Sri Lanka's Response To Covid-19 Has Been Noteworthy And Needs To Stay On Course

Sri Lanka has reported 1730 cases of COVID-19 as of June 3. The authorities and the medical staff have responded effectively to the crisis and need to say on course. The effort is being acknowledged in the region as an example. The challenge from now on would be to stay on course and not lose the gains.

- Dinesh Weerakkody

The lockdown is now being gradually relaxed to kick start the economy. Net capital outflows since March have been around US $ 300 million, mostly from the treasury securities and bond market. The stock market has seen a drop of around 8 percent, since the lockdown.

The Sri Lankan currency has also depreciated by around 2.8 percent against the US dollar since January. Sri Lanka’s Emerging Market Bond Index spread has more than doubled since mid-February. The government has allocated up to 0.1 percent of GDP for containment measures as well as US $ 5 million to the SAARC COVID-19 Emergency Fund.

The 2020 1Q payment deadlines for income tax, VAT and certain other taxes were extended until end-April. The president has announced that cash payments totalling around 0.25 percent of GDP will be made to the low-income groups.

Other measures announced include price ceilings on essential food items, tax exemptions for masks and disinfectant, concessional loans and food allowances for the vulnerable people.

The president has also established a Task Force on Economic Revival and Poverty Eradication and a special fund to manage the spread and social welfare spending, inviting local and foreign tax-free donations.

CBSL

The Central Bank of Sri Lanka (CBSL) has adopted a number of standard measures during the crisis to foster, as much as possible, a smooth functioning of the monetary policy. These measures include a substantial liquidity provision.