How Should Sri Lanka Finance the COVID-19 Vaccination Rollout?
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.
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.
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.
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’.
EU funded SEDR Project launches Policy Brief to strengthen alternative dispute resolution in Sri Lanka
The Supporting Effective Dispute Resolution (SEDR) project, funded by the European Union and implemented by the British Council in partnership with The Asia Foundation, launched a Policy Brief titled ‘Strengthening A Just Alternative’ to strengthen community-based alternative dispute resolution (ADR) mechanisms in the country.
The launch event, held at the British Council Library in Colombo, was attended by several distinguished dignitaries, including Dr. Wijeyadasa Rajapakshe, Minister of Justice, Ms. Beatrice Bussi, (Interim) Head of Development Cooperation of the European Union to Sri Lanka and the Maldives, Priyanath Perera, Secretary of the Mediation Boards Commission, Hon. Justice Yapa, Chairperson of the Mediation Boards Commission, and Commissioners of the Mediation Boards Commission.
Speaking at the event, Ms. Beatrice Bussi stated that “The importance of mediation in Sri Lanka is twofold, as it ensure an easy and economic access to justice to citizens, while it provides the opportunity to reduce the burden on the Sri Lankan court system. I want to praise the model of Sri Lankan community mediation boards, for its effectiveness and for the value it delivers to communities in addressing local disputes preventing their escalation”.
Dr. Wijeyadasa Rajapakshe stated ” One of the main tasks of the Ministry is to ensure the necessary legal, policy, and institutional framework is set up for efficient resolution of disputes. Alternative dispute resolution, including mediation, play a major role in this regard. There are different opinions regarding the effectiveness of alternative dispute resolution mechanisms, especially mediation among the community and stakeholders. In the meantime, the Ministry has initiated a number of reforms to improve dispute resolution processes in Sri Lanka. Accordingly, the Ministry highlights the importance of surveys of this nature to facilitate evidence-based decision-making regarding alternative dispute resolution mechanisms. As such the Ministry would like to congratulate the SEDR project on this successful initiative.”
The Policy Brief is based on the findings of a Knowledge, Attitudes, and Practices (KAP) survey commissioned by SEDR and conducted by the Centre for Poverty Analysis (CEPA) in 2022. The survey aimed to assess knowledge, attitudes and practices of various community-based alternative dispute resolution mechanisms, including mediation boards. The survey covered six districts in the country, targeting 1,712 households of all three main ethnic groups.
COYLE urges government to engage business leaders in policy-making process for fair, sustainable, and economically sound decisions
The Chamber of Young Lankan Entrepreneurs (COYLE) held its 24th Anniversary Celebrations on 10th March 2023, at Shangri-La Hotel, Colombo. The event was attended by the chief guest, Prime Minister, Dinesh Gunawardena; the guest of honour, U. S. Ambassador, Julie Chung; former President of Sri Lanka, Maithripala Sirisena; Chief of the Defense Staff, General Shavendra Silva; cabinet and state ministers; parliamentarians; commanders of the Sri Lanka Armed Forces; government officials, and business leaders.
The Chamber of Young Lankan Entrepreneurs (COYLE) comprises more than 116 prominent individuals who serve as Chairmen and Controlling Shareholders of some of the most influential companies in Sri Lanka.
It has over 500 member organizations and is affiliated with nearly 50 business chambers in the country. The organization is managed and controlled by young entrepreneurs but also boasts a number of senior and respected business leaders who joined the organization during its formative years to help shape COYLE into what it is today.
The Chamber actively promotes entrepreneurship, the development of rural communities, and thought leadership. In adherence to the organization’s strongly held principles and as a mandatory service to the community, COYLE engages in countless CSR initiatives through its member companies around the country. The Chamber provides leadership, learning, and development for its members and stakeholders, and over the years, it has grown into a vehicle for business growth in Sri Lanka via its many local and global networks.
The past year was an exceptionally challenging one for all parties in the Sri Lankan economy. Remarking on this, the Outgoing Chairman of COYLE, Mr. Dimuth Chankama Silva, stated during his address, “This year was the greatest test of our mettle. Even diamonds are born out of pressure. This year gave us the opportunity to shine through pressures from all directions. I believe we shone. We are here alive and kicking, our businesses are growing, we are conquering international markets and territories, and COYLE has grown in leaps and bounds.”
A notable emphasis was given to the introduction of the COYLE theme for the year 2023/24, EVOLUTION: #Resilience, #Agility, and #Transformation. The incoming Chairman, Mr. Rasith Wickramasingha, stated, “Evolution is to upscale capability, enhance skills and increase creativity, innovate at a time of chaos, and re-imagine a new business environment. Evolution requires change: change in mindset, attitude, self-awareness, and acumen of the surrounding environment as well as culture.”
He went on to note that in today’s environment, every five years constitutes a generational gap and emphasized the need for COYLE to evolve as a chamber in order to be relevant and sustainable for the future. He further mentioned that decades of ill-conceived, politically driven policies based on the advocacy of a few, rather than consultative decision-making with recognized business chambers, have led to the current crisis. Elaborating on this point, Mr. Rasith Wickramasingha said, “Policy formulation should be done based on sound economic principles and business acumen. Businesses rely on stable policies so that they may plan ahead. Ad hoc policies which bring no economic benefit have led to losses in the private sector and leakage of foreign exchange from the country.”
He emphasized that it is heartbreaking to see that the individuals who strive continuously for the betterment of the country and persistently do the right thing get penalized while those engaging in unethical practices to avoid taxation are rarely held accountable. COYLE hopes for more genuine dialogue from policymakers regarding these issues and affirms that the organization’s globally exposed and experienced members could be a great value addition to any actions taken to revive the economy. What sets COYLE apart from the rest is that its members are made up of business owners and decision-makers who are passionate about doing something good for the country, who are genuinely aligned with this cause, and willing to embrace the future without diluting our national and cultural heritage.
The 24th Anniversary Celebration of COYLE closely reflected in its overarching tone the state of the country following the Easter Bombings, the pandemic, and the economic and political crisis. The event also honored and recognized the Chamber’s numerous members who weathered the storm by building resilience, being agile, and transforming their businesses. It also highlighted the many CSR initiatives undertaken by COYLE member organizations, many of which were carried out quietly, purely as a service to the country.
These initiatives focus on communities most affected by the calamities of the past years and were chosen regardless of race, religion, or creed. With a host of esteemed and influential guests attending the celebrations, COYLE made this event a platform to convey a strong message calling for sociopolitical change in the country. COYLE believes that the hardline decisions taken by President Ranil Wickremesinghe and the Governor of the Central Bank, Dr. Nandalal Weerasinghe, were tough but necessary considering the state of affairs. The Chamber also notes that as a result of these decisions, gradual change for the better is apparent in the economy. Considering the massive pool of collective experience, expertise, and connections held by COYLE, it is capable of providing significant value and insight for economic reform. Hence, COYLE urges the government to actively engage and work together with the Chamber to expedite economic revival.
Once again, AIA Ran for their Lives – proud sponsor for the 3rd consecutive year
AIA Insurance was humbled to be a part of Run For Their Lives 2023, in raising funds for the Apeksha Cancer Hospital. The charity run aligns with AIA’s brand purpose of helping people live healthier, longer, better lives with focus on the prevention and management of Non-Communicable Diseases in Sri Lanka. The company will continue its commitment to fight NCDs and actively engage in creating awareness on leading NCDs in the country.
With AIA’s goal of making a positive impact on one billion lives by 2030, participants at RFTL were encouraged to make a pledge for a healthy habit that could help prevent illness and remain healthy in the long run. The participants also took part in a real-time survey that measured their unhealthy habits and recommended healthy lifestyle habits. Participants were also instantly rewarded for taking part in the wellness games and the free BMI sessions organised by one of AIA’s wellness partner Vida Medical Clinic.
Rajapaksa, Arshdeep deliver winning start for PBKS
I will not tolerate any breach of law and order in the country during my tenure – President
‘I’m still alive’ jokes Pope as he leaves hospital
‘Dates have the highest sugar content to fight Coronavirus’
Sunday Island 27 December – Headlines
U.S. Congress to probe assets fleecing by US citizens of Sri Lankan origin
Business5 days ago
Softlogic Finance appoints Ivon Brohier as new CEO
Features7 days ago
‘A Jaffna-man, an eminent surgeon with an European reputation’
Features7 days ago
Jaffna Revisited- Some Quick Impressions On Post-War Development
Features7 days ago
Marriage and some amazingly accurate astrological forecasts
Business5 days ago
‘Govt. lacks mechanism to recover USD 40 billion spirited out of SL from 2008 to 2018’
Features6 days ago
The Box of Delights – II
Business4 days ago
DFCC Bank establishes Indian Rupee Nostro Account with HDFC Bank India
Features7 days ago
LTTE writ on coral exploitation more effective than govt. orders