“In Sri Lanka, the main transmission channels through labour income, export related income, tourism and connected services, have impacted our real economy. Loss of employment and livelihood is large,” Rajapaksa told the ‘High-Level Event on financing for development in the era of COVID-19 and beyond’, organised via video conferencing by the Prime Ministers of Canada, Jamaica and the UN Secretary General on 28 May.
“Whatever the difficulties we have confronted, our policy of “people first” cannot be compromised as human development is the only asset we value most,” he emphasised.
In that context, Rajapaksa said, as this was a crisis beyond the control of Government and business, international help, by way of unconditional budget support and compensatory debt deferment facilities for official debt, will have to come from multilateral and bilateral official lenders, so that private debt and equity markets will not lose confidence.
“The multilateral and bilateral official creditors to developing countries have a special responsibility, to be innovative in creating such space for the developing world to revive their economies, and should not insist on normal conditionalities of lending; after all, most countries have honoured their debt obligations, and the time has come to provide new space through a decent haircut by official creditors,” the President pointed out.
He said the profiling of official debt, and medium-term emergency budget support loans by each major bilateral and multilateral lender, will not only provide macroeconomic space to meet private debt obligations and relax trade and payments systems, but also restore confidence among private sector creditors to re-energise growth and investments.
“I underscored the need for development financing when I spoke with His Excellency Xi Jinping, President of People’s Republic of China, India Prime Minister Hon. Narendra Modi, and US National Security Advisor Mr. Robert O’Brien,” President Rajapaksa recalled.
He also emphasised that the Middle Income Countries seem to get subsumed under the overarching classification of developing countries, and thereby their requirements are not wholly met.
“The fast actions by large bilateral, multilateral agencies without placing conditionalities among themselves, and coming forward as development partners in respective developing and middle income economies, is the responsibility of leading agencies and leaders of the world,” Rajapaksa said.
He told the conference that this dialogue must concentrate on how developing and middle income countries are assisted with emergency funding facilities, while encouraging countries to focus on the human development aspect, including education, health, women and children, new export industries, food security, and environment for a better and stable world.
President Rajapaksa also said Sri Lanka’s priority to develop agriculture and food security, environment conservation, renewable energy resources, digital economy and digital governance, rural economy and poverty reduction, market access to people and business community, through improved connectivity to villages and creating green cities in line with environment conservation strategies, suffered a setback with almost 2 months of lockdown in the economy.
“We have taken steps to ease restrictions from this week, while keeping health quarantine standards, to ensure the community will not be vulnerable to COVID-19 health risks. However as two months’ loss in the real economy and the likely timeline to reach normalcy will be longer, external funding must be “development-centric” by all aspects of such facilities,” the President added.