Covid-19 impact on BD economy & few underlying concerns
Published : Tuesday, 7 April, 2020 at 12:00 AM
Just as we speak, the recent global crisis of COVID-19 virus outbreak has claimed over 70,000 lives while over 1.4 million are infected worldwide. With terrific modernization and development of technology such as artificial intelligence, we could not yet find out a solid tool to fight against this deadly nature-caused virus and has to only depend on symptomatic treatment till now. Moreover, an incredible economic depression seems to be arriving immediately with next few weeks.
Till now 12 people died and 123 were infected in Bangladesh also and it is expected to dangerously increase within the next few days. The Bangladeshi economy is also moving towards a great depression and the government under the leadership of Prime Minister Sheikh Hasina already declared few measures to fight the upcoming economic fallout. But we feel few other issues need to be addressed immediately to win this economic and humanitarian fight.
Prime minister Sheikh Hasina has announced a total financial package of Tk727.5 billion on April 5, including the previously announced Tk 50 billion, in efforts to face the possible impact of the coronavirus on the economy.
The government will provide a working capital of Tk300 billion for the COVID-19 affected industries and service sector institutionsand Tk200 billion as a working capital for the small and medium industries through the commercial banks.The interest rate of this loan facility will be 9 per cent, of which the government will pay 4.5 and 5 per cent interest to the respective bank as subsidy respectively.
Bangladesh Bank will also expand its EDF (Export Development Fund). The central bank will enhance its EDF facility from $3.5 billion to $5.0 billion. Hence, around Tk127.5 billion will be added to the respective fund. The current interest rate of the EDF is 2.73 per cent and it will be decreased to 2.0 per cent.
The central bank will introduce a new loan facility system titled ‘Pre-shipment Credit Refinance Scheme’ worth Tk50 billion where the interest rate will be 7.0 per cent. Moreover, as declared on March 25, a stimulus package of Tk50 billion for export-oriented industries will remain for providing the salaries and wages of workers and employees only. This total stimulus package of Tk727.5 billion is 2.52 per cent of the total GDP of Bangladesh. The prime minister also urged all to increase production and the use of local products.
It is of utmost importance that, there is no corruption attached in carrying out this stimulus package. The Prime Minister on multiple occasions emphasized on honest utilization of all stimulus packages. Hence, zero tolerance to corruption must be ensured and we hope considering the humanitarian crisis and due to fear of the almighty at least, this time there will be no corruption as it is a fight for our survival.
This year our economy will miss ‘PohelaBoisakh’ celebration as the government already stopped all sorts of gathering and public celebration of the Bengali New Year, which is a great part of our culture. Surrounding this celebration, many seasonal businesses are conducted while many small and medium enterprises make huge investments like the thousands of boutique houses of Bangladesh. According to experts, around 15 to 20 thousand crores taka worth of transactions are carried out due to this occasion. But these businesses who already mostly made their investment will incur a great loss. Hence, the government should introduce a plan to specifically support this group.
It is important that, the stimulus package is distributed evenly among the service and manufacturing sector considering their contributions in the economy. Also, it should be ensured that, the big players, who are usually solvent, do not claim the lion share rather the comparatively small companies should receive priority so that those can survive. Moreover, the concern of unemployment is more for these companies. Hence, it is the responsibility of the government that these businesses can survive.
Additionally, the government employees, who are around 1.4 million in number, are assured of their payment of salary and wages but the private sector employees, totalling around 5.1 million is under the threat of loss of jobs and salary and they need to be protected. To ensure that, the government should even open a hotline so that an employee can directly register his or her complaint if he or she is dropped out of job or is not paid the salary.
The most suffering group will be the middle income and lower middle income group from this economic depression. A lot of unemployed people also hail from these families. The government and social groups are helping the poor ones but these groups cannot seek for help and keep suffering secretly. Additionally, a lot of lower income people like, maid servants, drivers, security guards etc. depend a lot on these groups. So, the government must especially focus on the middle and lower middle income groups to outcast the greatest adversity of this economic fallout.
As per the decision of Bangladesh Bank, the private and public banks will not charge any fine on the credit card payments till May 31. But it is not enough. Along with this coronavirus scenario, Eid-ul-Fitr will be celebrated during the last week of May. Immediately after the Eid, if the credit card users need to pay their bills, that will be an immense pressure. Hence, the fine should not be charged until the June bill cycle at least. Moreover, to support the middle and lower middle income group during this economic crisis and upcoming Eid, the government should direct the banks to at least double the credit limit of the users who has existing credit limit up to Tk2 lac for a period of at least six months.
Even after the coronavirus scenario, the securities market might not see an uptrend until the economy regains strength. Hence, the investors should receive interest-free loans worth minimum 50 per cent of their investment value not exceeding Tk5 lac standing on the last trading day before the closure of offices. The loan should be for one year at least and if the investors cannot pay back, the government can sell the shares from their portfolios to collect the loaned amount.
The government should allow turning ‘black money’ into white during this crisis period for a minimal tax. Here, we need to ensure the complete legal and financial protection as we have trust issues in this aspect due to our previous experiences.
The media houses are working relentlessly to serve us with the news in this crisis period. And there is no advertisement income especially for the print media for the last few weeks. There should be a stimulus for them also. At least the government should immediately order to clear all the pending advertisement payments especially the government ones so that, the media houses can become solvent to make the payment and the associated employees can receive their commissions soon.
The doctors are at the greatest risks of being infected followed by the media personnel and law enforcers. A life insurance scheme should be immediately introduced to assure them and their families. Moreover, if anyone from these groups lose their lives, they should be immediately declared national hero. We should extend all possible support to them for their valiant works.
Though Bangladesh is food sufficient for the last few years due to technological agricultural practices, ensuring food security will be a great challenge in the upcoming days. Reportedly, farmers are not finding help to cut the crops despite threats of upcoming rain and storm as the day labourers are focused to receive food and monetary help from their respective upazilas. Hence, the government should ensure that, the poor receives help at their own place rather than from the nearby cities.
Moreover, the government should put extra focus on the preservation of rice and potato at least considering the risky future. We will find it difficult to purchase food products from abroad in the near future as politics over food will be a reality. Different countries will stop export to ensure their own food security. Hence, it is important that, the government can purchase rice and potato from the farmers right now which will ensure proper sales price to the farmers as well as will help the government to ensure food security. To store these food products, the government can also build temporary sheds or cold storage etc. immediately. There should be extreme focus on ensuring continuous food production growth and there must not be any gap in this aspect. Without enough food storage, no war can be won and we will also not win this war over coronavirus if food security is not ensured and will risk rise of fundamentalism, terrorism and other crimes.
Bangabandhu Sheikh Mujibur Rahman called for a green revolution after independence which led people to cultivate every possible cultivable land. That really helped fight the famine of 1974 and the current government can also do that to ensure food security in the upcoming months or maybe years. Moreover, though the government already started the OMS and sale of food products in fair price through TCB, a ‘Ration Card’ system should be introduced to support people from all economic groups. Anyone should be able to receive a ‘Ration Card’ aligned with their National ID Card. For corruption-free food distribution, the government should form a task force containing the members of Bangladesh Army until our economy recovers completely.
Our leaders and different social groups are busy in giving food support to the poor people. But,the real support will be required after few weeks. As these helps are coming mostly out of the pocket of middle and lower middle income group, during that time of real crisis, we will not be able to support them. We should now mostly focus on keeping people inside and the social groups should participate in attaining that goal as containing coronavirus is the greatest issue now.
Along with the government, the opposition parties should also come out and stand by people during this great crisis. Country’s largest opposition party Bangladesh Nationalist Party (BNP) remained strangely distant as they channelled all their energy in criticizing the government only. Though they will claim that, their leaders and workers are silently working but we are not fool. The opposition party of the parliament Jatiyo Party is also behaving the same as BNP and it is completely unacceptable.
We are approaching a great crisis which will challenge our economy and our basic rights like; food, shelter, health etc. If we cannot systematically face this challenge, along with losing our economic development, we will have issues like; degrading law and order situation rise of terrorism and fundamentalism etc. Prime Minister Sheikh Hasina has led the nation valiantly over different crisis situation and we bestow our trust over her as we believe her wisdom and farsightedness will definitely make us overcome this crisis also. We hope Bangladesh will be the role model of sustaining economic and humanitarian development in front of the world ousting the deadly coronavirus impact.
The writer is Chief Editor at Mohammadi News Agency (MNA), Editor at Kishore Bangla and Vice-Chairman, Democracy Research Center (DRC)