Covid, poverty, and hope for Sri Lanka

Covid pandemic has had a devastating effect on the economy of all countries, including the very rich. As a result, ninety-five million people have been newly brought below the extreme poverty line of USD 3.20 in 2020, and this may increase to 150 million by the end of 2021 (World Bank). In Sri Lanka 8.9% of people were below the extreme poverty line in 2019, and this is expected to rise to 13% in 2021. This means there will be 890,000 newly poor people that need to be reckoned with in the efforts to alleviate poverty. Moreover, this figure represents a five-year reversal of the poverty alleviation effort. A huge effort would be required to recover from this setback.

In 2019 the global extreme poverty figure was 650 million, and was expected to improve gradually with extensive welfare measures, but today the pattern is quite different. This figure may increase by about 5% at end of 2021. Income inequality will worsen in spite of global economic growth, which is expected to be about 6% in 2021. What this means is many countries are reluctant to adopt welfare measures to help the poor. The pandemic has helped the rich, while the poor were left to fend for themselves. No wonder a US Covid patient said “it’s a poor man’s virus”. The situation may improve for some, like the very quick V recovery in China, but for many, including people in the Western countries, there would be permanent scars such as malnutrition, susceptibility to disease, missed schooling.

Sri Lanka does not come within the first ten countries that have the most number of extreme poor people. Nigeria is number one in this respect and India is second, but the latter is expected to displace the former as the frontrunner due to the massive Covid wave that engulfed it recently. Among these ten are some noteworthy Asian countries such as Bangladesh and Philippines too. However, none of these Asian countries are within the ten countries that are expected to have the deepest long lasting effects of Covid. They are expected to recover to some degree. It is the African countries that are worst affected in this respect.

The Covid pandemic has killed 2.9 million people in the world to date, and the numbers would rise to more than 3.5 million by the time sufficient numbers are vaccinated and the virus eradicated. The deaths had been mainly in India, the US and Brazil. Death rate had been minimal in the country where it started and the country with the largest population, which by any standard is the greatest achievement in recent times. The quick V recovery China achieved in the economic sector is remarkable. China will contribute 1/5th of the global GDP recovery which may happen by 2026. During these five years Chinese GDP would grow by 6%. It would be the number one economy in the world, followed by the US, India, Japan and Germany in that order.

Thus, it is a good time to have China by one’s side! Sri Lanka is under an avalanche of natural as well as man-made disasters. There is the Covid, then there were the floods and storms, and there was the burning ship spewing poison into the ocean. The Western countries are passing resolutions against us in the UN, and the US is trying to resurrect the banned LTTE, in their effort to get us to fall in line and do their bidding like signing the MCC. SOFA and ACSA. Our economy is in doldrums. Can we be choosy regarding whom to turn to in this hour of great peril? Although the duty of the Opposition is to oppose every action of the Government, it cannot at this hour of need refrain from attacking the government on vital issues, unless the government is doing something very wrong. The Colombo Port City project is vital for us at this juncture. It is the only hope we have for survival. The Opposition could help the government on this matter by not making it too much of a political issue. Calling Colombo Port City a colony of China is uncalled for, and not acceptable from a responsible Opposition, which must demonstrate some respect for our benefactors.

What could be done to prevent Sri Lanka sliding further down the slippery slope? It could learn from Pakistan what they are doing to stay afloat. Pakistan has started a massive drive to transfer cash to the poor. They are using modern communication methods to find the needy and give them money to ward off extreme poverty. Pakistan, under advice of the World Bank, distributes cash among the poor people in substantial amounts. This is one way of not only preventing poverty, but also income inequality to some extent, and minimise the effects of Covid. Sri Lanka too helps the poor people during lockdown times. Perhaps it could do more to look after the poor and the vulnerable.

The IMF representative in Sri Lanka has advised the Government on what it should do to minimise the effect of Covid on the people. Apart from looking after the poor, it has recommended the Government to invest more in agriculture and improve food security of the country. Sri Lanka must aim at self-sufficiency in essential food items. This certainly may not be the time to attempt to convert to organic fertiliser. It could result in a substantial food shortage, and our poor economy may not allow large imports of rice and other essential foods, including vegetables that are grown locally.

The IMF has also recommended greater investment in people, particularly their health and nutrition and education. This is rare advice from the IMF, which usually relies on market forces to sort things out. Perhaps the unique situation created by the Covid has made it change its attitude towards the poor countries.

The other thing that the Government must do in earnest, is the vaccination of the people as quickly as possible. Other preventive measures provide temporary protection and lockdowns cannot be a long-term solution. In this regard too, it is China which could come to our rescue. Sino Pharm and SinoVac are both effective against most of the variants, and could prevent serious illness and death in 100% of cases. Government must aim to vaccinate at least 30% of people before it removes travel restrictions. There would be an adverse impact on the economy, but recovery would be quick and long-term effects of Covid would be minimised.

N.A. de S. AMARATUNGA