Special Correspondent :
Terming the rescue package timely one, a leading economist of the country argued that it will help only if it reaches those in need.
“Measures is a ‘good start’ but it will help only if it reaches those in need,” Dr Zahid Hussain, former lead economist of World Bank’s Dhaka Office told The New Nation.
“The package that was necessary to aid the both formal and informal sectors of the economy. The ongoing shutdown enforced to contain the virus has already disrupted all industries and businesses putting them into existential threat. The package will help boost confidence of the businesses and enterprises,” he added.
Zahid Hussain commented that the first priority is containment of the pandemic mitigation, but addressing coronavirus fallout on the economy is equality important to save millions of jobs.
“The government offers working capitals to the affected enterprises and companies through banks. So, it is not a fiscal support,” he said adding that working capital support is provided to businesses for one year during an emergency and it is the global best practice. But right now nobody knows when the pandemic will be defeated. Considering the uncertainty the government should extend the
support for at least three years.”
He observed that the package announced by the government is mainly based on banks, but not the fiscal support. So, banks require setting aside a big chunk of liquidity to provide the working capitals to businesses. “Where banks get such a big fund,”? He said, adding they may collect funds from Bangladesh Bank’s Repo market but the current maturity rates is not supportive to lower cost fund to be provided to enterprises as working capital. The central bank must look into the matter urgently.”
However, he said, banks should focus on the funding only for pay-roll and asked owners to join with them a ‘matching fund’ in this regard.
“Bangladesh Bank enhances the size of its Export Development Fund (EDF) from US$3.5 billion to $5billion to facilitate raw materials imports under back-to-back LC under the stimulus package. But direct exporters are only included to avail this package leaving the deemed exporters who contribute a significant portion of export earnings adding value to the direct exporters. So, the deemed exporters must be included in this package,” he said
He also said that the prime focus of the package should be 50 million vulnerable people who live on daily earnings basis. They have already lost income due to nationwide shutdown. “But the package lacks clarity as to how their income will be revived. The government should respond quickly to save the vulnerable people, otherwise, it will pose an immense risk to whole population.”
When asked, Dr Zahid Hussain said, “It’s a huge package though smaller than the need of the time. The execution of the package requires dynamisms from all concerned to bear the fruit of it. Besides, the government should involve private sector and NGO’s to ensure proper supply of relief to poor and vulnerable people.”
