Sri Lanka should look at dealing with pandemic as endemic: ICRA Lanka

• Says more countries now ditching ‘zero-COVID’ strategy and returning to business as usual 
• Wants SL to follow the same, allowing  govt. to deal with virus in a more localised manner
• Cautions the move could still strain the budget as reliance on public healthcare system would continue to be higher
• Notes even gradual recovery in tourism trade would hugely help ease BoP pressure and high unemployment

As more countries appear to be ditching the ‘zero-COVID’ strategy and beginning to deal with the virus as an endemic compared to a pandemic, rating agency ICRA Lanka recommends Sri Lanka to follow the same path as the worst of the pandemic appears to be over while the persistent pandemic era restrictions aren’t viable from the standpoint of its fledgling economy. 

While endemic does not mean the end of COVID-19, the rating agency said it would require the government to deal with the virus in a more localised manner with the public having to still follow certain pandemic-induced lifestyles to a certain degree at least until the virus scare fades significantly. 

But the rating agency cautioned that it could still strain the budget as the reliance on the public healthcare system would continue to be higher due to contact tracing and vaccination with potential boosters having to be administered, leading to considerable cost on the public health facilities. 

With the worst of the pandemic appears to be behind the world, “transitioning to an endemic is one possible path for the current pandemic,” ICRA Lanka said in a fresh note laying out the path forward for the Sri Lankan economy.  

“Increasingly, more and more experts find this to be a more realistic endpoint. Looking ahead, some cautious optimism is on the horizon,” the rating agency added.  

Australia, Thailand, Vietnam, New Zealand, Norway, Denmark, U.K., Singapore and Malaysia are among countries, which have abandoned their ‘zero-COVID’ strategy.

They are re-opening borders for the fully vaccinated travellers to visit without having to quarantine while returning to business as usual, though under health guidelines.

In September, expressing similar sentiments to that of ICRA Lanka, Ho Yew Kee, a Professor in Accounting at Singapore Institute of Technology addressing a Sri Lankan business forum stressed the need for returning to normalcy while keeping certain safeguards to keep the virus at bay.  

“We have come to a conclusion that having a zero infection rate is not possible. So, in other words we will still have to open up the economy, bring us back to normality in the midst of a pandemic and to change the pandemic into an endemic,” he said.

Sri Lanka too appears to have ditched the ‘zero-COVID’ strategy as it kept its borders opened for foreign tourists and did away with the need to quarantine for the fully vaccinated recently. However it is still unclear whether everybody including the health sector, public health inspectors, their trade unions, and the media have fully realised that the country cannot wait until it has zero cases before returning to normalcy due to its precarious economic health and there are millions who earn a living out of a working economy. 

With promising tourist arrivals and the 60 percent jump in air traffic between August and September, authorities remain hopeful of the faster recovery of tourism and aviation industries earlier than expected as several airlines have also announced direct flights to Sri Lanka from November. 

There is strong pent-up demand for travel and tourism, specially to countries such as Sri Lanka which has been featured among the top destinations to travel by several international publications and surveys.

However ICRA Lanka said Sri Lanka may not see pre-pandemic arrival numbers immediately due to more restricted form of tourism for sometime given the conditions. 

“Sri Lanka is still in the red or amber list of several key tourist source markets such as the UK and Germany. Revival of inbound tourism is pretty much predicated on how soon these travel advisories/restrictions will be lifted,” the rating agency said. 

It added that even a gradual recovery in tourism trade would immensely help ease the balance of payment pressure and the high unemployment, which the official data doesn’t capture.