A new package of Tk 67,750 crore to overcome the potential economic impact of the outbreak of coronavirus has been announced by Prime Minister Sheikh Hasina. Earlier, the Prime Minister announced a package of Tk 5,000 crore for the garment sector. The financial support for the five packages, including the new four, amounted to Tk 72,750 crore, which is about 2.52 percent of GDP.
Sheikh Hasina said the budget deficit could increase even further under the current circumstances. GDP growth may slow down as domestic demand declines. The Prime Minister also mentioned immediate, short, medium and long term plans as a step to help overcome this situation. She said the first step was to give priority to government spending and employment generation. The Prime Minister expressed hope that the people will get the result.
The Prime Minister promised to provide financial assistance package, loan subsidy so that workers, employees or other working people do not become unemployed.
Package 1: To provide working capital facilities for the affected industries and service sector organizations, a loan facility of Tk 30,000 crore will be formulated to provide working capital at low interest through bank system. On the basis of Bank-Client Relations, the lending of working capital to the respective industries or businesses of the commercial banks from their own funds. The interest rate of this lending facility will be 9 percent. Concerned industries and business organisations will pay 4.5 percent interest, while the government would pay the remaining half to banks as subsidy
Package 2: Providing Working Capital for Small and Cottage Industries: A loan facility of Tk 20,000 crore will be prepared to provide working capital at low interest through bank system. On the basis of Bank-Client Relations, commercial banks will lend their respective funds to working small and medium enterprises with working capital. The interest rate of this lending facility will be 9 percent and the concerned industries and business organisations will pay 4 percent interest of that loan, while the government will provide the remaining 5 percent as subsidy.
Package 3: Extending the Benefits of Bangladesh Bank-initiated Export Development Fund (EDF): Under the Back-to-Back LC, the current size of the EDF will be increased from US $ 3.5 billion to US $ 5 billion in order to increase the import of raw materials. As a result, an additional 12500 crore taka will be added to the EDF fund, equivalent to $ 1.5 billion.
Package-4: Bangladesh Bank will launch a new loan facility of Tk. 5000 crore in the name of pre-shipment credit refinance scheme. The interest rate for this loan will be 7 percent.
Package 5: Earlier, the Prime Minister announced an emergency incentive package of Tk 5,000 crore to pay the salaries of workers and workers of export oriented industries.
Sheik Hasina elaborated the four measures that were taken to cope with the potential economic effects on the country of the coronavirus outbreak. Public spending would offer priority to generating jobs while international tours and luxurious spending will be discouraged. Since Bangladesh’s debt-to-GDP ratio is much lower (3 per cent), higher public spending does not impose any pressure on the country’s macroeconomy, she said.
Many low interest credit facilities will be introduced through the banking system primarily to rejuvenate economic development, holding intact the work of the staff and employees as well as the entrepreneurs ‘competitive edge, Hasina said.
Prime minister said the scope of the current social security network should be further expanded to meet the basic needs of people living below the poverty line, such as day laborers and non-formal work people.