BB’s new plan for Covid-hit people encouraging

We welcome the Bangladesh Bank's decision to roll out a Tk 500 crore stimulus package to support people who migrated to the villages from the cities due to the economic hardship they faced because of the Covid-19 pandemic. According to a report by the central bank, a large number of urban people who went back to their village homes after losing their jobs and sources of income in the past two years still remain unemployed. Therefore, it plans to provide funds to the returnees at six percent interest, so they can engage in income-generating activities. The Bangladesh Bank will provide the funds in eight categories, which include small businesses, farming, fisheries and livestock, purchase of small vehicles in the transport sector, etc. What is notable about this scheme is that the borrowers will not only get loans at lower interest rates, but they will also be able to get the funds without providing any collateral.

Several reports and studies published during the two years of the pandemic have revealed how people were pushed into poverty because of the several lockdowns enforced to prevent the spread of the coronavirus. A survey carried out by the South Asian Network on Economic Modeling (Sanem) on 5,577 households found that 42 percent of the families were pushed into poverty by the pandemic. Another study has found that, due to the rising expenditures and depleting savings, 27.3 percent of the urban population—particularly from Dhaka—temporarily migrated to their villages. Although a portion of these people later returned to the city, around 10 percent of them stayed back. Unfortunately, many of them still remain unemployed due to a lack of job opportunities in the villages.

Although the government provided a number of stimulus packages to address the economic impact at the beginning of the pandemic, evidently those were not enough to address the hardship of those pushed into extreme poverty. Against this backdrop, the central bank's decision to provide them with loans at low interest rates to engage them in income-generating activities is very encouraging. However, the success of this scheme will depend on how efficiently the funds can be disbursed to those who need it the most. The lenders should be careful and transparent in selecting the recipients, and women should be particularly encouraged to apply for it. Moreover, the process to get the loans must be made easier for the people. Lastly, it must be ensured that the recipients get enough time to repay the loans.