SANEM, an economic think tank suggests a set of recommendations for effective distribution of stimulous package also the face the impact of the impact of COVID-19, that include to raise subsidies for small industries and waiver of tax for the sector
“Since small industries will face problems in borrowing loans from banks, the associations of these small industries can be involved in this case. The support programs also need to address workers and employees of these small industries”, said Dr. Selim Raihan, Executive Director, SANEM.
As one of the leading think tanks of South Asia, South Asian Network on Economic Modeling (SANEM) is continuously taking part in the social actions necessary to fight the pandemic. In that endeavor, SANEM has launched the “SANEM Netizen Forum on COVID-19 Pandemic”.
This forum connects the SANEM Team led by Dr. Selim Raihan, Executive Director, SANEM, with academicians, researchers, development practitioners, and students around the world. Conducting online discussions once a week through SKYPE, the forum aims to contrive policy pathways and community actions for tackling the challenges posed by the COVID-19 pandemic.
After receiving an overwhelming response to its call for participation the Forum has already met thrice and its third online meeting titled Episode-3 was conducted on April 17, 2020, Friday at Bangladesh time 4 pm. The online meeting was moderated by Dr. Selim Raihan, Executive Director, SANEM and Professor, Department of Economics, University of Dhaka. Dr. Raihan began by discussing the current situation of the pandemic
Dr. Raihan explained that although Bangladesh’s stimulus package is the highest in South Asia, in terms of percentage of GDP, the announcement of the package is not enough. Since Bangladesh has never handled such a huge stimulus package, there are three areas of concern: financing, distribution, and monitoring of the stimulus package.
Dr. Raihan then informed the forum of SANEM’s proposals regarding the financing of the stimulus package. There are four sources from which the country can finance the stimulus package: 1) Cutting cost of unnecessary projects, 2) Loans from IMF and World Bank, 3) Loans from Domestic Banks and 4) Printing Money.
He further explained that loans from IMF and World Bank will have to of flexible conditions and the government must effectively negotiate for that. While the government has already reached the annual limit on borrowing loans from the domestic banking sector, this is not a preferable option.
Dr. Raihan also emphasized on a guideline for distributing the stimulus package. He recommended that loan defaulters must not be included in the coverage of this package. He also opined that the guideline can be developed in consultation with business leaders.
The guidelines or recommendations include : to form a monitoring committee is necessary for the distribution of stimulus package and relief programs. However, for the monitoring committee to be effective, political commitment is necessary. The committee must be non-conventional and empowered.
“Not to be concerned with the fiscal deficit, Flow in remittance will be affected. Most of the immigrant workers were in informal sectors. Including the repatriating workers in the national economy needs a different approach which can include loans with small interest and various technical support, We can't do much to impact on the world demand as the whole world is going to be under a recession. But the stimulus for other sectors in our economy is necessary for keeping them alive and increasing product diversity”, SANEM added. .
It also said relief and development efforts have to be decentralized. Initiatives by the youth in localities, for assisting the poor and vulnerable are very important. Targeting lower middle income or lower-income families who are at risk of turning poor is quite difficult. However, they can be provided with cash subsidy as well as relief.
For urban areas rationing system can be very effective. Specialized transfer of cash for the lower middle income or lower-income individuals can be also effective. Monitoring and transparency must be ensured in this process.
Suggesting a helpline to set up for assessing the needs and situation of the people and providing support, it said To re-establish the supply chain, Ministry of Agriculture, Home Ministry, Ministry of Health and Ministry of Transport must work together.
SANEM also recommends that Subsidies for small industries can be raised. Tax can be waivered for raw materials for small industries. Since small industries will face problems in borrowing loans from banks, the associations of these small industries can be involved in this case. The support programs also need to address workers and employees of these small industries.
“ Various regulations for SMEs can be relaxed, Mental health, social anarchy, rise in crime should be a concern. Telecoms should cut call-rates, there is reason to be concerned about job opportunities for educated people.
The private sector will shrink. Policymakers must address this, Light engineering products can be allocated a special stimulus package,a Hotline for reporting domestic violence should be established. Ministry for Women and Home Ministry can collaborate on this”, the recommendations include.
