"Bangladesh is facing a liquidity shortage. However, the injection of money in the economy in the form of money printing should be considered as the last resort" said SANEM, a leading economic think tank of the country .
The organisation also suggested that in the upcoming budget, the Government must focus on the health sector and social safety net programmes. Even if it requires a wider budget deficit, the government should take that path.
The fifth episode of SANEM Netizen Forum on COVID-19 Pandemic, took place recently on Zoom video conferencing platform, made the suggestions including a set of recommendations it made to tackle the adverse impact of COVID-19.
"The Government should not hesitate in deficit financing. The upcoming budget might have a higher deficit than the last couple of years; however, the government must not hesitate to implement it", SANEM added.
The forum was moderated by Dr. Selim Raihan, Executive Director, SANEM, and Professor, Department of Economics, University of Dhaka.
The SANEM Panel included Dr. Sayema Haque Bidisha, Professor, Department of Economics, University of Dhaka and Research Director of SANEM, Mahtab Uddin, Lecturer, Department of Economics, University of Dhaka and Research Fellow of SANEM, and Farazi Binti Ferdous, National Consultant at FAO Bangladesh and Research Fellow of SANEM. The episode was live-streamed on the Facebook page of SANEM.
Dr. Raihan expressed his concern that the spread of the pandemic in Bangladesh has not been slowing down. He also briefly discussed the debate around ongoing lockdown around the world. The problem in enforcing the lockdown reflects the institutional weaknesses existing in Bangladesh.
Dr. Raihan briefed the forum about SANEM’s recent research on Poverty Impact of COVID-19 Pandemic in Bangladesh. As he shared the findings of SANEM’s study with the participants, he explained how the pandemic can overturn Bangladesh’s decades of achievement in poverty reduction.
SANEM’s initial findings show that the poverty rate in the country could be doubled from the existing 20.5 per cent to more than 40 per cent during this pandemic.
The pandemic can push a significant portion of the country’s vulnerable poor population into long-term poverty. For combating the crisis, Dr Raihan welcomed the stimulus packages already undertaken by the Government. However, he opined that, while transferring the aid to the poor the policy should not focus on cash transfer as the only mechanism. Rather, it should also rely on the existing in-kind social transfers.
There could be some areas/regions where people might not have access to market or access to the market could be severely hampered by the lockdown.
Therefore, the existing in-kind transfer programmes (such as the VGF, OMS) should be strengthened further covering newly poor as well as vulnerable poor households.
During the discussion, the forum came up with more suggestions and proposals that include, before easing the lockdown in Bangladesh the number of daily tests runs in each district should increase by several folds.
Bangladesh could follow the path of the East Asian countries such as Vietnam and South Korea, where the governments emphasized testing and contact tracing.
Referring that there has been incongruence in the directives of BGMEA, the forum suggets strict instructions from the Government regarding the workers’ health and safety that must be followed by the factory owners are thus necessary.
Laying off workers should be stopped. Government and garments factory owners can share the burden of salaries for workers during this crisis period.
The spread of infection in factories can result in Bangladesh losing its international market. For ensuring the safety of the export-oriented manufacturing sector workers, the government should produce region-specific and sector-specific health protocols.
