Economists and businesses on Tuesday expressed doubts about effective implementation of the stimulus packages announced by the government to revive the country’s economy hit hard by the coronavirus pandemic. They also recommended fiscal measures to support the businesses instead of creating pressure on the banking sector for financing as around 80 per cent of the stimulus packages were designed to be implemented by the banks. They were speaking at an online discussion organised by the Centre for Policy Dialogue on ‘Responding to COVID-19: A Rapid Assessment of Stimulus Packages and Relief Measures’. CPD executive director Fahmida Khatun moderated the discussion participated, among others, by CPD distinguished fellow Mustafizur Rahman, Policy Research Institute executive director Ahsan H Mansur, Mutual Trust Bank managing director and chief executive officer Syed Mahbubur Rahman, former Bangladesh Knitwear Manufacturing and Exporters Association president Md Fazlul Hoque, National Association of Small and Cottage Industries of Bangladesh president Mirza Nurul Ghani Shovon and IndustriALL Bangladesh Council general secretary China Rahman. In the presentation, Fahmida said that many workers were facing termination although the government launched the stimulus packages for the payment of wages of the workers of the export-oriented industries. The workers who were given 60 per cent of their salaries have been facing troubles to meet their cost of living and a section of them were forced to borrow to survive, she said. She also urged the government to ensure effective designing of the stimulus packages. Unless the effective designing is ensured, the packages would increase disparity and instability, she said. Speaking about the cash incentives given to the marginal people, Ahsan H Mansur pointed out a number of irregularities and suggested transparency along with strict measures regarding the irregularities. Urging for strict handling of the government-announced packages meant for the businesses, Ahsan said that otherwise sponsor-directors of the banks would exhaust the funds and the packages would hardly bring any benefit to the economy. He also suggested that the banks should be aware about the defaulters. Considering the high cost of operation for the banks while giving credit to the small and medium entrepreneurs, issuing credit to the SMEs at 9 per cent interest would be difficult and unhealthy for the banks, said Mansur, also the chairman of BRAC Bank. As the banks were asked to disburse loans based on bank-customer relationship, the entire risk would be on the banks, said CPD research director Khondaker Golam Moazzem. If the defaulters take the opportunity and default again, the non-performing loans in the country’s banking sector would increase further and weaken the financial health of the banks, he said. Speaking about the Tk 20,000-crore stimulus package announced for the cottage, micro, small and medium entrepreneurs, Moazzem said that the amount would be exhausted by 5 per cent of the country’s CMSMEs if only Tk 5 lakh was disbursed to each of them, leaving a large number of the CMSMEs deprived of the credit facility. He also suggested fiscal measures like loan interest waiver and subsidy in utility bills for the CMSMEs as a large section of them would not get the loan facility. Moazzem also mentioned that the branches of banks were reluctant to facilitate such businesses. Bangladesh Bank executive director Lila Rashid said that the problem was not with liquidity, it was with other issues. She, however, agreed that there should be some fiscal measures along with the monetary measures. Mirza Nurul alleged that the banks were very reluctant to issue credit to the CMSMEs. If such tendency remains, the disbursement would not exceed even Tk 2,000 crore against the Tk 20,000-crore target, he said. Federation of Bangladesh Chambers of Commerce and Industry director Md Monir Hossain also mentioned the banks’ reluctance to issue credit to the CMSMEs even though the repayment history of such entities were far better than the large industries. The banks are under an intense pressure and have become vulnerable due to various measures taken by the government for the interest of the customers amid the pandemic, said Mahbubur, adding that 80 per cent of the stimulus packages would be implemented through banks, which would put additional pressure on the banking sector. He said that the banks had already started issuing stimulus credit to the large manufacturers but were in ‘go slow’ mood regarding the CMSMEs.
