The country's economy has taken a blow since the Covid-19 pandemic made its way into Bangladesh
Prime Minister Sheikh Hasina has announced a total incentive package of Tk72,750 crore to overcome the possible economic impact on the country due to the outbreak of the novel coronavirus.
“Earlier, I declared a Tk5,000 crore (emergency) incentive package for paying salaries and allowances of export-oriented industries workers and employees, and today I am announcing four fresh financial stimulus packages of Tk 67,750 crore,” she said while addressing a press conference at her official Ganabhaban residence in Dhaka around 10:05 am on Sunday.
With the fresh allocations, the total amount of financial assistance from the government would stand at Tk 72,750 crore, which is nearly 2.52% of GDP.
On March 25, the premier announced a Tk5,000 crore stimulus package for the export-oriented industries – mostly to pay the salaries and wages of the workers and employees in the sector.
Four programs under the work plan
At the same time, the government also took four programs under the work plan to be implemented in phases categorized as “immediate, short-term and long-term.”
The four programs are to increase public spending, introduce fiscal packages, expand social safety net programs and increase money supply in country.
Four new incentive packages
Highlighting the key aspects of the four new packages, the premier said the first of the four packages involves Tk30,000 crore to be provided, to affected industries and service sector organizations as working capital, through banks as low-interest loan, reported BSS.
She said the commercial banks would provide the amount as loans from their own funds to concerned industries and enterprises on the basis of bank-client relations.
“The interest rate of this lending facility will be 9%, and the concerned industries and business organizations will pay 4.5% interest, meaning half of the interest of that loan, while the government would pay remaining half to banks as subsidy,” she said.
Under the second package, small and medium enterprises (SMEs) including cottage industries would get Tk20,000 crore as working capital.
The premier said a mechanism would be devised to reach the amount to the SMEs as low-interest loans through banks, which identically will disburse amounts to the SMEs on the basis of bank-client relations, while the government in this case would bear the greater share of the interest amount.
“The interest rate of this lending facility will be 9% and the concerned industries and business organizations will pay 4% interest of that loan, while the government will provide the remaining 5% as subsidy,” the premier said.
The fourth package, she said, was meant for enhancing Bangladesh Bank’s Export Development Fund or EDF size from US$3.5 billion to $5billion to facilitate raw materials imports under back-to-back LC.
The prime minister said this last package would result in adding an amount of additional Tk12,750 crore, equivalent to $1.5 billion, to the EDF while its interest rate would simultaneously be brought down to 2%.
The existing EDF interest rate is 2.73% in line with current London Interbank Offered Rate-LIBOR + 1.5 %.
The prime minister said under the fourth package, the central bank will introduce a new credit facility of Tk5,000 crore as “Pre-shipment Credit Refinance Scheme” and its interest would be 7%.
Boost production and use of local products
Sheikh Hasina said local products alongside the export sector deserve special attention and support to cope with the possible global and domestic economic crisis caused by the pandemic.
“In this regard, I call upon all to boost production of local products and raise their use,” she said.
Bangladesh Television and Bangladesh Betar, as well as private television channels and radio stations aired the press conference live.
The country's economy has taken a blow since the Covid-19 pandemic made its way into Bangladesh.
Meanwhile, the government initiated a countrywide shutdown of all activities, except essential services, from March 26 till April 4 in order to enforce social distancing, a strategy crucial for slowing the spread of Covid-19, a disease caused by a new strain of coronavirus, which is extremely contagious.
The shutdown was later extended till April 11.
In the meantime, the authorities on Saturday extended the ongoing suspension on the operation of all public transport until April 11, to stem the spread of coronavirus.
As of Sunday, Bangladesh has so far recorded eight deaths and 70 cases from Covid-19, a pandemic announced by the World Health Organization (WHO).
The fast spreading coronavirus, which was first reported in China's Wuhan, has claimed 64,729 lives and infected 1,202,242 people across the world till 9:45am on Sunday, according to worldometer.
As many as 246,638 people have recovered from Covid-19, a disease caused by a new strain of coronavirus, which has spread to 206 countries and territories across the planet.