Prioritising economic policies, vital to overcome crisis | Sunday Observer

Prioritising economic policies, vital to overcome crisis

Prioritising economic policies is key to get over the current crisis and build a vibrant  economy as the initiatives of Government show that the economy is not resilient to withstand challenges even for two months, said Senior Lecturer, Department of Accounting, University of Sri Jayawardenepura Dr. Anil Jayantha Fernando.

Stressing the need for immediate intervention of  the Government, he said economic  integration, inclusiveness, a green economy and sustainability are prerequisites in formulating economic revival strategies which should benefit all equally and not a privileged few. 

However, he noted that recovery strategies vary from country to country depending on its economic policies, abilities, accessibility to resources, availability of technology and political philosophy to a greater extent.

“Initial stages of strategising should take into account where we stand at present in terms of local production and contribution to the world economy. Economic recovery strategies cannot be implemented successfully unless healthcare recovery plans and measures are incorporated,” Dr. Fernando said.Prioritising areas that need urgent attention he said agriculture including fisheries, agro-based industries, small and medium scale manufacturers targeted for local needs and global supply chains,  and use of technology in all key sectors should top the list in the recovery plan to build a strong economy.

“People can sacrifice any other needs at a difficult time except food. Therefore, food security and sufficiency must be given top priority in designing a resilient economic plan,” the don said, adding that the success of a recovery plan is highly intertwined with the quality of information generated and used in all economic activities which can be supported by technology.

“The National Intellectuals Organisation had included these areas as key economic priorities in its policy document at the last Presidential election despite the fact there was no adequate public discourse about it.

“On the other hand, it must be noted that technology is being used in economic activities in a haphazard manner merely symbolically. Recall what happened especially during the first couple of weeks when the county was kept under curfew. Online trading platforms were unable to provide services to customers effectively. Many tried to earn a fast buck by using the situation that prevailed,” the lecturer said.He said the Covid-19 pandemic will certainly result in a bigger negative impact on Sri Lanka’s economy mainly due to structural issues, over dependencies, bad governance and wrong economic policies.“The tourism sector has already been affected and a significant number of direct and indirect employees and entrepreneurs are at risk of losing their income. Survival of local industries is hanging by a thread.“Especially in the garment manufacturing sector, employers have already requested permission from the Government to terminate employees as they want to downsize operations at the first instance.

“Distribution channels of agricultural and fisheries production have collapsed. Debt servicing costs arising from public debt is mounting and the entire government revenue is inadequate to serve debts thus increasing the pressure for the government to borrow more and adopt inflationary finance policies.

“Dependency on imported raw materials and accessories hinders local production badly. “Decline in foreign exchange remittances from employees working abroad and poor export earnings intensify the balance of payment crisis. Insignificant contributions from the manufacturing sector and low savings weaken the ability to resist the shock. Some banks and financial institutions are likely to face going concern problems.

“The  declining economic growth trend in Sri Lanka  recording only 2.3% last year will continue with a growth of 1.5% forecast this year,” Dr. Fernando said.

The present economic system needs to be completely replaced with new economic policies which give priority to humanity, social justice, environment and sustainability. The current economic policies allow a few to become  rich and richer while leaving a large majority to struggle for their survival, he said. 

“The production and distribution of goods and services are the main aspects of any economy. Who takes decisions as to what to produce, how to produce and for whom. Only a handful of directors and managers take those decisions on behalf of roughly 21 million people.

“As their main objective is to maximise private profits, they need not consult others and to care about humanity, social justice and environment. The pandemic has taught all a lesson that we must be other centred, create value for society and care for the welfare of the planet instead of focusing on profit maximisation at the expense of denying the economic freedom of citizens,” Dr. Fernando said.