COLOMBO (News1st): The Sri Lankan economy, is heading into an economic recession in the face of the COVID – 19 crisis, Dhananath Fernando, Chief Operating Officer of Advocata Institute said.
â€œ…it will be a very difficult time for Sri Lankans as well as for all global citizens. For Sri Lanka it will be a double whammy,â€ Fernando said in an interview with News1st.
He predicted that the South Asian island nationâ€™s gross domestic product (GDP) will decline to less than two percent by the end of 2020.
Sri Lanka kicked off the year with a GDP rate of 2.6 percent, and has to settle USD 4.8 billion as external foreign debt, the highest debt repayment amount for the country within a single year.
â€œOperating the markets [sic] finding a solution to do that is also critically important while on the medical front we are taking the necessary measures,â€ the COO of the policy-based think tank noted.
He pointed out that the government should not consider printing money to ease the pressure of the rupee which has depreciated to 192 rupees against the US dollar.
Fernando pointed out that the government can opt to obtain a loan of USD 1 trillion from the International Monetary Fund (IMF) or obtain a bilateral loan to delay the economic crisis.
The IMF has already approved a USD 1.5 billion three-year loan for Sri Lanka in 2016. â€œWe really have run out of options,â€ the COO of Advocata Institute said.
Recently, the IMF announced that it is ready to lend USD 1 trillion to countries grappling with the outbreak of COVID – 19.
Fernando cautioned that the people should prepare themselves mentally for the post COVID – 19 period as it would be gruelling to the countryâ€™s economy.
He said that six-week-long working days, unemployment, pay cuts, a drop in profits and tax collection, depreciation of property, and price wars could be experienced once the pandemic is dealt with.