Economic recovery packages declared so far totaled Tk. 1,03,117cr: Kamal

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DHAKA, June 11, 2020 (BSS) – Finance Minister AHM Mustafa Kamal today said that the economic recovery packages declared so far have totaled Tk. 1,03,117 crore to offset the impact of the Novel Coronavirus (COVID-19) pandemic on various sectors of the country.

“You are aware that, since the beginning of the COVID-19 pandemic, our government has taken various steps to combat its fallout. We have taken a comprehensive plan to overcome the possible negative impacts of pandemic on our economy and people,” he said while placing the budget for fiscal year (2020-21) in Jatiya Sangsad.

Kamal said under this plan, the government has taken measures that were necessary in the immediate term and are implementing some in medium term. “We have also taken up a range of initiatives that will be implemented in longer term to achieve full economic recovery,” he added.

He said the comprehensive plan includes four main strategies. Firstly, the government will discourage luxury expenditures and prioritize government spending that creates job, he said.

Kamal said due to sound macro-fiscal operation by the government during the last ten years, the country’s Debt-to-GDP ratio is still as low as 34 percent. “This provides us a cushion against any negative macroeconomic implication while we are increasing public spending to overcome the crisis,” he added.

The finance minister said, “Secondly, we are creating loan facilities through commercial banks at subsidised interest rate for the affected industries and businesses so that they can revive their economic activities and maintain competitiveness home and abroad.”

He said the third strategy is to expand the coverage of the government’s social safety net programmes to protect the extreme poor and low paid workers of informal sector from the sudden loss of their source of earning due to pandemic.

Finally, he said the government will increase money supply to the economy while making a delicate balance between increased money supply and possible inflationary pressure.

“In light of the comprehensive plan and strategies described above, we have declared a number of stimulus packages to support the emergency healthcare services, to protect jobs and to achieve smooth economic recovery. The economic recovery packages declared so far has totaled Tk. 1,03,117 crore,” Kamal said.

The finance minister said at the onset of the coronavirus pandemic, there was a drastic fall in demand in the United States and European market and as a result, export orders to our export sectors including the readymade garments began to witness cancellation and postponements.

This threatened the jobs of about 5 million workers in our export-oriented industries, he said. To tackle this crisis, he said the government has created a fund amounting Tk. 5,000 crore for the export oriented industries so that they can continue to pay salaries and allowances to their workers and employees. This quick action from the government has saved jobs of a large number of workers and employees, he added.

Kamal said considering the partial shutdown effected in the country since late March to contain the spread of the coronavirus, the government has introduced a working capital loan facility of Tk. 30,000 crore at a subsidised interest rate for large industries. For the same reason, another working capital loan facility of Tk. 20,000 crore at a subsidised interest rate for the Cottage, Micro, Small and Medium Enterprises (CMSMEs), he added.

To facilitate the import of raw materials under the back-to-back Letter of Credit facility, he said the government increased the size of Export Development Fund (EDF) from $3.5 billion to $5 billion, at a reduced interest rate.

To improve export competitiveness by financing the pre- shipment expenses of exporters, a new Pre-Shipment Credit Refinance Scheme of Tk. 5,000 crore has been initiated through Bangladesh Bank, the finance minister said.

Besides, Kamal said the government introduced a special honorarium equal to the basic pay of two months for the doctors, nurses and other healthcare workers who are providing critical healthcare services to COVID-19 patients.

He said the government has taken special arrangements to compensate those frontline public servants who might get infected, and in the unfortunate event of deaths, to the family members of the deceased employees.

Besides, the government has introduced humanitarian aid including food aid to those affected by sudden unemployment due to the coronavirus outbreak, he added.

Kamal continued “To that end, we have so far distributed 4 lakh metric tons of rice and 1 lakh metric ton of wheat among the poor free of cost. In addition, we are selling rice at Tk. 10 per kilogram to the low income people,”

The finance minister said one of the key priorities in post-COVID economic recovery plan is to keep the momentum of agricultural production. “We have taken some important steps to maintain the growth in agriculture, and thus to ensure food security for our people. Subsidy in the agriculture sector has been increased to Tk. 9,500 crore. Tk. 200 crore has been allocated as incentives for farm mechanisation,” he added.

In addition, he said the government has raised the target for government procurement and distribution of rice and paddy by 2 lakh metric tons in FY 2020-21 to ensure that farmers get fair price for their produce while at the same time the retail market price of rice remains stable.

“We are also going to form an agriculture refinance scheme of Tk. 5,000 crore to provide required agricultural credit to farmers. Another refinancing scheme of Tk. 3,000 crore has been announced for small income farmers and traders in the agriculture sector,” Kamal said.

The finance minister said the government has been expanding low-interest credit facilities to poor farmers, recently repatriated overseas workers and skilled but unemployed youths in rural areas to enable them to take up self-employment ventures in sectors like agricultural production, agro-based service, small business, cottage industries, SMEs, etc. Under this program, Tk. 2,000 crore will be distributed through three specialised banks, namely Palli Sanchay Bank, Probashi Kallyan Bank, besides, the finance minister said Karmasangsthan Bank and one specialised institution, namely Palli Karma Sahayak Foundation (PKSF), with each receiving Tk. 500 crore.

Apart from this, he said, the government has suspended payment of interest for the months of April and May against loans distributed by all commercial banks. Borrowers of such loans will not need to pay interest proportionately, and of the total interest of Tk. 16,549 crore interest amount, the government will give Tk. 2,000 crore as interest subsidy, he added.