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How Should Sri Lanka Finance the COVID-19 Vaccination Rollout?

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Notably, the government did not budget for a vaccination strategy in its National Budget for 2021. As such, any spending would have to be allocated through an emergency budgetary allocation. The government could potentially reallocate funding from other sectors or even reallocate from within the health sector. These reallocations, for example, could occur through built-in fiscal space for public investments in the budget, postponements or revisions to non-essential government spending initiatives such as non-essential small-scale infrastructure projects

 

By Harini Weerasekera and Kithmina Hewage

 

 An effective vaccination strategy is a necessity for countries to move beyond COVID-19. However, it also requires careful policymaking to balance the financial cost of purchasing and delivering vaccines while stimulating economic growth. This article, based on a recent IPS analysis, provides an overview of the approximate costs associated with the COVID-19 vaccination rollout in Sri Lanka and evaluates policy options to finance the initiative.

 

Assessing Costs

 

While there is no universally agreed level, considering the emergence of new variants, many experts agree that a country should vaccinate around 80% of its population to achieve herd immunity against COVID-19. This translates to 17.5 million Sri Lankans. Thus far, Sri Lanka has received or is expected to receive vaccine donations and other financial assistance from the likes of the World Health Organization’s COVAX Facility to cover approximately 20% of the population.

 Based on publicly available proxy data, as detailed in Table 1 below, assuming that 20% of the population will be financed through the WHO COVAX scheme, the total cost of self-financing   another 60% of the population is USD 139.1 million. These costs include both the cost of purchasing the cheapest vaccine (AstraZeneca-Oxford) and the immunisation delivery costs.

 In a recent study, the World Bank estimates that for the South Asian region, the average per person vaccination cost amounts to USD 12 to receive one dose of the COVID-19 vaccine, under certain assumptions. This costing consists of the full vaccine deployment cost per person, which includes the vaccine dosage cost along with the international airfare and other delivery costs.

 Using this basis of costing, financing two doses of the vaccine for 60% of Sri Lanka’s population would amount to USD 336 million. This is over double the minimum estimate made earlier using local proxy data. As such, a range of USD 140-336 million (LKR 27-66 billion) can be treated as a minimum and maximum estimate range for financing the long-term vaccination strategy in Sri Lanka. This amounts to 0.6-1.4% of total government expenditure for 2020, which is a relatively small proportion of the country’s total government expenditure. For context, the health sector was allocated 4.8% of total government expenditure in 2020. That said, the estimated costs range between 12 and 29.5% of the Ministry of Health’s total expenditure for 2021.

 Furthermore, given difficulties in securing all necessary vaccines from a single producer (e.g. AstraZeneca) due to supply shortages, Sri Lanka has already moved towards purchasing Sputnik V and Pfizer vaccines, which are more expensive than AstraZeneca, and therefore will increase costs. The cost increase will be significant given that other vaccines are two to six times more expensive than a dose of Astra-Zeneca (Table 2).

 Given these realities, Sri Lanka will need to cover these costs through one or a combination of: (a) reallocating existing budgetary commitments; (b) receiving more bilateral and multilateral vaccine donations or financial assistance; or (c) self-financing through targetted tax policies and future borrowings.

 

Reallocating Budgetary Commitments

 

Notably, the government did not budget for a vaccination strategy in its National Budget for 2021. As such, any spending would have to be allocated through an emergency budgetary allocation. The government could potentially reallocate funding from other sectors or even reallocate from within the health sector. These reallocations, for example, could occur through built-in fiscal space for public investments in the budget, postponements or revisions to non-essential government spending initiatives such as non-essential small-scale infrastructure projects.

 However, the extent to which such revisions can be incorporated is greatly limited by the economic conditions under which this vaccination initiative is taking place. Some of these small-scale infrastructure projects, for instance, are geared towards stimulating the economy.

 Sri Lanka’s post-COVID-19 economic recovery is dependent on adequate government spending to stimulate growth, and there has already been a significant amount of spending rationalisation that has taken place. Furthermore, the government will be required to ensure that the broader public health sector is not compromised in any form simply to fund the COVID-19 vaccination initiative as that may have further severe long-term repercussions.

 

Self-Financing

 Given the current economic climate, the government is unlikely to increase direct taxes in the immediate future. Increasing indirect taxes such as import tariffs are also likely to be counter-productive since imports are restricted.  Rather, a tax rationalisation on luxury goods and a sin-tax rationalisation on alcohol and cigarettes could generate a significant amount of revenue that can be directed towards the vaccination drive.

 For instance, a recent study by IPS estimated that government revenue could be increased by LKR 17 billion by 2021, and LKR 37 billion by 2023, if taxes on cigarettes are streamlined and raised in line with inflation. This additional revenue can finance the vaccination strategy such that it reaches the midpoint of the study’s cost estimation range of LKR 20-67 billion.

 A targetted tax intervention achieves the dual aim of raising the required funds to vaccinate the public while simultaneously ensuring that the government’s broader macroeconomic stimulus initiatives can continue unimpeded. If the government is unwilling to finance the entire cost through a targetted tax intervention, even a partial self-financing measure would reduce the necessity for the government to depend on further loans to cover the cost.

 

Best Option

 A basic economic impact analysis by IPS found that the vaccination rollout would generate an additional 30.6 billion in national output, and an extra value addition of LKR 26 billion. Besides, the country’s economy will benefit additionally due to the indirect impacts associated with the public health benefits of a vaccinated populace.

 Considering these factors, the government is best off pursuing a medium-term self-financing option through targetted tax interventions and if required, through external financing. The challenge for Sri Lanka is to secure adequate funding without compromising on its investments in broader public health and social welfare initiatives as weaknesses on those fronts can undermine the success of vaccinating the public from COVID-19.

 From a budgetary perspective, the cost of vaccinating the public fast will also be cheaper than the cost of continuous PCR testing, managing quarantine centres and cluster associated lockdowns over a prolonged period. In addition to securing funding, receiving an adequate supply of vaccine doses for the country to reach its vaccination coverage targets remains uncertain as we progress further into 2021.

 

To learn more, read IPS’ Policy Discussion Brief (PDB) ‘Fiscal Implications of Vaccinating Sri Lanka Against COVID-19’.



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Dialog Enterprise with Fortinet strengthens the security of its Managed SD-WAN Service for Sri Lankan Enterprises

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Dialog Enterprise, the corporate solutions arm of Dialog Axiata PLC, announced the strengthening of its Flexnet managed SD-WAN service leveraging the Secure SD-WAN solution from Fortinet, a global leader in cybersecurity with broad and integrated solutions.

Dialog Enterprise pioneered the Sri Lanka’s first Managed SD-WAN service with the release of its Flexnet offering since September 2019. Two years after, most modern organisations are embracing digital acceleration, driving demand for greater agility in networks in order to stay competitive and deliver superior customer experiences. With the scale and variety of cyber threats continuing to grow, Dialog Enterprise enhances its Flexnet service with the Fortinet Secure SD-WAN. Fortinet Secure SD-WAN accelerates network and security convergence, aims at simplifying WAN architecture, and securing work-from-anywhere new normality with embedded ZTNA (zero-trust network access) Access Proxy for explicit per-user application access controls. It delivers integrated security and safer access to internal and external data and applications wherever they are residing, on-premises, or in the cloud.

By integrating Fortinet Secure SD-WAN solution to its Flexnet managed SD-WAN service, Dialog Enterprise will enable its customers the ability to cost-effectively eliminate security gaps in their network while gaining the benefits of advanced routing and self-healing WAN capabilities to ensure superior quality of experience for their users, and an increased business uptime. Additionally, an improved connectivity and user experience can be achieved through an integrated security by prioritizing network traffic and reduced latency. As well as the benefit of an integrated security by prioritizing network traffic is achieved by offering, unified thread management, SSL inspection and proactive security threat prevention.

“With the recent shift to remote working, cloud adaptation and SaaS usage accelerating SD-WAN adoption with organizations, many of our customers in the government, finance, retail, services and manufacturing industries will benefit from Dialog Enterprise’s Managed SD-WAN based on the Fortinet Secure SD-WAN solution. It provides us with an integrated, one-stop management and orchestration console to ensure that connections, configurations, advanced routing features and protections are easily configurable. Being the only Fortinet Managed Security Service Provider in Sri Lanka, we have already been able to provide Secure SDWAN solutions with Fortinet in over 1000 locations across the island.” said Navin Pieris, Group Chief Officer – Dialog Enterprise at Dialog Axiata PLC.

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SLT-MOBITEL completes first phase of Amazon Alexa integrations for Home Broadband customers offering exciting digital lifestyles

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The first phase of fully integrating Amazon Alexa for SLT-MOBITEL Home Broadband customers was successfully concluded recently. Now customers can seek help from Amazon’s virtual smart assistant Alexa and obtain a range of information on SLT-MOBITEL services such as Voice, Broadband, PEO TV services etc. ensuring subscribers experience exciting new intelligent built digital lifestyles.

Pictured Dilshan Boteju, Chief Executive Officer of The Connection Workshop, handing over the report on the concluded project to Prabhath Dahanayake, Chief Marketing Officer SLT. Also present were Lathika Weerasinghe, Administrative Coordinator, Anup Silva, Lead Developer Alexa program of The Connection Workshop, Ayoma Wickramaarachchi, Deputy General Manager, Product Development & Management of SLT, Ruwan Rekogama, Engineer-Product Development & Management of SLT.

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Loops wins big at SLIM DIGIS

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Award-winning creative-led integrated marketing agency, Loops Integrated, received 6 recognitions, including a Gold, at the SLIM DIGIS Awards, held on the 25th of January 2022. Loops Integrated received the only Gold DIGI in the Banking and Finance category for Softlogic Invest’s “This Could Be You” campaign, a Silver DIGI in the Performance Marketing category for British Council’s IELTS programme, and another Silver DIGI in the Best Use of Branded Content category for Sri Lankan Airlines. In addition to these three prestigious awards, Loops Integrated also received 3 finalist awards for the Banking & Finance, Performance Marketing and Best Use of Branded Content categories.

Discussing the awards, CEO at Loops, Wasaam Ismail said, “We work with our clients as partners, therefore it’s important to say a big thank you to them for having faith in us and letting us take their campaigns to town. Putting together creative-led campaigns amidst working from home during periodic lockdowns is nothing short of a herculean undertaking, which would not have been possible without our stellar team. Therefore, I must also acknowledge and appreciate our exceptionally talented, committed, dedicated and mind-blowingly fun team here at Loops, without whom none of this would be possible. A big thank you also to SLIM for ensuring that digital marketers in Sri Lanka have a national platform upon which to be recognized.”

The SLIM DIGIS awards is organized by the Sri Lanka Institute of Marketing (SLIM) and recognizes and celebrates Sri Lanka’s best digital marketing work, innovation and talent. SLIM is the national body for marketing in Sri Lanka and the SLIM DIGIS is among Sri Lanka’s most prestigious awards programmes that recognize innovation and budding talent in the digital marketing space.

Loops is an award-winning Creative Led Integrated Marketing Agency with operations in Sri Lanka, Qatar, Malaysia & Australia. The agency has worked with over 250 brands in 15 countries and has over 50 awards for its efforts in creative and digital excellence, awarded by both international and local bodies. Visit www.loops.lk to learn more.

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