Write an Essay on 'Stimulus Package' during COVID-19: Rote of Banks and Implementation Challenges.
'Stimulus Package' during COVID-19: Rote of Banks and Implementation Challenges
The government has so far announced a set of stimulus packages worth around $11.90 billion (Taka 1.011 trillion to offset the COVID-19 shock on various sectors of the country and minimize the sufferings of the people hit hard by the nationwide shutdown enforced to fend off the deadly virus. "In the wake of COVID-19 outbreak in the country, the government led by Prime Minister Sheikh Hasina has so far declared a set of stimulus packages of Tk 1.011 trillion which is 3.6 pe cent of total GDP to reinvigorate the country's economic activities and production system.". It said total of 18 economic sectors, including export-oriented industries; small, medium and industries, agriculture, fish farming, poultry and livestock have been brought under these incentive packages.
Among the packages, the highest amount of Tk 300.00 billion has been allocated for providing working capital facility to the affected industries and services sector organizations followed by T 200.00 billion stimulus package for supplying working capital to the small (including cottage industries) and medium industrial enterprises.
As the impact of the corona virus outbreak on Bangladesh economy is becoming apparent in many ways, Prime Minister Sheikh Hasina announced a second stimulus package for the affected sectors on April 5, 2020. These packages are for the immediate, short and long terms that aim to increase public expenditure, widen social safety net coverage and increase monetary supply. Earlier, on March 25, 2020, the government declared the first stimulus package amounting to Tk 5,000 crore for the export-oriented sectors.
Now the second package covers four areas and amounts to Tk 67.750 crore to overcome the economic losses caused by the corona virus situation. Thus, the total size of the stimulus packages stands at Tk 72,750 crore, which is about 2.5 percent of Bangladesh's gross domestic product (GDP). This support is deemed to help both local and export-oriented sectors which are facing the heat of Covid-19.
In the new package, Tk 30,000 crore is set aside for big industries and the service sector which will be distributed by commercial banks as working capital loan at 9 percent interest rate. Here, the government will provide 4.5 percent as interest subsidy. Small and medium enterprises (SMEs) including the cottage industries, will receive Tk 20,000 crore as working capital loan at 9 percent interest rate, and the government will give 5 percent interest subsidy. An amount of Tk 12,750 crore has been allocated under the Export Development Fund (EDF) of Bangladesh Bank to facilitate raw materials imports under back-to-back Letter of Credit. The interest rate here has been reduced to 2 percent from 2.73 percent. The fourth component is the allocation of Tk 5,000 crore to facilitate the Pre-shipment Credit Refinance Scheme' at 7 percent interest rate.
The government has also committed to widen the coverage of the existing social safety net to address the basic needs of people living below the poverty line. These include workers in the informal sector, the daily labourers, old people and destitute women. They will be supported by way of cash transfers, free food and rice at Tk 10 per kilogramme through the open market sale operation. Free housing has been promised to the homeless people. There is no clear indication about the amount of resources allocated for these activities. If these people are to survive throughout the corona period and beyond, there will be a huge requirement for that. Therefore, not only the allocation is required right now, but the upcoming budget for FY 2021 will have to make room for their requirements.
The stimulus package is a timely and much-needed measure. The questions that are echoed around now are: how this money will be mobilized, and how it will be utilized.
Apparently it seems that the major responsibility will be on the commercial banks. The banks have to generate the funds to provide working capital loan for business, trade and services. In this respect, a number of issues can be raised.
First, one of the important features of Bangladesh's stimulus package is that the lion's share of the package-Tk 67,750 crore-is repayable loan. In other words, this is a liquidity support. Except for the support t under EDF of the central bank, the commercial banks will be responsible for the selection of their customers, and thus for absorbing all types of risks attached to the loan, such as management risk, sectoral risk and market risk. The banks will also have to ensure that the loan is paid back to them in due course.
Given the current health of the banking sector, whether it is in a position to perform this huge responsibility is a natural question. The banking sector is now overburdened with huge non- performing loans (NPLs), liquidity shortage, low net profitability, lack of skilled human resources, poor risk management preparation and inadequate technological skills.
Several banks have lost their reputation due to bad loans and poor management. People have turned away from them and do not want to keep their hard-earned money in these banks. Particularly, the new banks and several non-banking financial institutions are suffering from a serious management crisis that led to loss of confidence of the depositors. In the current fiscal year, the government has imposed restrictions on further sales of the savings certificate as it was creating a fiscal burden for the government. As a result, bank deposit has increased by about 10 percent in the current fiscal year. However, those deposits are kept in the good private banks and in the state-owned banks. Therefore, not all banks are equally capable of providing loans to support the Covid-19 affected businesses.
Second, if the Covid-19 loans become bad loans, the banking sector will run into further trouble. It has been mentioned that borrowers will be selected by the banks based on bank-client relationship. Unfortunately, this understanding did not bring any good for the banking sector so far. Much of the NPLs in the banking sector is due to the habitual defaulters who have been given leeway through various supports by the policymakers. Given the historical experience of loan default, one cannot but be apprehensive of the misuse of the new opportunities announced for the corona-affected businesses. The willful defaulters are mostly powerful and politically connected people. Banks have had always difficulties both in case of refusing loans to them and in recovering the loans from them. Thus, banks should be hundred percent compliant in disbursing these loans during such a critical time. The central bank has a critical overseeing role to play here.
This is more so because the full responsibility of fund distribution and management will be on the commercial banks. No other organizations will be there for them. Even any irregularity with regard to the distribution of EDF fund will not be the responsibility of the central bank. The Ministry of Finance will provide export support. In case of bank loans, the ministry will pay the interest subsidy on loans which are projected to be Tk 3,000 crore.
Third, how the money will be generated is another issue. As the corona virus continues to affect the economy, the liquidity crunch will deteriorate further since economic activities will shrink. Bangladesh Bank has undertaken quantitative easing by reducing policy rates. Towards this, the Cash Reserve Ratio (CRR) has been reduced by 0.5 percentage point. This will generate an additional Tk 6,200 crore. If needed, Bangladesh Bank may have to reduce the CRR further and also reduce other rates such as the Statutory Liquidity Ratio (SLR) given the demand for liquidity during the Covid-19 crisis.
Fourth, the transparency and accountability of this stimulus package will be of paramount importance. Who will get the support, on what basis the demand of the applicants will be assessed, and whether there will be non-interference from the powerful groups are issues that are attached to the distribution of the incentive package. Of course, the prime minister herself warned again misappropriation and mismanagement of the stimulus package. One only hopes this reaches the people at the ground level-and for once at least, the opportunists keep themselves away from grabbing a share from this humanitarian support.
message Finally, the government should also explore options for support from the international developme agencies and donors. International Monetary Fund, World Bank. Asian Development Bank, Asian Infrastructure Investment Bank, Islamic Development Bank and other agencies have enhanced the support packages during this crisis moment. Bangladesh will have to move fast since there are several countries in line to receive their support to tackle the impact of Covid-19 crisis.
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The Importance of Press Freedom
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Press freedom takes influential place in a country. It represent citizen’s freedom of speech. Media can expose news without obstructer or any controls by government and organizations. There should not be control over the press. As press freedom is necessary for the preventability of corruption, development of economy and maintenance of democracy. One of the advantages of press freedom is it can help to control on the level of corruption. A country which has higher press freedom tends to lower corruption in government or some private’s agents (Brunetti & Weder, 2003). Sometimes countries might think press free threats the stable of political and it might easy be controlled by different organizations. However, again the most persuasive idea come.
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Health for all by the year 2000
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Cluster Villages
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Cluster Villages
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Description of Villages
Villages have either tiny hamlets of thatched huts or large settlements of tiled roofs, stones, and brick homes. An impression has been created by artists and filmmakers that an Indian village is a simple cluster of mud-plastered walls, shaded by trees, overlooking the large expanses of green fields with a few people moving slowly and of course, bullock carts. They portray a village woman with a pot on her head and walking gracefully, her skirt swaying gently. The reality is that a village is the hub of nonstop activity, with their stronger work ethics. Agriculture is tough and requires hard work. The villagers work very hard and are always trying to find innovative methods of growing wheat, rice, and lentils.
Importance of Village
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Life in Village
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Conclusion
My village is a small abode for happy people. Here they live in harmony and peace. The village people are very hardworking and thus they must have a good source of upliftment. Like the village’s schools and clinics should be maintained and increased in number. The farmers should be facilitated by helping them to leverage their sales, make them notified about the modern techniques used in farming, and give them compensation and knowledge of the true market price of their crops. Thus, I would request governmental authorities to come forward and uplift the medical, educational, and farming facilities in the village.
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Problems of urban living in Bangladesh
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Problems of urban living in Bangladesh
Cities in Bangladesh are faced with the challenges of rapid population increase characterized by crises such as lack of economic dynamism, governance failure, severe infrastructure and service deficiencies, inadequate land administration, massive slums and social breakdown. However, urban centers continue to grow, despite the severity of these obstacles. As a result, urban areas in Bangladesh have exceptionally high population density, but relatively low economic density. High population density, combined with rapid urbanization, implies a large and fast-growing urban population to manage. Dhaka city, the largest urban conurbation in Bangladesh, is one of the most densely populated urban areas in the world. However, the economic density of Bangladesh’s urban areas (GDP or value-added per square km) is relatively low from an international perspective. Economic activity is concentrated in Dhaka and Chittagong. About 9% of the Bangladesh population lives in the Dhaka metropolitan area, which contributes to 36% of the country’s GDP. An additional 11% of the Bangladesh GDP is generated by Chittagong, the second-largest city and home to 3% of the population. The economic gap between Dhaka and Chittagong compared to other medium and small-size cities is large and widening.
Bangladesh needs to build an urban space that is capable of innovating, is better connected and more livable in order to make cities competitive. Bangladesh’s urban space is falling behind in all three of these drivers of competitiveness. The Dhaka metro area needs to evolve into a diversified economy with skilled human resources and an innovation capacity fueled by the cross-fertilization of ideas typical of large metropolitan areas. Dhaka metro area also needs to be better connected internally and with its peri-urban areas, and both Dhaka and Chittagong have to strengthen their connection to the global economy. Improved connectivity within Bangladesh’s system of cities is also important for productivity and export competitiveness. The development of an economically dynamic urban space, in particular in the Dhaka metro region, has occurred at the expense of livability. The livability of the urban space will become an even more binding constraint to sustained growth as Bangladesh transitions to a new business model based on higher-value industries and services, which need a highly skilled and internationally mobile workforce. This is a tall order for Bangladesh, but planning needs to start today for Bangladesh’s cities to become more competitive in future.
Urbanization have crucial role to play in the economic development of Bangladesh. The circumstances under which population in Dhaka and Chittagong are growing without proportionate infrastructural development will begin to wipe out most of the gains associated with urbanization. That is, relative high levels of urbanization may not be sufficient to ensure higher levels of economic welfare in Bangladesh. This has happened in Latin America with levels of urbanization, above 80%, yet with real per capita incomes about a third that of developed nations. It could happen in Bangladesh as well unless the urban managers rise from their prolonged slumber.
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My school days
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My school days
School is said to be a temple of knowledge, the very first place that introduced you to the world and more so your own self. My school life is all about the memories I deeply cherish. The memories of not only the fun, friendship and all the sport and extracurricular but also the way it helped me find my interests. I owe it all to my school life. It has made me who I am today.
My school life has been full of different experiences over the years. It gave various opportunities to develop not only my scholastic abilities but also the art and sport side. It supported me in my sports as well as exposed me to numerous types of people. All of this accounted to make me understand how to behave socially and in building a personality which I have today.
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