The perpetual clamour for equitable access to wealth and a good lifestyle by the less privileged will cease with a change of attitude and educational reforms that would promote and bring technical education to the forefront, said a senior entrepreneur and an expert on labour productivity.
The daily wage earner and the casual worker is again in for turbulent times with the country imposing travel restrictions and curtailing public gatherings to restrain the spread of the pandemic.
Low income earners who constitute a large segment of the informal sector are the most affected due to movement restrictions which impedes carrying out their occupation. The informal sector which consists of low wage earners accounts for over 55 percent of the labour force in the country of which nearly 60 percent are engaged in the non-agricultural sector, according to data.
A more detailed analysis carried out across occupational categories under the informal sector has identified The daily and casual workers providing services, sales, those in the agriculture and manufacturing sectors are the most vulnerable segments of the informal sector. “It’s time that a drastic change in policy direction and in the mindset of people take place that would recognise and promote technical workforce which play a pivotal and an indispensable role in the economy,” a SME entrepreneur maintained during the year amidst adverse speculations and continued to provide relief to the businesses and individuals facing severe hardships stemming from the pandemic despite the limited fiscal space. However, according to economic analysts the fast depleting foreign reserves which stood at US dollars 5.7 billion at end 2020 sufficient for an import cover of 4.2 months would bring to bear severe pressure on the country to sustain debt servicing.
Meanwhile, the Bank noted that the subdued inflationary pressures and well-anchored inflation expectations provided the necessary space for the Central Bank to significantly relax its monetary policy stance during 2020.
These measures were focused on lowering costs of funds for businesses and individuals, ensuring adequate liquidity in the money market, and 6 facilitating the smooth functioning of the financial system under the challenging circumstances caused by the pandemic, the bank stated.
Reflecting the increased pressure on fiscal operations, the overall fiscal outcome was weaker than initially expected, with a widened deficit in the current account balance and the primary balance, and the overall budget balance being recorded at 11.1 percent of GDP in 2020. Pressures on the fiscal sector were aggravated by constrained access to foreign financing in 2020 amidst unfavourable global financial market conditions and downgrades of Sri Lanka’s rating by sovereign rating agencies.
Financing of the budget deficit was met from domestic sources in 2020, reflecting the limited access to mobilising funds from foreign sources and the Government’s explicit financing strategy, aimed at reducing the foreign exposure over the medium term.
The pandemic also caused a decline in the overall size of the economy to US dollars 80.7 billion in 2020 from US dollars 84.0 billion in 2019. However, the Central Bank introduced several concessionary loan schemes aimed at providing working capital for businesses affected by the pandemic.
The Central Bank implemented extremely accommodative monetary policy measures during 2020, through the reduction of the key policy interest rates to historic lows with a downward adjustment of 250 basis points in total, and the lowering of the Statutory Reserve Ratio (SRR) applicable on rupee deposit liabilities of licensed commercial banks (LCBs) by a total of 300 basis points and the Bank Rate by 650 basis points.