The government should think of rolling out more stimulus packages to ensure a quick economic recovery and protect firms and people as the threat of a second wave of coronavirus infections looms, experts said yesterday.
Micro and small businesses are yet to benefit from the packages unveiled more than seven months ago, although they were the hardest hit because of the crisis. A large number of workers are still suffering for losing jobs, they said at a dialogue.
The finance ministry organised the dialogue on "Stimulus Packages for Sustainable and Inclusive Recovery from Covid-19 Fallout in Bangladesh" at the Osmani Memorial Hall in the capital and plans two more next month.
Yesterday's one bore the title "Job Retention, Restoration of Demand and Maintenance of the Supply Chain".
The government has so far declared 21 stimulus packages worth around Tk 121,000 crore, which is 4.34 per cent of the GDP.
Of them, 14 involving Tk 33,603 crore are being financed from budget allocations, said Abdur Rouf Talukder, senior secretary of the finance division, while making a keynote presentation.
The remaining seven packages involving Tk 87,750 crore are being financed from the banking system, according to data from the finance ministry.
Talukder said 55 per cent of the total stimulus packages had so far implemented.
The Covid-19 has seriously impacted the Bangladesh economy like other countries, said Mercy Miyang Tembon, World Bank's country director for Bangladesh and Bhutan.
The business slowdown stemming from the pandemic has had an adverse impact on both supply and demand sides, she said.
"But, the country's government has taken swift actions by way of declaring stimulus packages to reduce the negative impact," she said.
The disbursement of the stimulus packages for the small and micro-enterprise (SME) sector is sluggishness as 30 per cent of the fund was given out as of September, Tembon said.
Given the uncertainties going forward, the government should be ready to expand the size of the stimulus packages, she said.
The rising number of coronavirus cases in Bangladesh and around the world may put negative pressure on domestic economic activities, according to the WB official.
"In order to resolve the crisis, the government should be ready to provide additional support whenever required."
The experiences of the current packages should be used in the upcoming economic programmes. This will help implement the new packages in a smooth manner, Tembon said.
"We need to continue our joint cooperation to tackle the economic slowdown," said ITO Naoki, Japanese ambassador to Bangladesh.
"Japan is ready to provide support to the Bangladesh government."
Salary support for the export-oriented industries and working capital loans in the form of stimulus packages have played a positive role in meeting the immediate needs of the industries.
The exports in the country's readymade garment sector faced a negative growth of 18 per cent last fiscal year due to a tremendous shock deriving from the business slowdown everywhere, said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association.
The RMG export growth has declined in different countries in the last couple of months to a large extent, she said.
"We need a fresh package to protect the sector. The current tenure of loan packages should be extended by at least five years," she said.
The Covid-19 has impacted the three major social indicators – poverty, inequality and employment, said Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem).
But both Bangladesh and India, among the south Asian countries, have promptly declared stimulus packages, he said.
The Sanem conducted two surveys to assess the crisis facing the people.
In a sector survey, which was conducted in October, the think-tank had assessed 502 firms in 14 sectors.
Four per cent of the firms informed that they made a strong recovery, and 29 per cent had not enjoyed any recovery. Some 41 per cent attained a moderate recovery while 26 per cent called the recovery weak.
"The findings are encouraging as around 70 per cent are on the recovery stage," Prof Raihan said.
"But the recovery is largely dependent on what is happening in the global economy. We are going to witness the second wave of the pandemic, which will put an impact on the ongoing recovery process."
Against the backdrop, the effectiveness of the stimulus packages is extremely important, he said.
The economist recommended three issues to make the stimulus packages effective.
"First is financing, but this is not a major barrier," he said.
"The second one is the management and the third is monitoring."
The government has announced massive funds to get rid of the crisis, which is unprecedented in the history of Bangladesh. "Management is essential to achieve the success," Raihan said.
The survey also found that 19 per cent of firms had received funds from the packages.
Only 8 per cent of micro and small businesses managed to avail funds from the stimulus packages. It is 20 per cent for medium-sized firms, and it is 41 per cent for large firms.
It means the large firms have so far enjoyed the facility from the packages and micro and small firms are lagging.
"Probably, we need to revisit the stimulus packages. In this context, we must have an independent evaluation of the packages that have been executed so far," Raihan said.
"We must look at the challenges of the SMEs such that they get the funds they need."
On getting these evaluations, the government needs to consider another round of stimulus packages because of the upcoming second wave of infections, Prof Raihan said.
"Many factories could not sustain themselves in the wake of demand collapse. And workers of the industries lost jobs," said Nazneen Ahmed, a senior research fellow of the Bangladesh Institute of Development Studies
"We all want recovery. So, fresh packages have to be devised so that we can support the suffering workers."
As of now, Bangladesh has survived in a better way in comparison to many other countries, said Ahmad Kaikaus, principal secretary to the prime minister.
All developed nations faced negative growth, but Bangladesh grew by 5.4 per cent last year, which is a positive thing, he said.
Attending as chief guest, Commerce Minister Tipu Munshi said the government had taken lots of initiatives to tackle the economic slowdown.
The wheels of the economy have started moving riding on the proper implementation of the stimulus packages, he said.
The government took the time-befitting initiatives, which helped avert any unexpected losses, Munshi said.