SAN DIEGO, California — Sri Lanka is facing the economic impact of the COVID-19 pandemic through lowered tourism rates, higher commercial prices and overwhelming medical systems. Sri Lanka is also experiencing an additional layer of hardship due to its unique economic reliance and leadership. In order to bring long-term resolution to Sri Lanka’s economic crisis, Sri Lanka and the global community at large must take several steps.
Sri Lanka is a country that relies heavily on its agro-industry, more specifically in the yield of rubber, tea and rice. Sri Lanka’s economic crisis is partly due to the 2019 policy by President Gotobaya Rajapaksa, in which all farmers in the country must use organic fertilizer, with the aim that the country would replace all synthetic fertilizer in the subsequent 10 years. As a result, the country’s own rice production has been falling by 20% and other domestic crop production (i.e. rubber, tea and coconut) has experienced devastation. As Foreign Policy reported, moving all of Sri Lanka’s agricultural growth into organic fertilizer dependence has shown that manure-based farming cannot support its economy. It also cannot help solve Sri Lanka’s economic crisis in the long run.
The Effects of COVID-19
One can also attribute Sri Lanka’s economic crisis to the COVID-19 pandemic. Sri Lanka is a country that people have historically touted as a prime travel destination. However, due to the cases of COVID-19 that first emerged in Sri Lanka in March 2020, travel restrictions have crippled the tourism industry by reducing the number of tourists from 1.9 million in 2019 to 570,000 in 2020, effectively cutting off earnings from what is supposed to be the country’s third-largest market. Alongside this decrease in visitors from abroad, there came a decrease in the funding for projects for new beach resorts and hotel developments which received $60 million in 2020 according to the International Trade Administration.
By having the leadership of President Rajapaksa and his administration step down, Sri Lanka can then begin to seek more democratic and representative leadership over its diverse populace. Sri Lanka is a country with a population of Tamil Muslims, Sinhala-Buddhist among many other ethnic groups. However, Al Jazeera has noted that the Rajapaksa administration has historically been responsible for directing state-controlled violence and suppression against its Tamil protestors. Political leadership that does not take into account the grievances and lived realities of all its constituents is one that cannot reasonably prepare its economy for diversification nor truly helps end Sri Lanka’s economic crisis.
Solutions and Reforms Going Forward
Extensive economic reforms are necessary in Sri Lanka in order to increase the country’s growth. A report by the World Bank highlights four major steps. The steps include an increase in agricultural productivity, increase job opportunities in non-farming sectors, better implementation of reforms to spur safer, more productive labor and improved access across the country to public services and education.
One of the main ways to resolve much of the economic strain in the country is by rolling back the manure policy that President Rajapaksa put in place and instead investing in methods of making artificial fertilizer less prone to environmental damage. For a second point, investing in non-farming jobs primarily includes looking at the resort and tourism expansion in Sri Lanka. Companies including Hilton, Shangri-La and Movenpick have all begun more hotel/resort projects to attract international customers and provide more income for Sri Lanka according to the International Trade Association.
The third point states that the aspect of informality or simply the kind of labor that goes unreported, is prone to long unregulated hours, low pay and low productivity. This can undergo mitigation through the building of a strong social network of health insurance so that times of economic downturn do not spur instability in Sri Lankan households. The final point states that providing more state-funded education will allow more Sri Lankans to use their skills to better industrialize the agricultural and tourism sectors.
Hope Moving Forward
There is good reason to believe that Sri Lanka’s economic crisis could reach a resolution, and a pathway for future economic growth could emerge using the aforementioned starting points. One reason for this is because Sri Lanka was already taking steps to reduce poverty in the decades preceding the COVID-19 pandemic, with a 5.2% reduction in the rate of poverty by 2016, the accomplishment of near-universal electricity and labor growth in non-farming sectors. The next step then is to continue to reimburse farmers and improve farming technologies rather than stripping away the artificial fertilizer. With more nuanced labor laws and democratic leadership, Sri Lanka’s economic crisis should disappear in time.
– Albert Vargas
Photo: Wikimedia Commons