Covid Fallout Package: Let barriers be removed | The Daily Star
12:00 AM, November 20, 2020 / LAST MODIFIED: 02:34 AM, November 20, 2020

Covid Fallout Package: Let barriers be removed

Govt to hold dialogue series to find ways to speed up implementations

In the face of criticisms, the government is going to evaluate its economic rescue scheme announced six months ago to tackle the fallout of the pandemic.

The finance ministry will hold a dialogue series, styled "Stimulus Packages for Sustainable and Inclusive Recovery from Covid-19 Fallout in Bangladesh" on three separate dates with economists, development partners, local think-tanks and other stakeholders.

The move comes amid criticisms over the effectiveness of the scheme as disbursement of the funds to small and medium enterprises and farm sectors is still very slow.

A local think-tank also noted that the stimulus packages could not create the required number of jobs.

"We will present reports on the progress and achievements of the fiscal packages before the stakeholders. The stakeholders will also come up with suggestions. We will then set the next course of action," a top official of the finance division told The Daily Star, wishing anonymity.

The dialogue series will start on November 26 on the topic "Job Retention, Restoration of Demand and Maintenance of Supply Chain," the official said.

Commerce Minister Tipu Munshi, Principal Secretary to the Prime Minister Ahmad Kaikaus, World Bank's Country Director for Bangladesh Mercy Tembon, Japanese Ambassador in Dhaka Ito Naoki, Centre for Policy Dialogue Executive Director Fahmida Khatun, and SANEM Executive Director Selim Raihan are among the panelists of the dialogue, said finance ministry officials.

The second day of the dialogue would be held on December 3 on employment creation and revitalisation of the rural economy. The last part of the series would be held on December 10 on food security, they added.

Experts believe that the dialogues would also help them find out the barriers standing in the way of the packages' implementation, and speed up the execution.

Hailing the initiative, Zahid Hussain, a former lead economist at the World Bank's Dhaka office, said, "It will be important to focus on the discussion on the specific issues such as food security and assisting the informal sector in the midst of the pandemic as identified.

"The government needs to pay serious attention to the assessments of why the implementation of stimulus packages for the cottage, micro and small enterprises in the formal and informal sectors is so slow," he told this paper.

The government's evaluation of the huge stimulus packages comes after experts and think-tanks decried over the slow disbursement of the funds to some of the sectors hit hard by the pandemic.

Since the virus was detected in Bangladesh in March, both the government and the central bank have unveiled 20 stimulus packages involving Tk 120,053 crore. The combined support now accounts for 4.3 percent of the country's Gross Domestic Product (GDP).

The packages have been provided in the form of low-cost loans to micro, small, medium and large industries and service-providers and food security, social protection and special allowances as the pandemic-induced shutdown paralysed the economy, drying up millions of jobs and creating the new poor.

For sectors like the export-oriented ones and large industries, the disbursement of the funds was quick. But the needy small and medium enterprises and farm sectors are yet to avail much of the support.

As of September, the banks disbursed 48 percent of Tk 76,000 crore funds they were entrusted with lending to the large industries. It means the banks have disbursed Tk 36,624 crore.

The export-oriented sector, mainly the readymade garments, is ahead of all so far. Initially, they were given Tk 5,000 crore. When the sector demanded more after the funds exhausted, the government allocated another Tk 3,000 crore. The second tranche has also been distributed.

But there are sectors where the disbursement of the stimulus fund has been very slow.

The special refinancing scheme worth Tk 5,000 crore for the agricultural sector can be a case in point.

Some 78,526 farmers or farms received Tk 1,892 crore from 43 banks, which was less than one third of the allocation.

Food security is another sector that apparently gets lesser priority.

The food ministry had aimed to buy 16.70 lakh tonnes of boro rice during the procurement period from April 26 to September 15. But it could manage to purchase only 9.10 lakh tonnes.

Despite the pandemic, the government could distribute around 7.45 lakh tonnes of rice from July 1 to October 15 this fiscal year whereas it was around 7.97 lakh tonnes during the same period a year ago, documents show.

One of the reasons behind the slow distribution is the decline in the country's food reserve.

Food Secretary Mosammat Nazmanara Khanum, however, said the distribution was low because the government doled out cash incentives instead of food under its food programme.

The Tk 20,000 crore fund as the working capital support to the pandemic-hit small businesses has also moved slowly. So far, Tk 4,822 crore have been disbursed from the package. Some 21,642 male entrepreneurs and 1,124 female entrepreneurs received the loans.

Similarly, the pre-shipment credit refinance scheme amounting to Tk 5,000 crore for export-oriented industries has not made any progress.

Bangladesh Bank started the scheme on April 13, but only Tk 16.6 crore was disbursed as of September.

In a recent paper, the Centre for Policy Dialogue (CPD) found only 8 percent of the employed workforce benefitted from the stimulus packages.

There are about 6 crore people engaged in the formal and informal sectors in the country. But the packages failed to create required jobs to help people, the think-tank said.

Zahid Hussain said local think-tanks have done a lot on this together with the development partners. The dialogue will provide a forum for synthesising the insights obtained from these analyses.

"We hope at the end of it, there will be some clear directions on how to reform the existing initiatives and who will do what going forward. The crisis is deepening all over the world and the challenges are unprecedented. There is good news on the vaccine front, but a long way is still to go.

 

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