Clear plan needed

The Government has tentatively indicated that curfew and social distancing measures currently in place could be lifted in the first week of May with staff of public universities requested to report to work from 4 May and schools to reopen on 11 May.

Everyone understands that the curfew cannot continue indefinitely but countries around the world are struggling to pinpoint exactly when it would be safest to start loosening measures that have been effective in holding COVID-19 at bay.

Obviously, the concern is that lifting curfew too soon, especially in high risk areas, could trigger community spread, especially when widespread testing remains limited. However, the flip side of this concern is that the longer social distancing measures are in place the worse off low-income earners, financially vulnerable groups and the economy by extension will be.

There is also the question of elections and the Government is clearly keen to hold them as early as possible. When to loosen measures is a difficult choice and perhaps one devoid of a perfect answer but there are some things the Government will have to decide and communicate effectively if the call is to loosen measures.

Clearly the supply and distribution lines of the economy have to be supported but the Government will have to decide which sectors, internal and external, need to restart their functions fastest and in what regions they operate in.

Industries such as apparel that have appealed for faster reopening of factories need to be supported to do so and their supply links restored. Support similar to what is being given to tea, rubber and coconut will have to be extended to them as well. Allowing economic centres to function again with more testing for farmers and other support will also be important for internal commerce and to address some of the livelihood issues.     

A clear plan will have to be set out and followed, reinforced by stronger essential services including a robust public healthcare system. To minimise short-term economic pain, temporary work programs may be needed for unemployed workers, enacting debt relief measures for businesses and individuals, and easing interregional customs clearance to speed up import and export of essential goods.

A new report from the World Bank recommends that once lockdown restrictions are loosened, South Asian governments should adopt expansionary fiscal policies combined with monetary stimulus to keep credit flowing in their economies.

Since many South Asian countries have limited fiscal space, these policies should target people worst hit by the freeze on economic activity. The report urges governments to adopt temporary spending measures and coordinate with international financial partners to avoid unsustainable long-term debt levels and fiscal deficits.

After tackling the immediate COVID-19 threat, South Asian countries must keep their sovereign debt sustainable through fiscal prudence and debt relief initiatives, a point that Sri Lanka will have to adhere to stringently. The reality is that with virtually no fiscal space the Government will have to select a set of reforms and get cracking on them to put the economy on at least a somewhat better footing. But before all that it needs to get the Parliamentary Elections out of the way.

As with most things, the way forward begins with a plan. Due to the COVID-19 pandemic, economic circumstances within countries and regions are fluid and change on a day-by-day basis. So, the plan has to be fluid, innovative and timed right.