Concerns Concerning Coronavirus Abu Tahir Mustakim
Whole world is now passing through a very crucial time due to the coronavirus pandemic. Governments of many countries of the world have declared lockdown. In order to save the lives, people are instructed to stay at home cut off from the outside world. In fear of contracting coronavirus, people are in ‘social as well as professional recession’ when for international lockdown economies are bogged down.
Because of international lockdown, global economies are facing economic downturn. The economy of Bangladesh is undoubtedly facing a serious setback if supply of food from agriculture sector was not in place. Export and foreign remittance decreased, production is under serious threat due to hamper of import and thus, local demand reduced too.
As a precaution of such economic slowdown, Prime Minister Sheikh Hasina has announced stimulus package of Tk. 727.50 billion (72,750 crore) which is equivalent to 2.52 per cent of gross domestic product (GDP) of the country.
This stimulus package includes Tk. 50 billion (5,000 crore) for paying salaries and allowances of export-oriented industry workers and employees, Tk. 300 billion (30,000 crore) for providing working capital loan to the affected industries and service sectors at nine per cent interest rate, out of which 4.5 per cent, will be borne by the facility enjoying entity and the other 4.5 will be paid by government as subsidy, and Tk. 200 billion (20,000 crore) for providing working capital loan facility to small and medium enterprises (SME) including cottage industries at 9.0 per cent interest, out of such interest 4.0 per cent will be borne by the entity and 5.0 per cent will be subsidized by the government. Export Development Fund (EDF) will be enhanced by an additional amount of Tk. 127.50 billion (12,750 crore) with interest rate of 2.0 per cent and a new credit facility of Tk. 500 billion (50,000 crore) as ‘Pre-shipment Credit Refinance Scheme’ will be introduced by the central bank with 7.0 per cent interest.
Prime Minister has unveiled a new Tk. 50 billion (5,000 crore) stimulus package for the agriculture sector. Bangladesh Bank will form a re-financing scheme to inject capital into the agriculture sector and money from the fund will be disbursed at 4 percent interest. And the national commercial banks will receive 5 percent subsidy in interest. Small and medium scale farmers in rural areas producing grains, fruits, flowers, fisheries, poultry farms, dairy farms will be eligible for loans from the fund.
Bangladesh Bank will also continue to provide loans at 4 percent interest rate for farmers producing spices like onion, garlic, ginger etc will continue.
During the announcement of stimulus package for the agriculture sector Sheikh Hasina mentioned, having an agriculture-based economy, food security must be ensured above all. But media and industry experts termed the amount of stimulus package for agriculture is poor.
The stimulus package is a timely and much-needed measure. But the government’s stimulus plan has no allocation for the informal sector, in which 87 percent of the workforce is engaged.
It was imperative to devise some form of cash transfer mechanism to help this workforce in both the short and medium terms. According to the Bangladesh Bureau of Statistics (BBS), of the 25 million workers who live on wages and salary, at least 10 million are dependent on their daily incomes.
There are 5 million people employed in industries whose situation is nothing different from day-labours. A rough estimate will be around 20 million people whose livelihoods have been affected in the past months since the partial lockdown began on March 25.
The government insists that the poor and extreme poor will be covered under the expanded safety net VGD (Vulnerable Group Development) programmes, especially with low cost rice, flour, and pulses, and the distribution of rice through the VGF (Vulnerable Group Feeding) programme. But lack of cash and the misappropriation of relief supplies by ruling party activists are disturbing and disgusting.
Besides, middle class wage earners, who will neither qualify for the relief nor will be helped by their employers, will still be in a difficult situation. The plight of the poor and middle class worsened in between two biggest Muslim festivals— Eid-ul Fitr and Eid-ul Adha.
The lack of support to the agricultural sector could also create a new crisis. With the fall in prices of farm produces, farmers across the country are already bearing losses, and the absence of transport facilities are hindering the availability of perishable foods on the market in time as a total collapse of supply chain management. On the one hand milkman is draining the surplus milk when babies are crying for milk as the father of the baby can’t reach the milkman. This is already affecting the food security of a large number of people, and it will only get worse in time to come under such circumstances.
Leaving the most vulnerable people behind raises disconcerting questions about the priorities of the government. Unless the larger number of people and those on the bottom can benefit from the relief measures, Bangladesh will not be able to recover from this imminent crisis.
There is also the question: how the supply of the fund will be managed. Before the pandemic, the government has already borrowed a substantial amount from the banks to meet up the expenditure. Altogether there are around Tk 13 lakh crore in banknotes and coins in circulation in Bangladesh. Of the total amount, around Tk 1.6 lakh crore in the hands of the people and the rest are at the hands of banks and financial institutions.
If all the conventional ways and means to increase the supply of money fail, the last weapon that will remain at the hand of the government is to go for printing the paper currency. Bangladesh Bank can print Tk 2.5 against 1 US dollar. Exhausting the option of printing money without discretion may mount huge inflationary pressure on the economy. Many insiders are giving hacks on printing banknotes to inject money in the market whereas printing paper currencies may be suicidal and an act of moron. The printing banknotes or minting coins may backfire for Bangladesh like Zimbabwe and Venezuela. In 2000 Zimbabwe printed paper money and ended up mounting the inflation rate to 23 crore percent and printing of paper currency in cash-starved market of Venezuela backfired and ended up spiking the inflation rate to 10,000 percent.
Meanwhile, after the elapse of coronavirus pandemic which surfaced on March 8, the government became and has done some works regarding implementing the stimulus package. There are some success but gross irregularities have also been surfaced in the entire process of package implementation. Government was not that much careful about possible irregularities, proper data of people in real problem, channeling the money to the affected people while implementing the stimulus packages.
Different media quoting a finance ministry position paper reported that almost half of the list of coronavirus-hit 50 lakh poor households is anomalous as a large number of solvent people showed up as poor and landed in their list. A total of 22,86,528 people have found in the poor people’s list with either wrong mobile numbers, NID or smart cards and some did not mention real professions.
According to media report quoting the position paper, a total of 557 names in the list, each having Tk 5 lakh national saving certificates, have illegally applied for the cash relief programme. Besides, a total of 2,855 government employees and 6,786 state pensioners are also listed in the programme.
Of the 41,20,615 people identified by ICT division, 16,16,356 are real beneficiaries who already have received cash incentives while the rest are listed either twice or illegally, according to paper.
Seemingly, Bangladesh government lacked vision about agriculture, upon which it heavily relied for escaping from recession due to pandemic. Government could have planned to be an agricultural superpower in a time when there is no opposition to oppose the government move to do something drastic. In the time of no import Bangladesh could have enhanced its capacity to enable the local industries to bring down the import bulk small amount if not zero. The products, which are imported spending hard-earned foreign currencies, could have been produced locally or at least inspire people regarding these sorts of initiatives. n