Bangladesh PM unveils massive stimulus package to counter adverse effects of coronavirus

The total amount of financial assistance would stand at Tk 72,750 crore, which is nearly 2.52 per cent of the country’s GDP

Bangladesh Prime Minister Sheikh Hasina on Sunday announced stimulus packages to the tune of Taka 72,750 crore (USD 8,573 million) to counter the adverse effects of coronavirus on the country’s economy.

“Earlier I declared Taka 5,000 crore (emergency) incentive package for paying salaries and allowances of export-oriented industry workers and employees, and today I am announcing four fresh financial stimulus packages of Tk 67,750 crore,” she said.

In a nation-wide, televised address from her official Ganobhaban residence on Sunday, the premier said with the fresh allocations the total amount of financial assistance would stand at Tk 72,750 crore, which is nearly 2.52 per cent of GDP.

“I hope our economy will rebound and we can reach near the desired economic growth, if the stimulus packages — the previous and the fresh ones — are quickly rolled out,” she said.

The premier said the government has simultaneously taken up four programmes under the work plan which are to be implanted in “immediate, short and long” phases to increase public expenditure mainly through employment generation, introduce stimulus packages and widen social safety net coverage

This was Hasina’s second media appearance in four days over the coronavirus outbreak following a video-conference meeting with officials and public representatives across the country.

Relief measures

The premier said the first of the four packages involves Taka 30,000 crore to be provided to affected industries and service sector organisations as working capital through banks as low-interest loans. She said the commercial banks would provide the amount as loans from their own funds to concerned industries and enterprises on the basis of bank-client relations.

The premier said the government would pay half of the interest amounts to banks as subsidies to the affected enterprises, which would pay the rest of the interest.

“The interest rate of this lending facility will be 9 per cent and the concerned industries and business organisations will pay 4.50 per cent interest, meaning half of the interest of that loan,” she said.

Hasina said under the second package small and medium enterprises (SMEs), including cottage industries, would get Taka 20,000 crore as working capital. She said a mechanism would be devised to send the amount to the SMEs as low-interest loans through banks which identically disburse amounts to the SMEs on the basis of bank-client relations while the government in this case would bear the greater share of the interest amount.

“The interest rate of this lending facility will be 9 per cent and the concerned industries and business organisations will pay 4 per cent interest of that loan, while the government will provide the remaining 5 per cent as subsidy, the premier said.

The premier said the other package was meant for enhancing Bangladesh Bank’s Export Development Fund (EDF) to grow from USD 3.5 billion to USD 5 billion to facilitate raw material import. The premier said this last package would result in adding up Taka 12,750 crore (USD 1.5 billion) to the EDF while its interest rate would simultaneously be brought down to 2 per cent.

The existing EDF interest rate is 2.73 per cent in line with current London Interbank Offered Rate-LIBOR + 1.5 per cent.

The prime minister said the central bank would also introduce a new credit facility of Taka 5,000 crore as “pre-shipment credit refinance scheme” and its interest would be 7 per cent.

Hasina said local products alongside the export sector would deserve special attention and support to cope with the possible global and domestic economic crisis caused by the pandemic. “In this regard, I call upon all to boost production of local products and raise their use,” she said.

The Bangla spirit

The prime minister said as a nation the people of Bangladesh have wonderful strength of patience and capability to rebound fast by enduring blows of any type. “Nothing can suppress us as a nation which snatched independence in 1971 in only nine months responding to the call of Father of the Nation Bangabandhu Sheikh Mujibur Rahman and may Allah protect the world people from this pandemic,” she said.

Finance minister AHM Mostafa Kamal and concerned officials including Bangladesh Bank governor spoke at the conference as well.

Extended lockdown

Bangladesh on Saturday extended the nationwide transport shutdown till April 11 as the country recorded its biggest single-day increase of COVID-19 cases with nine new positive tests, taking the country’s total to 70.

The country reported two more deaths from the novel coronavirus, taking the total number of fatalities to eight.