Navigating the socioeconomic perils of Covid-19 in Bangladesh

Despite the depressing state of major indicators such as for example negative export-import growth; large earnings deficit; falling private sector investment; rising non-performing loans recorded in the last quarter of 2019, along with the impending fear of a worldwide economic recession, the government of Bangladesh has been optimistic that the depressing trend of the indicators could possibly be reversed and instead result in another great year-with respect to growth and poverty reduction. But this optimism has been seriously dented with the extreme onslaught of Covid-19. It has nearly stalled all economical activities everywhere.

Many countries and multilateral agencies have now started to count the economical and social costs of Covid-19. The preliminary estimates emerging from a few sources are frightening. JP Morgan has slashed its USA GDP forecast for another quarter (i.e. second quarter) by twenty five percent and projected an imminent recession, despite "Herculean" stimulus measures equivalent to USD two trillion from the government. The title of the OECD Interim Economic Assessment, published on March 2, 2020, was "Coronavirus: The world economy at risk". Similarly, Modi's government cut India's financial growth forecast from 5.3 percent to 2.5 percent for 2020. Similar dire projections have emerged from other reports and briefs.

The Bangladesh economy will not be spared. The impacts of Covid-19 on monetary growth, job losses and increase in poverty are anticipated to be large. The projected GDP growth of 8.2 percent for 2020 may decline by 2-3 3 percent-that is, economic growth may settle somewhere between 5 to 6 percent. Robust monetary growth during the last decade helped Bangladesh to win her fight poverty-mainly through employment generation channels. According to current projections (before Covid-19), the poverty rate it's still 20 percent in 2020, with almost 32 million living in poverty. Poverty measurement use a poverty line (PL) threshold to recognize poor persons. If per capita income is leaner compared to the PL by even one Taka, they're considered as poor. Like a great many other countries, Bangladesh adopts a minimal PL in value in comparison to international poverty lines, such as for example USD 3.2 for lower middle-income countries and USD 5.5 for upper middle-income countries-suggesting that large numbers of the population are vulnerable regardless if they aren't counted as poor. A decrease in economic growth, plus a rise in joblessness, will inevitably bring about a sharp increase in the poverty rate and push more persons into poverty. The number of vulnerable persons who will need assistance may rise exponentially in 2020, although perhaps for a temporary period, especially since vulnerable groups in Bangladesh lack the savings and resources required to fight the impacts of Covid-19.

Like a great many other countries, the Bangladesh government in addition has proposed a series of measures and stimuli to buttress the results of the pandemic. These are welcome initiatives. Support can be being supplied by the private sector, NGOs and other development partners. Addressing medical risks and the social and financial perils faced by vulnerable populations ought to be the main focus of the federal government stimulus measures. How big is the stimulus may need to be around 4 to 5 percent of GDP. Bangladesh will also announce its budget for another fiscal year (FY2020-21) in June 2020-amid the Covid-19 pandemic. The budget should reorient its focus and channel resources from traditional sectors such as energy and physical infrastructure to social protection, poverty alleviating programmes, medical health insurance and universal health programmes, together with programmes for small and medium enterprises (SMEs). The federal government could increase current social protection allocation of 2.2 percent of GDP to about 5 percent of GDP during this crisis period. Employment generation and poverty alleviation programmes should also attract higher allocations of the budget. Medical sector budget should be permanently risen to 3 percent of GDP from the existing allocation of significantly less than 1 percent of GDP. Along with fiscal measure (tax and subsidy) and utility measures (lower rates and deferred payments), Bangladesh Bank may create special funds to aid SMEs to overcome the Covid-19 economical crisis.

A major plus point regarding Bangladesh is that fiscal and monetary instruments already are in operation (despite the fact that they are not highly efficient), by which these stimuli can be implemented. Operations of digital finance service providers such bKash, Rocket and Nagad could be the key conduits for fast and efficient low-cost fund transfers that avoid human contact. Another advantage in Bangladesh may be the presence of effective clusters of Civil society organisations and NGOs. They, combined with the government, can play a crucial role in beneficiary identification, delivering resources to poor and vulnerable populations, and monitoring the stimulus implementation. Effective and timely disbursement of funds are imperative to tackle the financial and social perils of Covid-19.

Affordability of public funds is normally lower in Bangladesh, epitomised by cost overrun and delay in implementation. It is now time to break this trend and also have high value for the money from the proposed stimulus and the measures to be proposed within the next budget. The next steps can help improve this situation-coordinated likely to pull together all resources (public, private, NGO and development partners) for maximising prioritisation and allocation; creation of a dedicated cell within the Planning Commission for Covid-19 related projects with an aim to approve projects within ten days for the speedy delivery of cash, goods and services; and extension of support from Bangladesh Bank for the quick approval of loans for SMEs and for the effective and timely disbursement of funds.

Bangladesh is well known for its resilience, and we've many times during the past, surpassed expectations and overcome all obstacles in the end. Following on those, it is presumed that Bangladesh will eventually emerge as a more robust nation after weathering the perils of Covid-19.