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Sri Lanka economy re-opens after controlling Coronavirus, Covid-19 curfews lifted

ECONOMYNEXT – Sri Lanka ended nightly curfews on June 28, the Presidents office said as most economic activities are resuming subject to contact tracing and new cases are limited to quarantined sailors and foreign returnees.

“The curfew has completely been lifted effective from today, June 28th Sunday,” the President’s office said in a statement.

Sri Lanka is opening museums from July 01. However, people have been advised not to hold large cultural and religious events.

Under Control

“The Covid-19 epidemic is now under control,” the head of Sri Lanka’s health service Anil Jasinghe said last week giving the go head to open cinema halls subject to health guidelines.

Most of Sri Lanka’s businesses are open and schools are also set to open in July in a phased program.

Sri Lanka has been quarantining or isolating foreign arrivals from China since January 2020 and started to aggressively contact trace arrivals from third countries from March. On March 19 the airport was closed for inward passengers and strict curfews imposed.

Some observers say Sri Lanka’s Coronavirus activities were perhaps only second to Vietnam.

But Vietnam used testing aggressively at a time when Sri Lanka limited PCR tests to a hospital setting and waited for symptomatic cases to turn up with no community testing of high-risk groups and private hospitals raided by a drug price control authority stop voluntary testing.

Under the strategy a stricter lockdown that Vietnam was required.

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Sri Lanka also did not rest frontline workers, leading to sailors in a navy camp which was involved in contact tracing being infected.

The last case from the community in Sri Lanka was found on April 30, 2020, health authorities say.

Sri Lanka had confirmed 2033 Coronavirus cases up to June 27, with 9 new cases on the day. Six were from Navy camp that was injected and 03 were from foreign returnees, the health ministry said.

The Navy camp which was infected in late April has been generating new cases in part due to weaknesses in the testing regime, observers have said, though all contacts are isolated.

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Authorities are now testing in high-risk areas in the community unlike earlier.

Foreign Travel

Sri Lanka has been bringing back stranded citizens from abroad and are quarantining them, which is the second source of new cases.

Paid quarantine at hotels is available for those who do not want to go to free military-run quarantine centers.

On June 15, 2020, onwards all the zoological gardens were opened for visitors.

Visas of foreigners in the country were automatically extended.

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Sri Lanka also said it was planning to allow tourists in from August 01, subject to multiple PCR tests but no mandatory quarantine but late said the opening may be delayed.

Sri Lanka has also suspended crew change program via the country’s ports and airports after a number of Indian seamen tested positive and had to be admitted to the hospital.

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Under the plan announced so far, tourists could enter from Katunayake, Ratmalana, or Mattala airports from August 01. Tourists will be asked to take a pre-departure test at least 72 hours before departure.

They will be tested on arrival.

Tourism Authority said all travelers will require a valid visa; this will be issued for 30 days and extendable for up to 6 months after arrival for 100 dollars. Online visa at http://www.eta.gov.lk/slvisa/

Further relaxation for long stay guests is under consideration, enabling tourists to be granted five-year multiple-entry visas with a maximum 6 months stay.

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Sri Lanka Tourist Development Authority had announced a relief scheme for the sector.

About 124,000 staff with employment records in hotels and travel agencies as well as over 10,000 workers at restaurants, spas, tourist shops and water sports centres could benefit, the SLTDA said.

Sri Lanka hotels, travel agencies to get 4-pct loan on EPF records: Tourism Authority.

State-run SriLankan Airlines is operating cargo flights to over 20 destinations and is ferrying in stranded Sri Lankans for quarantine.

The airline is also re-structuring debt and has said it is ready to bring in tourists as soon as the go ahead is given.

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Schools and Places of worship

Places of religions worship and tuition classes have been allowed to open under health guidelines and social distancing.

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Education Ministry said schools are expected to open on June 29, 2020 under four stages.

Under the first stage Principal, academic and non-academic staff as well as the school management bard will be reporting to school in order to prepare class rooms and school premises.

Under the second stage grade 5, 11 and 13 students will attend the school from July 6 – July 17.

From July 17 -24 grade 10 and 12 students will be attending the school and from July 24 students from 3,4,6,7,8 and 9 will be attending the school.

Macro-econonomy

Though Sri Lanka has made strong gains in Coronavirus and is perhaps only behind Vietnam, the country has been hit by monetary instability due to long standing problem with a discretionary policy as well as a fiscal ‘stimulus’ in 2020 which hit tax revenues and earned a credit downgraded.

On top of earlier money printing Sri Lanka is also giving central bank credit (printed money) re-financed credit to affected businesses worsening fears about the currency and foreign debt repayments.

Fitch Ratings and Standard and Poor’s had already downgraded the country after taxes were cut in early 2020 in a fiscal stimulus which was followed by rate cuts and liquidity injections leading to foreign currency shortages and fears about the ability to repay debt.

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Bad loans in Sri Lanka’s banks will worsen after a Coronavirus pandemic, pressure on foreign loan funding could intensify and Interest margins would be squeezed amid weak loan growth, Fitch, a rating agency has said.

Bad loans had risen to 5.1 percent of gross loans by the first quarter of 2020, from 3.4 percent a year earlier, and Fitch expected bad loans at banks rated by the agency to peak at 13.2 percent in 2021, when loan classification rules come back to normal.

Sri Lanka’s budget deficit is expected to rise to at least 8.5 percent in 2020 from 6.8 percent last year.

Sri Lanka is planning a budget deficit of 8.5 percent of the gross domestic product in 2020 up from 6.8 percent a year earlier and a revenue loss 440 billion rupees following tax cuts, while capital expenses will be slashed, finance ministry data shows.

Sri Lanka is expecting tax revenues to fall 429 billion rupees to 1305 billion rupees and non-tax revenues by 11 billion rupees to 145 billion rupees, taking total revenues down 440 billion rupees to 1,450 billion rupees according to a draft budget published by the finance ministry.

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Sri Lanka has opened negotiations on a new program with the International Monetary Fund on April 16 but no agreement has been announced so far.

Sri Lanka’s existing program with the IMF is stalled after the new administration slashed taxes in January going against its ‘revenue-based fiscal consolidation’ thrust, worsening the deficit.

The Coronavirus crisis hit in March, which has further hit revenues as economic activities came to a virtual standstill amid lockdown-style curfews to curb the spread of the virus.

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Election Commissioner announced the General Elections which will elect a new parliament are due on August 05, 2020.

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President Gotabaya Rajapaksa’s Sri Lanka Podujana Party which won an election with a landslide victory on February 10, 2018 will be led by his brother Mahinda Rajapaksa.

The losing Presidential candidate Sajith Premadasa will lead the Samagi Jana Balawegaya coalition.

The main constituent party of the grouping that fought the general elections, the United National Party of ex-Prime Minister Ranil Wickremesinghe has split and is going alone. (Colombo/June19/2020-sb)

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