Ensure Implementation of Stimulus Packages: ICC,B

The International Chamber of Commerce, Bangladesh (ICC,B) has said that timely implementation and ensuring that various stimulus packages announced by the government and the Bangladesh Bank are availed by the most desired will be very crucial.

The government announced details of its Tk 50bn stimulus package for export-oriented industries. This includes assistance towards salaries and funding of two-year loans to factory owners at 2 percent interest.

Like most other emerging economies, Bangladesh has to tackle a number of key issues such as include healthcare, sustainable export, FDI and remittance flow to achieve the desired GDP growth, the ICC,B said Thursday. 

In order to maintain sustainable growth and the supply chains functional and cost-effective, it is very important to save MSMEs (micro, small and medium enterprises), it said.

Bangladesh’s economy grew by 5.24 percent in FY20 despite COVID-19 pandemic against a 2 percent growth forecast by the World Bank and IMF.

The government has set the GDP growth target for FY21 at 8.2 percent, which under present COVID scenario will be difficult to achieve, according to ICC Bangladesh quarterly News Bulletin (April-June 2020) published Thursday. 

COVID-19 is unprecedented health and economic crisis, affecting the lives and livelihood of workers, as well as the continued operations of businesses globally. 

Governments around the world are putting in place measures to address the unprecedented impacts of COVID-19. 

The G20, along with the WHO, IMF, World Bank Group, United Nations and other international organizations, are mobilized to take active steps to overcome the pandemic, and the International Chamber of Commerce (ICC) is collaborating as a trusted business advisor with many of these engaged stakeholders.

ICC welcomed steps to fight COVID-19 and stem human and economic losses at the conclusion of the virtual G20 Summit held on March 26, including G20’s commitment to ease the flow of essential medical equipment and maintain a bold and large scale fiscal stimulus in the global economy. 

ICC has written to G20 Trade Ministers with a roadmap for G20 countries to use trade policy to fight COVID-19 and rebuild the future. 

Countries around the world are implementing economic and fiscal policy stimuli, including emergency tax measures to support their economies under the pandemic.

Economy takes hit

To control the spread of the pandemic, the government announced countrywide lockdown from March 26, bringing the whole economy virtually to a standstill. 

The shutdown has left a huge number of people unemployed as they are dependent on daily income for their livelihood. According to the Bangladesh Institute of Development Studies (BIDS) survey, Bangladesh will have 16.4 million new poor in 2020 due to the impact of a pandemic.

The Economist Intelligence Unit forecast in March that the global economy is expected to contract by 2.2 percent this year. 

This is likely to affect its garment exports to major G20 countries such as Germany, Italy, UK and the US. Due to depressed oil prices, the Middle East and North Africa region will also face lower growth, said the ICC,B.

These will have a serious impact on Bangladesh’s remittance inflow, export earnings, industrial production and services sector.

However, surprisingly remittance inflow recorded an all-time high at $ 18.2 billion in FY20 and on the other hand, export earnings have registered a sharp decline of nearly 17 percent at $33.67 billion in FY20 due to cancellation and/or reduced export orders of garments, which accounts for 84 percent of total national exports. 

Experts consider that the country’s export diversification is urgently needed. 

At the same time, FDI dropped by 14 percent to $3.73 billion in the 11 months of FY20.

Prime Minister Sheikh Hasina has announced stimulus packages of Tk 677.5bn (approx. USD8bn) planned to implement in immediate, short and long phases through four programs – increasing public expenditure, formulating a stimulus package, widening social safety net coverage and increasing monetary supply.

The Prime Minister also announced a number of social safety packages including direct cash assistance for informal sector workers; health insurance for health workers and bankers in case of COVID-19 infected, special honorarium for bankers, health workers and others and cash payment in case of death.

Bangladesh Bank announced a moratorium on loan payments until September 30 and that such borrowers will not be in default.