The government is planning to disburseTk72,750 crore as part of the recently announced stimulus package aimed at overcoming the impact on the country's economy from coronavirus, officials said. A Bangladesh Bank official said that the central bank will issue a set of guidelines soon for disbursement of the funds.
An official of the Finance Ministry said the finance ministry and Bangladesh Bank have started working on it after the announcement of the package. “Bangladesh Bank will set policies on the use of this money, class of beneficiaries, borrowing from the package and repayment time,” he informed.
“The central bank will issueguidelinessoon,” he said adding that the implementation of the package will start with the public and private commercial banks. Finance Secretary Abdur Rauf Talukder said,“The large, medium, and small industries as well as services sector along with fishery, dairy, poultry sectors would be able to take loans as their current capital from the stimulus package earlier announced by the Prime Minister Sheikh Hasina.”
“Basically, this loan will be given for 3-6 months. In the meantime, beneficiaries can avail any new loan again after retuning their pending loan,” He said. Welcoming the Prime Minister’s move for announcing such a huge package, former financial adviser of caretaker government AB Mirza Azizul Islam said, “The government would have to act fast in this regard by framing necessary policies and guidelines.”
“Besides,” he said, “It must ensure that the workers get its benefits and no middlemen could interfere in it and enjoy the benefits,” he added. He said that the banking sector is facing liquidity crisis as the deposit money has been decreased for low interest rate. “That is why, the government should solve liquidity crisis by providing cash support to the banks, otherwise, banks will not show interests in lending if they have liquidity crisis,” Mirza said.
Prime Minister Sheikh Hasina on Sunday unveiled the government’s work plan to overcome the possible coronavirus impact on the country's economy, declaring an allocation of Tk72,750 crore under a set of stimulus packages, which is nearly 2.52 percent of GDP. Earlier, the government had declared a Tk5,000 crore (emergency) incentive package for paying salaries and allowances of export-oriented industries workers and employees.
On Sunday, the Prime Minister announced four fresh financial stimulus packages of Tk67,750 crore including increasing public expenditure, formulating a stimulus package, widening the coverage of the social safety net and increasing monetary supply. In the four new packages, the Prime Minister Sheikh Hasina said that her government will provide working capital of Tk 30,000 crore for the COVID-19 affected industries and service sector institutions.
Commercial banks will provide loans from their own resources to the industries or business entities concerned on the basis of bank-client relationship. The interest rate of this loan facility will be 9 percent, of which the borrower will provide 4.5 percent while the government will pay the rest of the interest to the respective bank as subsidy.
In the second package, which will be for the small and medium industries, the government will provide Tk 20,000 crore as working capital. Here too, the commercial banks will provide the loans from their own resources to the industries or business entities concerned on the basis of bank-client relationship.
The interest rate will be the same as 9 percent, but the 4 percent interest will be borne by the loan-taking industries while the rest of the money will be paid by the government to the respective bank as subsidy. In the third package, the Bangladesh Bank will expand its EDF (Export Development Fund). Aiming to increase the facility for importing raw materials under the back-to-back LC system. Meanwhile, the central bank will enhance its EDF facility from $3.5 billion to $5 billion.
As a result, some Tk 12,750 crore, equivalent to $1.5 billion, will be added to the respective fund. “The current interest rate of the EDF is LIBOR (London Inter-Bank Offer Rate) + 1.5 percent (which is actually 2.73 percent). It will be decreased to 2 percent,” he said. For the last package, the Prime Minister mentioned that Bangladesh Bank will introduce a new loan facility system titled 'Pre-shipment Credit Refinance Scheme'. The amount of this loan facility will be Tk 5,000 crore in total where the interest rate will be 7 percent.
While addressing the nation on March 25 on the occasion of the Independence and National Day 2020, the Prime Minister announced a stimulus package of Tk 5,000 crore for export-oriented industries to fight the adverse impact of coronavirus on the country's economy. This money will be used for providing the salaries and wages of workers and employees only.
