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Pattern of economic recovery not uniform

Experts opine at SANEM Netizens Forum

FE REPORT | October 25, 2020 00:00:00

Bangladesh urgently needs to assess its corona-related incentive packages to address the issues concerning slow progress in fund disbursement, speakers at SANEM Netizens Forum said on Saturday.

They recognised the need for adopting fast and innovative ways of implementing the stimulus packages to ensure a robust economic recovery after virus shocks.

The speakers also suggested taking immediate actions to formalise informal sectors that account for more than 80 per cent of overall employment.

It is imperative to bring acceleration in the incentive package disbursement for small and medium enterprises (SMEs), they asserted.

The suggestions were made at the ninth episode of the virtual forum styled 'Covid-19 and Bangladesh: Path to economic recovery' hosted by the South Asian Network on Economic Modeling (SANEM).

Addressing the discussion, SANEM executive director Dr Selim Raihan said there are some signs of economic recovery but not in a uniform pattern.

"Some sectors are recovering while some others are not. We need to make recovery in the social sector alongside economic recovery to achieve a sustainable recovery."

Mr Raihan said the country requires to come out from a narrow focus on growth and must give more attention to PIE (poverty, inequality and employment).

"The crisis creates opportunity for us to rethink our policies for a larger scale of development," he cited.

He said export and remittance are considered two major dominant drivers of economy because of their strong multiplier effects on other sectors.

But there are uncertainties in apparel exports and remittance inflow and sluggishness in private investment and import growth. These issues need to be sorted out, he said.

On incentive packages, Mr Raihan, also a professor of economics at the University of Dhaka, said the government announced incentive packages for SMEs but only one-fifth of the fund has been disbursed.

Dr Sayema Haque Bidisha, another professor at the same department, hailed the government for timely announcement of the incentive packages.

"But proper implementation of the funds is a huge challenge. Quite a large number of the affected people are in the informal sector," she said.

Highlighting the importance of formalising the informal sector, Ms Bidisha suggested the government give a timeframe alongside relaxing some formalities in this crisis period to bring them in the process.

She proposed tougher enforcement of health guidelines to avert the possible second wave of coronavirus attack as it costs much lower than that of the lockdown costs.

To encourage the informal sector's formalisation, SANEM research fellow Mahtab Uddin said the government can relax some constraints like obligation of too much documents along with fiscal facilities like tax holiday for a certain period.

"We need some policies that will give them the assurance relating to an easy access to formal credit. It might take two years," he added.

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