Spotlight: Econ Op-eds in Summary (Week ended 03rd June '20)
1. Suggested revival plan for Sri Lanka’s economy in the post COVID-19 era
By: Ajith Nivard Cabraal
· Sri Lanka has so far fared well in responding to the virus outbreak from a health perspective. It is now time for the Government to implement a focused and practical plan of action from an economic perspective.
· A debt-standstill from the IMF and World Bank for 2-years will save around $2.5bn or Rs.470bn in forex outflows, which can be funnelled to a business recovery and revival fund and a safety net fund for vulnerable groups. Support businesses by taking steps to attract Rs.200bn in equity inflows and a further Rs.200bn in venture capital funds. Build reserves by re-attracting $3bn in foreign inflows to government securities.
· In the near-term provide a boost to the economy via support to 2.6mn EPF members by releasing 20% or Rs.500bn of the fund balance. In the medium-term deploy a well-thought-out 3-5 year ‘import-substitution’ strategy – instead of a panic-stricken ‘import restriction’ – to help increase company revenues by Rs.1000bn every year.
· According to studies carried out, the stimulus given to the economy should be at least 10% of the economy’s GDP to make any positive impact in the post-COVID economy. Thus, the above measures should be implemented simultaneously, using capable individuals, in order to provide approximately Rs. 1.5 trillion in stimulus to revive the economy.
2. Saving the economy of Sri Lanka after the COVID-19 pandemic
By: Lloyd F. Yapa
· The coronavirus pandemic has exacerbated the pre-existing issue of poverty in Sri Lanka. While a short-term plan to address the immediate fallout of the pandemic is necessary, so is a long-term plan that can address and remedy the underlying factors behind poverty.
· These underlying factors include a shortage of investments, lack of long-term policy stability, need for good governance, low productivity (especially in the agriculture-sector), brain drain, poor global competitiveness amid deterioration in the ease of doing business and finally, environmental pollution.
· The long-term plan should be aimed at remedying the above by attracting FDI and expanding export earnings through a sound policy framework that addresses social, political and economic aspects. This will not only improve income equality but will also contribute to ease the nation’s debt burden. However, the political consensus necessary to implement these measures remains the need of the hour.
(Compiled by: Chayu Damsinghe, Promodhya Abeysekera & Eshan de Mel)
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