6 August 2021 04:00 am Views - 821
COVID-19 cases are rising again, triggering fears over the capacity of the health sector to cope with the daily
The World Health Organisation (WHO) said four million new cases were reported last week along with 64,000 deaths all over the world. But, the countries in the world, particularly, the low, middle-income economies, are no longer in a position to enforce stricter lockdowns this time despite high transmissibility of the current dominant variant. The pandemic –induced curtailments of economic activities have crippled the world’s economies to such an extent that the respective countries have now decided to remain open regardless of COVID-19 and proceed with routine activities.
The present predicament, caused and exacerbated by the pandemic, prompted the world bodies such as the International Monetary Fund (IMF) to evolve fresh approaches to address liquidity issues of the member states battered by limited economic activities.
The IMF Board of Governors approved a general allocation of Special Drawing Rights (SDRs) equivalent to US$650 billion on August 2, 2021, to boost global liquidity.
“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis. The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis,” IMF Managing Director Kristalina Georgieva said, according to a press release uploaded on its Twitter account.
The statement said the general allocation of SDRs will become effective on August 23, 2021. The newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the Fund.
About US$275 billion (about SDR 193 billion) of the new allocation will go to emerging markets and developing countries, including low-income countries. According to the IMF current account balances of the countries were widened by the factors such as major shifts in travel, trades and consumption.
Sri Lanka is no exception to this crisis at all. It has already begun to feel the pinch of reduced economic activities during previous lockdowns. Income from tourism, an industry that generates US $ 4.5 billion foreign exchange, had dropped to a mere US $ 19 million during the first quarter of this year. The remittances of expat workers have come down.
Like elsewhere in the world, the informal sector of economy has been hard-hit by the pandemic in Sri Lanka. The informal economy involves people as diverse as tax drivers, pavement hawkers, vegetable, fish/meat sellers, construction workers etc.
The International Labour Organisation (ILO) estimates that about 2 billion workers, or over 60 per cent of the world’s adult labour force, operate in the informal sector--at least part time.
After the relaxation of restrictions in recent times, it is found some of these people in informal economy struggle hard to resume their businesses due to lack of working capital. The pandemic has raised its ugly head at such a time, but further curbs public movements appears to the last option for the government grappling with a slew of economic challenges including foreign currency liquidity issues to lack of money for daily operation. In fact, the government has reached the saturation point in the enforcement of COVID-19 related curbs. Any further lockdown, either national or localised will have a huge bearing on the economy with marginalised people being driven to poverty.
Likewise, COVID-19 curve should also be flattened without allowing the number of patients to rise beyond a point as otherwise the health sector will be exhausted. Then, it is a challenging situation with limited options. The health experts have warned of a serious outbreak in the months to come. But, the government does not mull any closure of economic activities to control the trend because it is aware of economic challenges lying ahead. Actually, the government is eager to open the country for international tourism as early as possible as otherwise, it cannot replenish its depleting foreign reserves.
Sri Lanka paid a $1 billion bond last week. It gave some confidence in overcoming the crisis. But, there is no payment until next January. The government is expected to settle US $ 500 million next January, and another US $ 1 billion in July, next year, and another US $ 1 billion before the end of 2023. As such, it is impossible for the government to resort to any step that will result in the slowdown of the economy any further.
That is the reason for Deputy Director-General of Health Services, Dr. Hemantha Herath urge people repeatedly to cooperate in the containment of the spread of the pandemic by following health guidelines. Of course, people have a greater responsibility in bringing transmissions down. That is by adhering to health measures that are simple in nature. What is perturbed is the fact that some people do not despite warnings.
WHO’s Infectious Disease Epidemiologist Maria Van Kerkhove also said health measures – physical distancing, hand sanitizing, avoiding gatherings and mask-wearing – could prevention infections, but she was worried, during a vacation with her family recently, to notice some people not following them.