Investments and outcomes

How ghould Governments pick investments? What are the priorities and criteria they should follow? What is the best use for already limited fiscal space? And in a situation where there is high debt should the Government not make judicious decisions to limit creating more debt? These are some of the questions that have popped up in public spaces as people dissect the Government’s decision to green light infrastructure projects, including cricket stadiums and new highways. 

The COVID-19 pandemic is threatening development as never before. Global human development – which can be measured as a combination of the world’s education, health and living standards – could decline this year for the first time since the concept was introduced in 1990, the United Nations Development Programme (UNDP) warned yesterday. 

Even though the world has seen many crises over the past 30 years, including the Global Financial Crisis of 2007-’09. Each has hit human development hard but, overall, development gains accrued globally year-on-year. But with COVID-19 – with its triple hit to health, education, and income – may change this trend. 

According to the report declines in fundamental areas of human development are being felt across most countries – rich and poor – in every region. COVID-19’s global death toll has exceeded 300,000 people, while the global per capita income this year is expected to fall by 4%.

With school closures, UNDP estimates of the “effective out-of-school rate”—the percentage of primary school-age children, adjusted to reflect those without internet access—indicate that 60% of children are not getting an education, leading to global levels not seen since the 1980s.

The combined impact of these shocks could signify the largest reversal in human development on record.

This is not counting other significant effects, for instance, in the progress towards gender equality. The negative impacts on women and girls span economic – earning and saving less and greater job insecurity – reproductive health, unpaid care work and gender-based violence.

Essentially COVID-19 has become a magnifying glass for inequalities. The drop in human development is expected to be much higher in developing countries that are less able to cope with the pandemic’s social and economic fallout than richer nations. Therefore, building equality cannot be equated to just constructing buildings. For example cheaper internet access could improve equality within a country and provide education and business opportunities to more people than a physical road ever could. And it would be cheaper.

The importance of equity is emphasised in the United Nations’ framework for the immediate socio-economic response to COVID-19 crisis, which sets out a green, gender-equal, good governance baseline from which to build a ‘new normal”. It recommends five priority steps to tackle the complexity of this crisis: protecting health systems and services; ramping up social protection; protecting jobs, small- and medium-sized businesses and informal sector workers; making macroeconomic policies work for everyone; and promoting peace, good governance and trust to build social cohesion.

These are the investments that the Government should be focused on. Infrastructure development in the traditional sense and white elephant ego projects must become a thing of the past of or Sri Lanka. It is time to redefine public interest by promoting transparency and accountability. Policy makers must realise that not all investments are created equal.