Bangladesh needs to inject more cash into the economy to tackle the impact of novel coronavirus (COVID-19) pandemic, said Asian Development Bank (ADB) Country Director Manmohan Parkash.
He also underscored the need for scaling up heath expenditures and tapping all sources of affordable funding to combat the outbreak, reports BSS.
“There is unanimity that the Covid-19 pandemic will affect the economy. Bangladesh economy is largely dependent on trade, remittances and domestic consumption. The challenge is how to minimise it. The interventions and response plan need to be designed from this perspective,” he said.
The ADB country director came up with the observation in an interview with BSS on Friday in connection with the release of the Asian Development Outlook (ADO) 2020, the flagship publication of ADB.
The outlook said the economy of Bangladesh is expected to remain strong in the current fiscal year (FY20) with a growth rate of 7.8 per cent.
Parkash said whether the recovery will be “V shape” or “U shape” will determine how much will be the impact and how long it will last.
The ADB country director said the government of Bangladesh needs a mix of fiscal and monetary interventions like injecting cash into the economy by providing stimulus package as a priority.
He said this could cover social safety net payments; cash support to the vulnerable including informal workers and daily wagers; liquidity support to businesses, including small and medium-sized enterprises; tax rebates; tax incentives; tax holidays; tax reliefs; tax cuts; delayed interest payment opportunities for businesses and industries; and soft loans or interest free credit, among others.
“Health expenditure should be scaled up, cash payments to people and businesses should be prioritised and started immediately. Implementing actions quickly is critical. Quick actions will help restore confidence and ensure quick recovery or V-curve.”
Parkash also suggested that all sources of affordable financing, including grants, low cost debt and reserves, should be tapped.
“A cash stimulus equal to the upcoming economic impact, may help economy jump-start quickly. This must be done in tandem with addressing the health emergency on a ‘war footing’. If done in a coordinated manner, this will not only help flatten the curve but will also make it a temporary shock.” he said.
Appreciating Bangladesh government’s recent interventions to face this deadly virus, Parkash said these are actions in right direction.
He suggested addressing cash management challenges and broader resiliency issues due to Covid-19 related shutdowns and economic knock-ons could help minimise impact on Bangladesh economy.
Noting that the exports are largely dependent on demand from the advanced economies, Parkash said with Europe and the US affected, there may be longer-term impact: staff lay-offs, unclaimed inventory, and cash flow problems due to cancellation and shortage of orders.
He said the other key impacts are likely to be drop in demand, both domestic and overseas; liquidity crunch; reduced remittances; drop in consumption; layoffs contributing to higher unemployment, reduced corporate cashflows, and curtailed wages.
The corporates may have to dig into savings and surpluses, and people may also have to rely on their savings because of layoffs, he added.
“The longer the lockdown, the more will be the economic losses. To contain this, we need a balanced strategy, where we go for targeted lockdowns, and opening of businesses with proper precautions,” he said, adding the government needs to arrest the supply-demand downward spiral, avoid the output loss, and make sure that these are temporary. “Else, it can last longer.”
Terming Covid-19 outbreak as a global pandemic and affecting almost all countries and the entire global population, Parkash said it is a challenging situation, impacting adversely on the well-being of the people, and health of the economy.
“Many people are calling it the worst economic challenge since the second world war. The challenge needs to be managed well.”
He said Bangladesh has been fortunate that it got the time to respond to the crisis and opportunity to learn from the lessons in other countries, like Singapore, Japan, Korea, Hongkong and China.
He said Covid -19 is highly contagious, and the contagion curve needs to be flattened. The contagion effect needs to be stabilised like Japan, Singapore, Hongkong and lately in Korea.
Parkash said some of the main lessons from these countries are: surveillance, rapid testing, isolation, caring, and treatment–moderate for normal but aggressive treatment for seriously affected patients, which may need the hospitalisation, and use of ventilators.
Given the limited resources, he said the management becomes very important, hence the approach has to be to identify critical hotspots, based on either the number of patients or people susceptible as a large number who are coming from outside, and prepare medical facilities adequately.
The ADB country director suggested for closer monitoring, adequate testing facilities, preparing an isolation unit in affected upazilas and adequately providing them with facilities and medical care professionals will all help.
Identifying one key challenge as to have enough medical care professionals – doctors, nurses and other para-medical staff, Parkash said, “We need to encourage them and recognise them through incentives such as enhanced insurance cover for one-year, adequate protective gear equipment, safe work environment, rapid testing and other facilities.”
“It’s a battle that all are fighting and the medical professionals are the main saviours,” he said.
“So, we must protect them and keep their spirits high. Priority should be on health sector with a clear strategy to flatten the contagion curve. This could include providing direct support to health sector for procurement of PPEs, testing kits, safety aprons, and medications, and augmenting the health units where the patients are likely to be treated,” he added.