COVID-19: Is shutting down Sri Lanka’s economy the best answer to Coronavirus?

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Governments around the world, in the face of the coronavirus pandemic, are looking to flatten the curve and using various methods. South Korea and China have been some of the more successful countries in flattening the curve so far. China has used rather draconian methods to keep people indoors. 

The entire nation went into lockdown. Chinese streets were deserted and economic activity seemingly ground to a halt. The only exceptions were stores selling essential items and medical institutions being permitted to remain open. Meanwhile, South Korea did not resort to such harsh methods. Yet, as the centre of the pandemic now shifts to Western Europe, much of the continent looks to adopt the measures of China. 

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Sri Lanka put a strict curfew in place. While this may work in the short run, this can cause issues in the medium to longer-term (Image credits: Eranga Jayawardena/The Associated Press)

In Sri Lanka, the decision was made to put a strict curfew in place, leaving us with no access to groceries or medicine. Granted, there is an easing of restrictions with some services receiving curfew passes. This approach may work in the short run. However, in the medium to longer-term, this causes significant issues for the economy. Workers dependent on daily wages will be the ones most vulnerable to these issues. For these reasons, this article argues for a more measured approach.

Is a curfew the best way to fight COVID-19?

Absolutely! Other than a vaccine (which is not there), this would be the best approach. But this approach comes at a massive cost. The Sri Lankan economy is too poor and is not mature enough to sustain the costs associated with such a shutdown. 

The current reasoning is that slowing the infection requires putting distance between infected and uninfected people. Given the lack of testing in Sri Lanka, there’s only one way to keep the sick and healthy apart. That is to keep every one of us apart, which will lead to a massive recession. 

Thus, the current approach by the government leads to preventing workers from working (deepening the supply-side recession) and consumers from consuming (deepening the demand-side recession). The recession, in other words, is intentional and unavoidable. Most countries such as China and the EU that have engaged in massive shutdowns have huge stimulus packages to help the economy. But the Sri Lankan government is in no position to engage in such spending measures; in short, we are too broke.

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The curfew, while being the best approach to fight the coronavirus, will cause a recession. This will leave those dependent on daily income to put food on their table particularly vulnerable. (Image credits: Billy Cedeno)

The recession will be coupled with several immediate issues. Currently, Sri Lanka has 6-7 million (a conservative estimate) people dependent on daily income to put food on their table. The danger of the coronavirus is very real. But the daily hunger is also extremely real and will be felt by the 6-7 million people every day. 

Thus, the ones who are most susceptible to go hungry will make a very rational call to risk their lives and try to acquire some food or a wage. This will eventually lead to loss of control and civil disobedience. This will also lead to little control happening in terms of the spread of Coronavirus. We have seen some instances of this in the past.

So then what other measures could be implemented?

We can look into some short-term solutions to address the issues, which are faced by Sri Lankans today. As we do so, we can also look at examples of countries such as South Korea, which controlled the virus without locking down the total economy. Some of the measures we can adopt are as follows. 

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To prevent such long queues after the curfew is lifted and panic buying, all points to purchase groceries and medicines should be open at least for a few hours daily (Image credits: Ishara S. Kodikara / Associated Free Press via Getty Images)

The government should open all points where groceries and medicines can be bought by the general public for at least a few hours a day. This will solve the most immediate problem of food shortages for families. In doing so, the police and military have to play a role in ensuring that loitering and large gatherings are kept to a minimum. Granted, there has been a directive to open pharmacies. Yet, with a curfew in place, people will find it very hard to reach pharmacies.

Once people are sure that their local grocery, pharmacy is going to stay open, they are less likely to panic buy or gather in large numbers. For the economy to keep going along, we should ensure the banking sector remains open. Thankfully, the latter was declared an essential service on the 26th of March. 

Test early, often, safely and monitor anyone who might be infected. While we have restrictions, we must invest our energy to open more testing centres. We must test as many people as we can. Those who are infected should be isolated. Individuals who they have been in contact with should be asked to self-isolate. Further, Sri Lanka can utilize its large military cadre to assist the health authorities with surveillance. 

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Individuals at most risk of getting ill should be asked to self-quarantine. This will be easier than implementing a curfew (Image credits: Siyatha News)

Self-Quarantine the most vulnerable. Individuals over the age of 65 or suffering from underlying medical conditions should be asked to self-quarantine. These are the individuals who are most at risk of getting ill and suffering due to the Coronavirus. They should be kept away from the general population. This will be a far easier task than what is being done now under a curfew. 

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The Sri Lankan government needs to get people at low risk to return to work. As a country, we do not have the necessary financial resources for a huge stimulus. (Image credits: Soul Drifters)

Either a huge stimulus / get people at low risk to return to work. The Sri Lankan government is at a crossroads. It must either come up with a massive stimulus or get people with the least risk of being infected to return to work. However, the stimulus route is not an option at this stage. Simply because the country does not have the necessary financial resources.  

We must be proactive to save lives

In summary, Sri Lanka has to manage within very real constraints. Firstly, we have limited testing capabilities. Secondly, we have extremely limited ICU space to treat serious cases of the novel coronavirus. Finally, we have no fiscal or execution ability to expand healthcare capabilities on-demand as South Korea and China in the city of Wuhan. 

While a curfew is the best way to defeat the coronavirus, it’s possibly not the best solution for Sri Lanka under the current context at this juncture. We need to adopt a more proactive approach to tackle the issue. This will save lives in the short term. Most likely prevent larger social issues in the future as well. Ultimately, a faltering economy in a country such as Sri Lanka will mean more than the loss of livelihoods.

Footnote:

Ideas and statistics were taken from the following articles: 

The supply side matters: Guns versus butter, COVID-style – Prof. Richard Baldwin

How South Korea flattened the curve – Forbes India

1 COMMENT

  1. Keeping in mind imposing the curfew was for the wellbeing of its citizenry and the resulting slowdown of the economy was an unfortunate byproduct. As a poor nation we have very limited tools to fight this virus unlike others therefore the comparison is not on level ground. If we had not acted on the curfew we would be in far worse economic state now with far few able to return to work due to illness or grief due to loss of family members. This article is dated march 27, it is now almost a month later. We have had no riots or looting inspite of ~7million daily wage earners going without money…none of whom nor their families have reportedly died due to hunger, which means they found a way around with some govt support and some community assistance. Those ~7 million do not have the typical overheads or discretionary spends anymore (vices included) given the curfew. Whatever little savings they have are now providing for more days or weeks for bare essential such as food, medicine, and rents perhaps. These daily earners are not out of the woods by any measure, but they are not the primary drivers of our economy from a spending or export earning perspective.

    Had we kept our economy open….focussing on large sectors. Tourism wouldn’t have performed anyhow as this is a global issue not just a local one. Garments, a highly labor intensive and therefore high risk operation – without orders is pointless and their collective pivot to export PPE is a bandaid for now; even that was blocked by the Govt until recently! There is the Tea industry which could possibly function given it has partially automated some operational aspects outside of plucking (adding to that the online auction platform)…The entire domestic transport infrastructure could have been leveraged for medical use or essentials deliveries combining wholesale trade aspects. But we are not coordinated enough inspite of all our technology to achieve such efficiencies. Construction could continue with added safety protocols in place as workplace health and safety is not unknown to that sector. All financial services can/should be done remotely. Many govt services can/should be done remotely. Agriculture efforts continued but due to lack of integration of supply chains significant wastage resulted as supply wasn’t accessible to match demand due to curfews…this is still a shambles today indicating how ineffective our incumbents are in execution. Blocking various imports may spur domestic product demand however not in a 3 month cycle…people will switch back and manufacturers wouldn’t be able to ramp up quality in this short time. The movements of the workforces for some of these sectors would have required immense monitoring to ensure safety.

    There will be significant innovation and new economic activity birthed out of this crisis and these ideas are being hatched now ready to take the nation on. The old ways of doing business and conducting commerce are nearly dead and revival of those will be our fault. Regardless of this curfew or not these businesses were already dying due to lack of innovation and efficiency (what is the innovation behind importing goods and selling for profit and without warranties?). Their expiry has just been sped up. Govt needs to support local industry via PPP mechanisms and regional funding agents such as ADB create an infra that supports lending for domestic innovation.

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