By: Dinesh Weerakkody
· GDP in South Asia is expected to be negative in 2020, as COVID-19 affected exports, FDI and worker remittance inflows severely, causing a drastic decline in spending. The large lockdowns imposed to contain COVID-19 crippled supply chains and is expected to lead to higher prices and depressed income in 2021.
· The Sri Lankan government needs to focus on expanding the export industry given the need to boost foreign exchange reserves. In line with this, the Budget 2021 needs to target a realistic budget deficit, while gradually taking off import controls in order to revive business climate.
· The depiction of an imminent vaccine by the WHO and pharmaceutical companies could cause the general public to ignore simple health strategies leading to increased infections and deaths in the short term. As it will take time to deploy a vaccine, economists believe that economic activity will still remain somewhat constrained in 2021.
(Compiled by: Chayu Damsinghe. Promodhya Abeysekara, & Malitha Goonerathne)
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