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| Sunday, 2 January 2005 |
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Asian disaster costs Sri Lanka $4 billion The greatest economic catastrophe in living memory, bar the two World Wars of the 20th century struck on December 26 2004. The death toll consequent to this Asian tidal wave was put down at 80,000 Thursday, last week, and the International Red Cross said that the figure could rise to 100,000. Sri Lanka's coasts took the brunt of the killer tidal waves which followed. What would the economic repercussions on Sri Lanka, be? at a time when the national coffers had nothing much to spare? Sunday Observer staffer ELMO LEONARD talked to DR SAMAN KELEGAMA Executive Director, Institute of Policy Studies of Sri Lanka (IPS). IPS comes under foreign patronage and is intended as the think tank of government. The cost Sri Lanka has to bear could be US$4 billion based on the latest pronouncements Thursday last, by international financial agencies that the total cost of the disaster of the Asian catastrophe to Indonesia and the Bay of Bengal countries is US$13 billion. Indonesia's estimation was 40,000 dead while Sri Lanka's calculation was 22,000 dead, with further numbers to come in. The 'shocks' that Sri Lanka has faced in the recent past are war, drought and floods and power shortages. The December 26 catastrophe is an external factor, as arises in escalation of petroleum prices, drop in demand of exports and the 11 September strike on the United States. Resulting from the Asian disaster is the effect it bears on two-thirds of Sri Lanka's coastal belt of 800 miles. It affects the physical assets of the people, land, buildings and possession, private sector assets and national infrastructure. One to two million people have been affected, many living in refugee camps on the coastal belt, including the North and East of the island and the expenditure of maintaining these displaced people must be taken into account. Wellwishers have borne some of these costs such as food, medecine and other basic day-to-day requirements. Contributing towards demand is the assistance coming in from foreign donors in the form of food and medical aid, voluntary medical personnel and the like. Government has to restore electricity, infrastructure, telecommunications, roads, government buildings, damage to irrigation systems. For such needs, government requires massive foreign aid, magnified by the lack of finances the Treasury was up against. This is the best time for international donor agencies to offer debt relief, given that the nation's public debt is 100 percent above its GDP. A significant part of which is foreign debt. In Sri Lanka's hour of need, it would be good if those concerned write off the nation's foreign debt. Such a move would give the government more room for budgetary allocations and to rectify the damage to the infrastructure in the devastated areas. Economic impact After the storm rehabilitation and reconstruction must be planned and coordinated. Currently, there are too many players involved in providing food, medicine and clothing. It is very important that a particular segment of people must not be over supplied and another segment not looked after. Towards this end, there must be an effective partnership and coordinated planning between government, the private sector and civil society. Sri Lanka's infrastructure is ad hoc and should this opportunity be made use of to rectify the situation? Dr Kelegama said that after the disaster a process of planned construction along the coastal belt should be undertaken. The Urban Development Authority, town planners and other stake holders must be brought in. Illegally occupied land must be put to gainful use. Industry must be housed in industrial parks, resort hotels, located separately and residences, separately. Insurance claims Some hotels will have to bear reconstruction bills. Some big hotels may be insured and insurance companies would have to bear large costs of insurance. Some insurance companies may be reinsured. However, a figure to be borne as insurance has not been quantified yet. Stock market The Hotel sector was doing well. Stocks were high however after the disaster it should dip. Now, with a lot of reconstruction needed, stocks concerned in/or which would be set up in, construction, telecom, oil, gas, petroleum, public utilities and the like should do well in the coming months. Sectors like tea, garments, gemming and the like have not been affected and with world demand positive, should fare better. Emphasis should be on developing up such industries. Figures forecast in the budget would have to be revised, but economic growth will not reach the negative rate of 2001. Early warning system. Early warning systems are part of the Pacific Rim countries and the same has to be established in the Indian Ocean Rim nations, including Sri Lanka which would entail money. In the aftermath the spread of disease has to be stalled. The parentless children have to be looked after, for there could be people who could take undue advantage of these kids. There are demographic problems which could arise, like a shortage of fishermen, industrial workers; the Prima mill in Trincomalee has Navy personnel working in it to compensate for the loss of workers. The external and internal shocks Sri Lanka has faced is a reminder that the island's North-East problem should be settled, beginning a positive approach to economic development and an end to poverty. |
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