Virus-related restrictions push over half a million Sri Lankans into poverty

• Latest Finance Ministry annual report says poverty rate rose to 11.7% in 2020, from 9.2% in 2019
• People who earn below US $ 3.20 a day or Rs.640 in today’s exchange rate are considered to be in poverty
• Govt. yesterday extended current lockdown orders by another seven days until June 14

The pandemic-related restrictions have pushed over 500,000 people in Sri Lanka into the depths of poverty in 2020 alone, while the disastrous implications of the most recent round of controls on people’s lives and livelihoods are yet to be assessed and counted. 

The virus-related restrictions have pushed Sri Lanka’s poverty rate from 9.2 percent in 2019 to 11.7 percent in 2020, pulling more than 500,000 people into poverty, as they lost their incomes due to lockdowns and their lingering economic effects, the Finance Ministry annual report for the year 2020 said.

“As a result of the COVID-19 pandemic, it is estimated that over 500,000 people have been pushed into poverty, recording an increase in the US $ 3.20 poverty rate from 9.2 percent in 2019 to 11.7 percent in 2020,” the report stated. 

People who earn below US $ 3.20 a day or a meagre Rs.640 in today’s exchange rate are considered to be in poverty. With the fresh restrictions being reimposed, many millions of people are now unable to make even that, as they are barred from going out to make a living due to the draconian-type controls on their economic freedoms to control a virus, which has an extremely high survival rate, according to data.

Majority of them have already burned through their little savings and mobile vendors mean very little to these people. Sri Lanka’s food prices were rising an astronomical 10 percent a month, the monthly consumer price
data showed. 

In the most recent month in May, the food prices rose by 9.9 percent from a year ago, up from 9.0 percent in April, notwithstanding less consumption due to lockdowns. 

But the government touts giving them a Rs.5,000 stipend for a family after confining them into their homes for three weeks, while 1.6 million state sectors workers get paid ahead of their pay day for being at home, mostly from printed money, as tax money gets dried up when businesses remain closed and consumers
shelter-in-place.

As people lose employment and other livelihoods, they are also seen joining the agriculture sector, migrating from other sectors of the economy, exacerbating the problem of low income and poverty, as the productivity in the sector remains very low. 

The Central Bank has indicated that they would lower Sri Lanka’s growth projection for 2021 from 6.0 percent, as the persistent restrictions on the economic activities are damaging the country’s prospects 
The government yesterday announced that the current lockdown orders would be extended by another seven days until June 14.