Experts have suggested that when the economy begins to reopen, priority must be accorded to the cottage, micro, small, and medium enterprises (CMSMEs).
The CMSMEs need to be given priority not only because of their limited power to survive but also as this sector accounts for an overwhelming proportion – some 86% – of employment outside agriculture in the country, they said.
The experts made the comment while speaking at a policy webinar on “Coping with COVID-19: The Case of Bangladesh” on Tuesday night.
Planning Ministry’s General Economics Division (GED), BRAC Institute of Governance and Development (BIGD), BRAC University, and the International Growth Centre (IGC) jointly arranged the webinar, which was moderated by BIGD Executive Director Dr Imran Matin.
Planning Minister MA Mannan was the chief guest of the webinar, which was also addressed by GED Member and Senior Secretary Dr Shamsul Alam, PPRC Executive Chairman Dr Hossain Zillur Rahman, BIDS Director General Dr KAS Murshid, Policy Research Institute Vice Chairman Dr Sadiq Ahmed, former lead economist at World Bank Dr Zahid Hussain, and CPD distinguished fellow Dr Debapriya Bhattacharya.
Professor Siddiqur Rahman Osmani from Ulster University presented an integrated policy framework at the webinar.
In his policy framework, Professor Siddiqur elaborated the types and phases of proposed policy instruments, linking them to major components of the economic support package, and the emphasis on the government’s priority to revamp the public health system.
Professor Siddiqur said that the contents of the policy instruments must be calibrated on the basis of a two-phase approach – a first phase consisting of at least three months during which distancing will have to be imposed very strictly resulting in large-scale economic shutdown, and a second phase lasting for at least another six months during which it should be possible to re-open the economy gradually by relaxing the shutdown.
"At least half of the population is facing food insecurity in the wake of economic shutdown. This means that some 20 million households will need entitlement support in the first phase. The amount of support needed is estimated conservatively at Tk8,000 per household per month" he added.
In the second phase, when the economy begins to re-open, the number of households needing support will gradually decline.
“Taking the two phases together, it is estimated that the entitlement support programme will cost Tk960,000 million – about 3.8% of GDP,” Professor Siddiqur added.
He also said, many of these enterprises are currently outside the network of the banking system, a comprehensive list of these enterprises must be prepared first through the cooperation of BBS, SME foundation, and BSCIC.
“We know from various statistics that well over a 100,000 people were displaced with many among them slipping into poverty. The government thus found it imperative to safeguard the lives and livelihoods of this large section of the population,” Osmani added.
Addressing the webinar, Planning Minister MA Mannan said the government took the risky decision to reopen economic activities as millions of people became jobless due to the lockdown of Covid-19.
“We had to take a decision in order to control the situation so that people can resume their jobs to ensure food.
“We hope we are on the right path. We will take ideas from experts for recovering the country from existing problems,” he added.
Meanwhile, Dr Debapriya Bhattacharya underscored the needs for creating a national database.
“We need to create a national database to resolve our existing problems. Social protection is very significant now. It has to be given priority in the upcoming budget as well,” he added.
Debapriya also said: “We have to search for sources inside and out to meet the budget deficit.”
However, Bangladesh’s Eighth Five Year Plan (8FYP) will go into effect from July 2020, and the parliamentary session on the National Budget for FY2020-21 begins from Wednesday.
To adjust for the economic implications of Covid-19, the GED has sought the expertise of Professor SR Osmani in rethinking priorities and resource allocation currently outlined in the 8FYP, consequent sectoral reallocation, and adjustments to 8FYP’s macroeconomic framework.
Former World Bank lead economist Dr Zahid Hussain told the webinar that business people cannot resume their economic activities due to health risks.
“If the Health Ministry cannot implement health related projects due to its incapability, other agencies should come forward with the plan,” he added.
He also said the number of poor people in the country is likely to increase to around 40% due to the coronavirus pandemic.
“The budget should allocate cash handouts for those who were already poor and the new poor,” Dr Zahid said.
