Awami League Govt succeeded in keeping the Economy Afloat during Corona crisis

After the government announced 21 stimulus packages involving more than Tk 1,21,000 crore to tackle the pandemic fallout, 39.23 percent of the total amount or Tk 47,615 crore was disbursed till October 31, according to a report of the finance ministry.

A total of 3.54 crore people have received assistance from various stimulus-cash-food support packages over the period, said the report released at a programme at the capital's Osmani Memorial Hall on Thursday.

The report also said 76 lakh firms, organisations, entrepreneurs, and other beneficiaries got loan facilities under the economic bailout scheme as of October 31.

The finance ministry organised the programme to evaluate the progress of the scheme undertaken after the Covid-19 outbreak struck the country in March. The programme was joined by noted economists and members of development partners, local think-tanks and other stakeholders, among others.

The bailout packages were announced at different times after March. The combined support of more than Tk 1,21,000 crore accounts for 4.34 percent of the country's Gross Domestic Product (GDP).

"The marginalised people in the country did not face any shortage of food because of the cash and food aid provided under the stimulus scheme. The possibility that these people would slide below the poverty line once again has also been reduced," said the progress report prepared by the finance division under the ministry.

The disbursement of the funds also had a positive impact on the business sector's ongoing recovery process and helped retain employment of tens of thousands of people working under different sectors, it said.

The support has been provided in the form of low-cost loans to micro, small, medium, large industries, service-providers and as food security, social protection and special allowances after the pandemic-induced shutdown paralysed the economy, drying up millions of jobs and creating the new poor.

The implementation of the scheme, however, has not been the same in all sectors.

For example, fund disbursement rate for the export-oriented and large industries has been quick, but the progress has been slow for small and medium enterprises and farm sectors.

The finance ministry divided the 21 packages in three broad categories -- job retention, restoration of demand and maintenance of supply chain; employment creation and revitalising rural economy; and enhancing social security and food supply.

Tk 41 billion for 73 lakh firms  

In the first category, there are seven packages involving Tk 86,750 crore, which are being financed from the banking system.

Of the amount, around Tk 41,153 crore has been disbursed till October 31. As many as 73,28,251 firms and businesses got the loan assistances, the progress report shows.

The lion's share of the beneficiaries, or 72.80 lakh, are the borrowers who benefitted from the Bangladesh Bank's measure to suspend the payment of loan interests for two months -- April and May.

The total amount of interests for the two months stood at Tk 16,549 crore. The central bank will give Tk 2,000 crore in subsidy in this regard. The government has already started the process to release a fund of Tk 1,390 crore, the report said.

The export-oriented sector, mainly readymade garments, received support from one of the seven packages in the first category. This sector is ahead of all others in terms of fund disbursement.

An interest-free loan of Tk 10,500 crore was given in two phases with a service charge of two percent for providing salaries to workers and employees of 1,992 export-oriented industrial units for four months. The full amount was disbursed by June and an estimated 50 lakh workers got the benefit, says the progress report.

The support in the form of salaries helped save jobs of 50 lakh workers. As a result, the families of those workers have been able to overcome the economic crisis caused by the pandemic, the report said.

A significant progress was made in dispensing the Tk 34,500 crore fund to the pandemic-hit large industries at an interest rate of nine percent, which is to be repaid equally by the borrowers and the government as subsidy.

As of last month, Tk 22,934 crore was disbursed and 2,594 firms got the assistance.

However, the scenario over the pandemic-hit micro and small businesses has not been satisfactory as they were yet to get enough benefit from the packages.

The government announced Tk 20,000 crore as the working capital support for such businesses at an interest rate of nine percent -- four percent to be paid by the borrower and five percent by the government as subsidy.

Till last month, Tk 6,345 crore was disbursed for the sector and 41,069 firms and entrepreneurs got the loan support, said the report.

"As the disbursement rate is slower than expected, the government is augmenting refinancing scheme and credit risk sharing facility to boost the disbursement," the report said.

The pre-shipment credit refinance scheme amounting to Tk 5,000 crore for nine export-oriented industries has also not made any progress. As of last month, only Tk 48.58 crore was disbursed.

Cash incentive for 35 lakh families

There are four packages in this category that involve Tk 12,458 crore. Of the amount, Tk 4,225 crore was disbursed till October 31.

As many as 37.22 lakh people, firms and beneficiaries got assistance under this category, according to the progress report.

Of the beneficiaries, a large chunk or 35 lakh families received cash incentives -- Tk 2,500 a month -- under a stimulus package named cash transfer to the targeted poor. Of the allocated Tk 1,258 crore, around Tk 880 crore was spent.

However, the government had initially planned to give the cash incentives to each of 50 lakh families under this package. But it had to stop midway following allegations of anomalies over the lists of beneficiaries.

On the other hand, some 2.22 lakh firms and beneficiaries got the assistance under the three other packages -- credit expansion for employment creation, agriculture refinance scheme, and refinance scheme for farmers and small traders.

Free food distribution for 2.5 crore families 

There are 10 packages in this category and the government allocated Tk 22,125 crore. So far, around Tk 2,237 crore has been disbursed under different packages that benefited around 3.28 crore people.

Free food was distributed under one of the packages. The government distributed five lakh tonnes of rice and one lakh tonnes of wheat among 2.54 crore people in 496 municipalities and upazilas.

Around 50 lakh families across the country were allowed to buy rice at Tk 10 a kg under the OMS of rice package. The government also helped nearly 18 lakh families in the urban areas to buy rice at Tk 10 per kg.

"As a result, these people did not have to spend days starving," said the report. But the progress has been slow in implementing some packages in this category. The special honorarium allowance for healthcare professionals is a case in point.

The government has failed to provide frontline health professionals with the incentives after its announcement over four months ago.

A Tk 100-crore fund was earmarked to this end, but it could not be released as the health ministry has not yet sent the list of the recipients.

Similar is the case for handing compensation to the healthcare professionals. The government allocated Tk 750 crore for this purpose, but it could spend Tk 16.25 crore till October 31.

Speaking at Thursday's programme, Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem), suggested that the government should come up with an independent evaluation of the packages that have been executed so far.

Finance Secretary Abdur Rouf Talukder said they have a plan to carry out an independent assessment of the packages so that they can make adjustment to those packages whose implementation lags behind.

Principal Secretary to the Prime Minister Ahmad Kaikaus said no initiative can ever be hundred percent successful. He, however, claimed that they have done an assessment of the food and cash supports and found that they have been able to reach nearly 21 percent of the population.