COVID-led lockdowns put dismal impact on people, say experts

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DHAKA, July 21, 2020 (BSS) – Experts in a webinar today said the COVID-led lockdowns, a potential successful tool to slow the spread of Covid-19, have put a dismal impact on people as lockdowns stopped economic activities and reduced tax revenues squeezing government resources.

The experts shared the aforementioned insights at a webinar on ‘Macroeconomic adjustments to the Covid-19 pandemic: considerations for Bangladesh’, jointly organised by Oxford Policy Management (OPM) and Policy Exchange, said a press release.

Policy makers, senior government officials, economists, researchers, representatives from private sector, civil society and development partners participated in the webinar.

Dr. Shamsul Alam, general economics division member of the Planning Commission, was present as the guest of honour.

OPM Country Manager Josh Chipman provided the welcome remarks and the keynote was presented by Stevan Lee, principal economist of OPM. Policy Exchange Chairman Dr. MasrurReaz moderated the discussion.

The speakers said legacy of lockdowns combined with the effects of a global recession is a severe hardship as development gained by developing countries over many years may face setback from this domestic supply shock together with the international demand shock.

The keynote paper is based on a dynamic macroeconomic model developed by a team of researchers from Oxford University and Oxford Policy management that helps look forward through the pandemic to gauge the medium-term impact and paths to recovery.

Highlighting that recovery depends on how the public finances are restored to sustainability, the study said tax systems are narrowly based and plagued by ‘leakages’ and exemptions, which can distort private investment and drag down growth.

Fragile systems for delivering public services means that cuts in investment and productive recurrent spending make things worse, it said.

There are no easy policy options.If ‘Official Development Assistance’ (ODA) supports the public finances, the recovery accelerates.

External finance widens fiscal space, so that domestic policy choices are less awful; it relieves the need to raise distorting taxes and cut productive spending.

Dr. Ahsan Mansur, Executive Director of PRI stressed on health concern needs to be addressed before economy can fully re-start and that the much-required reforms are missing in the current context.

Abul Kasem Khan, chairperson of BUILD, stressed on need for better management of public finance including minimizing less productive expenditure in state-owned enterprises.

Dr. Nazneen Ahmed of BIDS stressed on ensuring equality in the recovery.

Azizul Alam, Additional Secretary and Head of Macroeconomic Wing of Ministry of Finance,stressed on the need for reviving small businesses to ensure employment protection.

Among others, Dr. Selim Raihan of SANEM, Bernard Haven of World Bank, Asif Ibrahim of Chittagong Stock Exchange and Executive Chairman of Bangladesh Investment Development Authority participated in the discussion.