More stimulus to offset Covid shock | The Daily Star
12:00 AM, December 04, 2020 / LAST MODIFIED: 04:25 AM, December 04, 2020

More stimulus to offset Covid shock

ADB working on to lend $1b for Bangladesh’s economic recovery; slow disbursement of funds from govt-announced stimulus packages

The government and the development partners plan to inject more money into the economy for its recovery amid the pandemic while the progress in implementing the stimulus packages for employment creation and revitalisation of the rural economy remains slow.

The Asian Development Bank is likely to give Bangladesh $1 billion for economic recovery and tackling the Covid fallout. Another Tk 3,000 crore may be allocated for expanding the scheme for credit guarantee on small loans. The fund will be provided by the government and the World Bank.

Fresh funds are in the pipeline for Bangladesh Small and Cottage Industries Corporation (BSCIC) and Small and Medium Enterprise (SME) Foundation for providing loans to small and cottage industries, top government officials and representatives of development partners said at a discussion in the capital yesterday.

The Finance Division organised the discussion titled "Employment Creation and Revitalising Rural Economy" to evaluate the progress of the schemes taken up since the pandemic hit the country.

Speaking at the discussion, Manmohan Parkash, ADB country director in Bangladesh, said they are working on a new programme involving $1 billion for Bangladesh for tackling the economic fallout from the pandemic.

Of the amount, $500 million will be for resource mobilisation and SME financing and the rest for health and social protection, he said.

Bangladesh Bank Governor Fazle Kabir said the government plans to expand the credit risk scheme to Tk 5,000 crore from Tk 2,000 crore. "The government and the World Bank will provide the money."

The government has so far rolled out 21 stimulus packages since March to absorb the economic shocks of the pandemic.

Of the packages, six involving Tk 34,458 crore were aimed at employment creation and revitalisation of the rural economy. But till November, Tk 13,053 crore or 37.88 percent of the amount was disbursed, according to finance ministry officials.

Top government officials at the discussion blamed "the huge number of target beneficiaries" and "non-cooperation of some banks" for the slow progress in implementation of the vital stimulus packages.

"There are some faults but broadly we have been successful in implementing the stimulus packages," said Planning Minister MA Mannan.

He asked the officials concerned to take steps so that all banks cooperate in the implementation of the packages.

"We spend money, but on many occasions, we do not get the desired return. We should spend money in such a way that we get the highest return.

"Spend money but spend it wisely," said the minister.

Finance Secretary Abdur Rouf Talukder made the key presentation detailing the status of the six stimulus packages for employment creation and revitalisation of the rural economy.

According to the Finance Division data, the Tk 3,200-crore package titled "Credit Expansion for Employment Creation Through 5 State-owned Financial Institutions" was aimed at supporting small-scale businesses with the core objective of employment generation. Till November, Tk 428 crore was disbursed under the scheme.

"We are now in talks with the ADB for additional financing for these five state-owned enterprises," said Rouf.

Another Tk 5,000-crore package titled "Agriculture Refinance Scheme" was rolled out for boosting food production and ensuring food security. Till November, 51 percent of the amount was given as loans to 105,427 farmers and agricultural farms.

Another package, "Refinance Scheme for Farmers and Small Traders", involving Tk 3,000 crore was announced to support low-income professionals and small and marginalised traders. But only 32 percent of the money was disbursed till November.

"The remaining amount will be disbursed soon," Rouf said.

Besides, the Tk 20,000-crore stimulus package titled "Working Capital Loan to SME and Cottage Industries" saw disbursement of 41 percent of the amount as loans.

"While disbursing loans, we are facing problems and non-cooperation from some banks," mentioned the finance secretary.

Finance Division data also shows no money was disbursed under the Tk 2,000-crore Credit Risk Sharing Scheme for the SME sector.

"The government has plans to expand this guarantee scheme further with the support of its development partners. We are also having discussions with the development partners to expand this facility," Rouf noted.

The government rolled out another stimulus package to provide Tk 2,500 as cash assistance to each of the 50 lakh households that are not covered by any social protection programme.

Rouf said they could not provide the assistance to all those households due to a number of problems.

"We could provide money to around 35 lakh households. We have a large database now. If there is a second wave of Covid, we will be able to instantly transfer money to these households."

Replying to a query, the secretary said the government plans to create funds for the SME Foundation and the BSCIC. "We are working on it."

He further said the government also has a plan to make public the lists of beneficiaries of the stimulus packages.

About fund disbursement under the stimulus packages, BB Governor Fazle Kabir said, "It will cross 90 percent by December as a result of some steps we have taken."

He, however, did not elaborate on the matter.

Manmohan Parkash said, "The government, the private sector and the development partners -- if we work together, we will not only overcome this [Covid-19] challenge but also convert this challenge into an opportunity.

"If we can use technology to drive some of the middlemen out of business, we can help the farmers get a much better value for what they produce," noted the ADB country director.

SME Foundation Chairman Masudur Rahman said the existing stimulus package for cottage, micro, small and medium enterprises (CMSMEs) is not sufficient.

Banks are giving loans to CMSMEs that can comply with the stringent rules, including the one regarding collateral. Most of the CMSMEs remain out of the scheme as they are unable to offer collateral.

Planning Commission Member Shamsul Alam said the stimulus packages were comprehensive, timely and prompt.

Emphasising rejuvenation of the rural economy, Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, said the future of the country and inclusive economic growth hinge on rural jobs as well as good and well-paid jobs.

FBCCI President Sheikh Fazle Fahim said they firmly believe that there is no alternative to full implementation of the stimulus packages for economic recovery during the time of this pandemic and beyond.

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