COVID-19 FALLOUT: Tk 72,750cr bailout plan | The Daily Star
12:00 AM, April 06, 2020 / LAST MODIFIED: 12:06 AM, April 06, 2020

COVID-19 FALLOUT: Tk 72,750cr bailout plan

PM unveils the package to help offset economic shock

Prime Minister Sheikh Hasina yesterday announced four new stimulus packages of Tk 67,750 crore to overcome the possible economic shock from the ongoing shutdown enforced to prevent the coronavirus spread.

With the previously announced Tk 5,000 crore stimulus package, the amount of the whole package now stands at Tk 72,750 crore.

The announcement was made at a press conference held at her official residence the Gonobhaban which was arranged to brief journalists about the possible impacts of the coronavirus outbreak on the national economy and the ways to face the upcoming challenges.

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"I hope our economy will rebound and we could reach near the desired economic growth, if the stimulus packages, the previous and the fresh ones, could be quickly implemented," she said.

The premier said the government simultaneously took four programmes under the work plan to be implemented in phases categorised as "immediate, short and long".

"The four programmes are: increasing public expenditure, formulating a stimulus package, widening social safety net coverage and increasing monetary supply," she said.

In the four new packages, Sheikh Hasina said her government would provide working capital of Tk 30,000 crore for the Covid-19 affected industries and service sector institutions.

The commercial banks will provide the loans from their own resources to the industries or business entities concerned on the basis of bank-client relationship.

The interest rate of this loan facility will be nine percent, of which the loan takers will provide 4.5 percent while the government will provide the rest of the interest to the respective banks as subsidy.

In the second package, which will be for the small and medium industries, the government will provide Tk 20,000 crore as working capital.

The commercial banks will provide the loans from their own resources to the industries or business entities concerned on the basis of bank-client relationship.

Here, the interest rate will be the same as nine percent, but the four percent interest will be borne by the loan-taking industries while the rest of the money will be paid by the government to the respective banks as subsidy.

In the third package, the Bangladesh Bank will expand its EDF (Export Development Fund). Aiming to increase the facility for importing raw materials under the back-to-back LC system, the central bank will enhance its EDF facility from $3.5 billion to $5 billion.

As a result, some Tk 12,750 crore, equivalent to $1.5 billion, will be added to the respective fund.

The current interest rate of the EDF is LIBOR (London Inter-Bank Offer Rate) + 1.5 percent (which is 2.73 percent in total). It will be decreased to two percent, she said.

For the last package, the PM mentioned that Bangladesh Bank will introduce a new loan facility system titled "Pre-shipment Credit Refinance Scheme".

The amount of this loan facility will be Tk 5,000 crore in total where the interest rate will be seven percent.

While addressing the nation on March 25 on the occasion of the Independence and National Day 2020, Hasina announced a stimulus package of Tk 5,000 crore for export-oriented industries to fight the adverse impact of coronavirus on the economy. This money will be used for providing the salaries and wages of workers and employees only.

"The total amount of these stimulus packages will be Tk 72,750 crore which will be 2.52 percent of the GDP," she said.

Hasina hoped that the country's economy would bounce back if the stimulus packages are implemented quickly. "And we'll be able to go close to the desired economic growth, Inshallah."

She also put emphasis on giving special attention to local products beside the export-oriented sector to overcome the possible global and domestic economic crisis.

In this connection, the prime minister urged all to increase production and the use of local products.

On Thursday evening, Hasina held a high-level meeting at the Gonobhaban in this regard.

Finance Minister AHM Mustafa Kamal, PM's Principal Secretary Ahmad Kaikaus, Bangladesh Bank Governor Fazle Kabir, Finance Ministry Senior Secretary Abdur Rouf, and PMO Secretary Md Tofazzel Hossain Miah were present at the high-level meeting.

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