Business

Do not prioritise economy over health: Dr. Dushni Weerakoon

Notes that such shortsighted policies will hurt in the long run

By Dayan Surendranathan

 

IPS Executive Director Dr. Dushni Weerakoon addressing the conference

Ensuring the normalization of economic activity must be balanced with containing the spread of Covid-19, as prioritizing the economy over health could be detrimental in the long run, according to Institute of Policy Studies (IPS) Executive Director Dr. Dushni Weerakoon.

“I understand the Government’s urgency to get the economy back to normal as fast as possible. We were enjoying a good period; exports were picking up, so was FDI (foreign direct investment). Foreign investors were starting to come back, and the CSE (Colombo Stock Exchange) was reflecting high market.

confidence. But as health specialists here pointed out: There are no easy trade-offs. If you choose the economy over health now, in favor of the short term, there will be severe consequences in the long term,” she stated yesterday (15).

She voiced these views speaking at Day 1 of the Asia Securities’ fourth Annual Investment Conference titled “V(accine)-Shaped Recovery? Medical Factors and Economic Implications”, which discussed the rollout of Covid-19 vaccines, and their implications for public health policy strategy and macroeconomic policy going into 2021.

She added that the Government should pay close attention to the ongoing health crisis, while continuing to keep a close eye on the economy. 

Alongside Dr. Weerakoon, the panel featured University of Sri Jayewardenepura Microbiology Department Head Prof. Neelika Malavige, and Institute for Health Policy (IHP) Executive Director Dr. Ravindra P. Rannan-Eliya.

Dr. Rannan-Eliya opened with praise for Sri Lanka’s efforts toward the containment of the first wave in March. He stated there was clear political leadership that listened to the health authorities, complemented by the military’s logistical expertise. 

“Our world-class quarantine controls, together with diligent test-and-trace methods, ensured that the pandemic was contained. The pandemic will still have to be managed diligently through effective test-and-trace, with the aim of elimination, not control,” he said. 

However, he also criticized the failure in containing the second wave in October, which he attributed to the failure to ramp up testing when required, and splits in political decision-making. 

He specifically slammed last week’s decision by the Ministry of Tourism to reopen the airports, which he said the Ministry of Health opposed.

“We need to protect our businesses by keeping our borders closed. The decision to open Sri Lanka to tourism from next month is a hare-brained idea. Our current response mirrors that of Japan’s, which is also facing a difficult time containing the pandemic,” he espoused. 

From left: Kavinda Perera, Senior Vice President – Research, Asia Securities, Dr. Dushni Weerakoon, Executive Director, Institute of Policy Studies of Sri Lanka, and Prof. Neelika Malavige, Professor, Department of Immunology and Molecular Medicine, University of Sri Jayewardenepura

All three panelists agreed that the rollout of the Covid-19 vaccine means very little for Sri Lanka’s public health and economic health into 2021, with health experts Dr. Rannan-Eliya and Prof. Malavige in agreement that the rollout of the vaccine will not be Sri Lanka’s saving grace. It is understood that the only guaranteed vaccine Sri Lanka has is from Covax, an organization working for equitable access to the vaccine. 

Prof. Malavige pointed out that even by August 2021, the vaccine would only cover 10% of the island’s population, and another 10% six months afterwards. 

Meanwhile, Asia Securities’ Isuri Munasinghe, citing a study conducted by McKinsey & Co. in the US, noted that “Even if we vaccinated up to 50% of our population, it would not have a significant impact on the community spread of the virus.”

Outside of concerns about the pandemic, Sri Lanka’s economic health was also put under the spotlight at the conference.  

“Inflation is a looming concern. It is lagging behind currently, because no one is spending right now, which gives us the flexibility to pump liquidity without too much fear. The initial impact to the economy from Covid-19 was a supply-side shock. Now what we see is a demand-side shock. People are not spending due to concerns over livelihoods,” Dr. Weerakon said, when asked how long the Central Bank of Sri Lanka would be able to maintain low interest rates.

She added that people will be required to return to employment from 2021 to drive economic growth. 

“However, the health risks are high, especially given that almost 68% of the labor market is from the informal sector. There will have to be a strong public health message that goes out to those workers to give them a sense of confidence that going back to work is not putting their lives at risk.”

Dr. Dushni Weerakoon was of the opinion that a two-month lockdown might be ideal for managing the pandemic, but might “knock over” the economy, given the upcoming debt servicing obligations, and the excess liquidity and low interest rate environment. 

On the other hand, Dr. Rannan-Eliya believed that, given the data and what we have from the global management of Covid-19 thus far, lockdowns are ineffective for containment. He emphasized that Sri Lanka’s approach must be built around ramping up the frequency and volume of test-and-trace efforts. 

“Data shows that countries that have successfully eradicated Covid-19 outbreaks and brought them under control are those that have aggressively increased PCR testing capacity. A vaccine, on the other hand, wouldn’t be as effective, because dosage volumes, especially for countries like Sri Lanka, would not be sufficient to achieve adequate herd immunity,” said Dr. Rannan-Eliya.