The impact of the coronavirus pandemic on Bangladesh’s economy is becoming ostensible in various ways. To revive the country’s virus-hit economy the government has announced 31 incentive packages to provide financial and policy support to both large and small enterprises.
Considering a protracted impact of the second wave of the COVID 19 pandemic, Bangladesh Bank (BB) has started working to extend the repayment tenures of different incentive or stimulus packages.
According to the rules, the installment payments are expected to start from the current month. However, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) demanded an extension of the loan repayment from 2 years to 5 years. They opined that the garment sector is yet to recover from the corona impact.
As most of these stimulus packages is in the shape
of bank loan, strong administration and monitoring
is needed to avoid the risk of loan default
The loan incentive should reach more small enterprises as so far it failed to do so. As a result of sluggish implementation of stimulus packages, many smaller firms, the agricultural sector and environment friendly industrial projects have not produced the expected result when it comes to employment protection and creation.
In a crisis of such magnitude, our country needs stronger fiscal policies than monetary policies. In a dismal economic situation the demand for bank loans is little. Therefore the government should consider boosting aggregate domestic demand through higher public spending. This will create jobs in the long term and people will have money to spend.
However, if the government wants to avoid fiscal burden and follow the current monetary policy then the loan incentives should be utilized and handled properly. The clarity and accountability of these stimulus packages and loan incentives are of supreme importance. As most of these stimulus packages are in the shape of bank loans, strong administration and monitoring is needed to avoid the risk of loan default.
