Implementation of government’s stimulus package, announced to absorb the economic shock from the coronavirus pandemic, saw a mixed progress as around 26 percent of the massive Tk 111,141-crore scheme was disbursed in four months till July.
For sectors like export-oriented and large industries, the disbursement of the funds was quick. But the needy small and medium enterprises and farm sectors are yet to avail much of the support, making it difficult for them to pull through the losses incurred by the pandemic.
The government rolled out 20 stimulus packages after it reported the maiden cases of coronavirus infections on March 8. The combined support now accounted for 3.7 percent of the country’s gross domestic product (GDP).
The packages have been provided in the form of low-cost loans to micro, small, medium and large industries and services, food security, social protection and special allowances as the pandemic-induced shutdown paralysed the economy, destroyed millions of jobs and created new poor.Four months after its launch, around Tk 29,200 crore was doled out to the fund recipients as of July, according to the latest progress report of the stimulus packages, supervised by the Prime Minister’s Office.
The government’s economic rescue scheme, channelled and executed using the banking networks, will be implemented by both government and private banks as per the direction of Bangladesh Bank.
“We will review the stimulus package after the end of the first quarter of the current fiscal year. Then we will take measures as per our review,” said Finance Minister AHM Mustafa Kamal.
“If we find any problem or delay in any of the packages, we will solve it,” he told The Daily Star.
A MIXED PICTURE
Of the scheme, there are five large loan-related packages where the lion’s share — around Tk 75,750 crore — will go. Those include export-oriented industries, large businesses, service sectors, SMEs, and refinancing for pre-shipment credits.
Of the amount, Tk 25,574 crore was disbursed to these five sectors, according to the progress report documents.
The export-oriented sector, mainly the readymade garments, is ahead of all so far, as the Tk 5,000 crore support here has been fully disbursed.
Soon after the deadly virus arrived on the shores of the country, the government allocated the interest-free fund for the export sector with a service charge of two percent as employment of nearly 50 lakh workers became vulnerable amid cancellation of orders and placement of no new order from the buyers.
The funds were released as salaries for workers and employees of export-oriented industries through equal instalments in the three months from April to June. Nearly the entire fund — Tk 4,935 crore — was disbursed as of July.
As many as 1,992 such industries borrowed the funds through 47 commercial banks.
Significant progress was made in dispensing the Tk 33,000 crore funds to affected large industries and services at 9 percent interest rate to be repaid equally by the borrowers and government as subsidy.
Some 2,062 large companies received the low-cost loans as of September 17 Tk 25,461 crore, which is 77.15 percent, according to data from the central bank.
The quick fund disbursement by the lenders has already had a positive impact on the ongoing recovery process of the business sector.
For the cottage, micro, small and medium enterprise sector, the picture is rather gloomy.
The government announced Tk 20,000 crore as the working capital support to the pandemic-hit small businesses at 9 percent interest rate – four percent to be paid by the borrower and five percent interest by the government as subsidy.
Till July, only Tk 1,491 crore was disbursed for the sector where 6,432 firms got the loan through 76 banks and financial institutions. As of end of last month, it went up to 20 percent with number of enterprises 11,183, said sources.
The pre-shipment credit refinance scheme amounting to Tk 5,000 crore for export-oriented industries has also not made any progress.
The Bangladesh Bank issued the scheme on April 13, but it’s yet to release any funds under the scheme till now. As of August 4, 30 banks signed deals with the BB for releasing the fund.
AGRICULTURE SECTOR LAGS BEHIND
This slow pace was also observed in the case of the special refinancing scheme worth Tk 5,000 crore for the agricultural sector. But only Tk 497 crore was disbursed as of July, the documents showed.
However, there was a rise in the disbursement till August 31 as 46,804 farms and farmers got the loan support of Tk 1,095 crore in total, said sources.
Similar was the case for the disbursement of Tk 3,000 crore in refinance loans meant for low-income farmers and small traders in the agriculture sector. The progress of lending was so slow that the Bangladesh Bank last week extended its timeframe.
As of August 31, the amount stood at Tk 286 crore.
Forty-three banks have so far signed participation agreements with the central bank to disburse the loan by December 31.
The government included agricultural subsidy in a stimulus package as it gave the food security issue the utmost importance in the wake of the pandemic.
Last year, the subsidy was Tk 8,000 crore, of which Tk 7,188 crore was spent. Now the government increased it by Tk 1,500 crore, but the disbursement process is yet to begin.
The government allocated a Tk 3,200 crore stimulus package to speed up mechanised farming. However, no money was disbursed yet as the agriculture ministry is outlining a project under which it would be spent.
HEALTHCARE LESS CARED-FOR
The government set aside an allocation of Tk 850 crore for the doctors, nurses, health workers; field officers; members of law enforcement agencies, armed forces, BGB; and other government employees, who are on the front line risking their lives.
They will receive compensation under the package if they fell sick or die.
However, the compensation has so far been doled out to two victims, Tk 1 crore to each of their families.
Also, an allocation of Tk 100 crore was made as a special honorarium for doctors, nurses and health workers, who are directly involved with the treatment of Covid-19 patients. But the fund was not released as the health ministry did not send the list of the recipients yet, sources said.
EMERGENCY FOOD SUPPLY AND CASH HANDOVERS
Notable progress was made in the free distribution of food materials to the people who became jobless after the Covid-19-induced shutdown. More than 2.54 crore families in 496 upazilas and municipalities got rice and cash handovers in April, May and June.
There was also a good progress in the open market sale operation of rice at Tk 10 per kilogramme. Over 67 lakh families in all unions and 439 municipalities, city corporation areas.
But the progress in distributing cash incentives to selected families is not satisfactory. The government announced a stimulus package of Tk 1,258 crore to give each of 50 lakh families Tk 2,500 a month.
The distribution, however, had to be stopped after allegations surfaced over the lists of beneficiaries despite preparing the list twice. So far, some 35 lakh families got the support.
Another package that moved at a slow pace is the free housing for the homeless people. Against an allocation of Tk 2,310 crore, the Department of Disaster Management could build 1,112 houses at the cost of Tk 33.34 crore.