The government has introduced a series of fiscal measures to contain and mitigate the impact of the COVID-19 outbreak. At end-March, the Ministry of Finance issued a revised budget for FY20 including additional resources to fund the Ministry of Health’s COVID-19 Preparedness and Response Plan and expanding existing transfer programs that benefit the poor.
Increased allocation has been made to the Open Market Sale (OMS) program to facilitate the purchase of rice at one-third of the market price, and the Ministry of Disaster Management and Relief is distributing food supplies at the district level.
On March 31, the Ministry of Finance announced a Tk. 50 billion (about USD 588 million) stimulus package for exporting industries to be channeled through a refinance scheme operated by Bangladesh Bank. Loan proceeds will be used to pay worker salaries, primarily through mobile financial services, and the scheme is expected to benefit close to 4 million workers for a three-month period.
Exporting firms that have laid off workers will not qualify for the loans. The Ministry of Finance will also subsidize interest payments on up to Tk. 500 billion in working capital loans by scheduled banks to businesses.
On April 15th, the Prime Minister announced the allocation of Tk. 21.3 billion under a housing scheme for the homeless, Tk. 7.6 billion for poor people having lost their jobs as a result of the pandemic, Tk. 7.5 billion to provide health insurance for government employees most at risk, and a Tk. 1 billion bonus payment for government doctors and health workers treating COVID-19 patients.
The National Board of Revenue has suspended duties and taxes on imports of medical supplies, including protective equipment and test kits. The government has approached international financial institutions seeking budget support, and similar requests have been addressed to bilateral development partners.
In Summary Bangaladesh has ...
Bangladesh has announced a $11.6 billion stimulus package to support the economy, with a primary focus on supporting the manufacturing and service sectors, agriculture and social safety nets.
“This support package is equivalent to 3.5% of our GDP,” Prime Minister Sheikh Hasina said on April 24.
the two main channels through which the Bangladesh economy will be impacted are remittances and exports of ready-made garments (RMG). Remittances represent over 5 percent of GDP ($16.4 billion in FY 19), and a majority of migrant workers are based in Gulf countries that are affected by the abrupt decline in oil prices.
The Bangladesh Garments Manufacturers and Exporters Association has said that orders worth about $3.2 billion were cancelled or suspended, affecting over 2.3 million workers. The textile sector, a major forex earner, directly employs more than 4.5 million people, mostly women.
MONETARY AND MACRO-FINANCIAL
The focus of Bangladesh Bank (BB) is to ensure that there is adequate liquidity in the financial system to support the operations of financial institutions, and it has announced that it will buy treasury bonds and bills from banks.
The repo rate was lowered from 6 percent to 5.75 percent effective March 24th and was further reduced to 5.25 percent effective April 12. The CRR was initially reduced from 5 percent to 4.5 percent (daily-basis) and from 5.5 percent to 5 percent (bi-weekly basis), with a further reduction to 3.5 percent and 4 percent, respectively, from April 15. BB has also raised the advance-deposit ratio (ADR) and investment-deposit ratio (IDR) by 2 percent to facilitate credit to the private sector and improve liquidity in the banking system.
The Export Development Fund was raised to $5 billion, with the interest rate now fixed at 2 percent and the refinancing limit increased. BB has created several refinancing schemes amounting to a total of Tk 380 billion and a 360-day tenor special repo facility to support exporters, farmers and to facilitate the implementation of the government stimulus packages.
To further support farmers, BB also announced an agriculture subsidy program that will take effect for 15 months until mid-2021. In addition, BB has taken measures to delay non-performing loan classification, waive credit card fees and interests, suspend loan interest payments, impose restrictions on bank dividend payments, extend tenures of trade instruments, and ensure access to financial services.
Raising the money was never going to be easy, but now the program to protect the 37 million people who live in the delta is in limbo — hit first by the coronavirus and then by the damage from Amphan. Bangladesh evacuated 2.4 million people from coastal districts, State Minister for Disaster Management Enamur Rahman said in Dhaka on May 19, the day before the storm hit.