Tackling Second Wave Fallout: Govt hints at fresh stimulus

Officials hinted at a new stimulus package yesterday amid fears of a possible second wave of Covid-19 and the subsequent setback for the economy which has only slightly recovered from the impacts of shutdown.

Economists and businesses suggested this in a two-week-long series of dialogues on Stimulus Packages for Sustainable and Inclusive Recovery from Covid-19 Fallout in Bangladesh organised by the finance ministry.

"We are discussing the issue [of a new package] with businesses and economists. We will report the suggestions to the higher authorities. The decision will be made then," Senior Secretary Abdur Rouf Talukder of the finance ministry said yesterday.

"Due to the second wave, there is a risk of slow recovery. We are thinking of asking development partners for support," he said at the dialogue at Osmani Memorial Hall in the capital.

The government has so far announced 21 stimulus packages worth $14.28 billion, which is 4.34 percent of the GDP.

The packages focused on job retention, demand restoration, supply chains and food supply protection, employment creation, rural economy revitalisation, and social security enhancement.

In the 3rd part of the dialogue on enhancing social security and ensuring food supply, Finance Secretary Talukder said Bangladesh economy has been hit hard since it is linked to the global economy through trade and investment.

Despite sluggish external demand, the country has managed a moderate growth in fiscal year 2019-20 with its domestic demand. The provisional growth has been 5.24 percent against an original target of 8.2.

The revenue to GDP ratio declined to 9.40 percent in fiscal year 2019-20 from 9.91 percent the previous year. Moreover, NBR Taxes to GDP ratio fell to 7.68 percent from 8.60 percent.

Metropolitan Chamber of Commerce and Industry (MCCI) President Nihad Kabir said, "In June-July, the recovery was good, but the second wave of Covid has been a matter of concern. Some sectors have yet to become fully active."

Ninety percent of the small businesses have reopened, but the demand and prices of commodities dipped, she said.

The government needs to provide both policy and financial support and the packages may need expansion. The major goal should be to keep wage employment going, she added.

Khondaker Golam Moazzem, Centre for Policy Dialogue research director, said coverage of the social safety net programmes need to be expanded as some 17.5 million new poor have been created due to the pandemic.

He said the social safety net programme like Vulnerable Group Feeding has covered only 33 percent of those eligible for the programme. The urban poor also need to be covered by the safety net.

"We need to consider how the unemployed, the people of ethnic minorities and chars can come under the safety net," Moazzem said.

The economy should continue to reopen, but the focus also should be on health-related measures like mandatory use of masks and hand washing.

Economic Research Group Executive Director Sazzad Zohir suggested taking measures that augment local markets since the recovery could be slow due to the second wave of the pandemic globally.

The policy should be such that the local industries grow, he said.

Economists also suggested continuing open market sales of food and renovating rural infrastructure, particularly in the flood-prone areas.

Dhaka University Economics Professor Firdousi Naher suggested considering the nutrition aspect in the food distribution programmes.

European Union Ambassador Rensje Teerink said the pandemic is an opportunity as the authorities can now strengthen social security, not only through relief but through other institutional measures like health and farm insurance.

Cabinet Secretary Khandker Anwarul Islam said the next one year is going to be tricky.

"Some of our export items are facing difficulties because of low demand," he said, seeking cooperation from the businesses and experts.

Local Government, Rural Development and Cooperatives Minister Tazul Islam said Prime Minister Sheikh Hasina's strong leadership and prudent decisions have kept the country's economic situation better than most of the countries in the region.

Engagement of all can surely help overcome the challenges, he said.