It needs to escalate the money flow into the rural economy in order to raise the GDP size through job creation and increase in production, say analysts
The loan distribution from the government's Tk1.21 lakh crore stimulus package is failing to gather pace due to banks' unwillingness, said speakers at a views-exchange meeting in the capital on Thursday.
In this situation, the authorities concerned should force them to distribute the package quickly, they also said at the event titled "Employment Generation and Recovery of Rural Economy" – the second episode of a series discussion being organised by the Finance Division.
Besides, speakers expressed hope that it would be possible to deal with the second wave of Covid-19 with the experience obtained from the first wave.
The meeting was also told that the size of the government incentives to deal with Covid-19 may be raised.
In the keynote, Finance Secretary Abdur Rouf Talukder highlighted various government initiatives and said the economy that declined in the first four months during an eight-month pandemic began to turn around in the following four months. Exports and remittance inflow increased during this time.
The health services directorate is regularly updating the Covid fallout on the health sector but it will take some time to determine the damage done to the economy, he continued.
He also mentioned that about 56-57% of the stimulus package has been disbursed so far but the delivery of some packages needs some time.
Planning Minister MA Mannan, as the chief guest, called upon the Bangladesh Bank governor and the finance secretary to take actions against banks that are vacillating in distributing the stimulus loans.
"Our biggest problem is miss-targeting. As a result, we are getting lower returns overall. We have to get out of this trend," he commented.
Regarding the SME sector, the minister said most of the entrepreneurs in this sector do not have relations with banks, so they need to be brought under the banking network.
The results would be better if reforms are ensured by reducing incentive subsidies and increasing policy support, he observed.
Bangladesh Bank Governor Fazle Kabir said, by December this year, it would be possible to release 90% of the incentive package, if not 100%.
However, only 41% of the package announced for cottage, small and medium enterprises have been disbursed so far, he said, adding that a credit guarantee scheme has been introduced for loan distribution in this sector by moving away from collateral.
Dr Shamsul Alam, member (senior secretary) of the General Economics Division of the Planning Commission, said employment opportunities must be increased to bring momentum to the economy. And in order to do that, the issue of micro-economy must be considered.
Manmohan Parkash, the country director of the Asian Development Bank's (ADB) Dhaka office, said the urban economy has been hit hardest by the pandemic. Creating new employment opportunities by overcoming the impact of this loss is a big challenge for Bangladesh.
He called for increasing the use of technology as well as infrastructure development in market management to take advantage of the rural transformational economy.
Research institute Centre for Policy Dialogue's (CPD) Distinguished Fellow Dr Mustafizur Rahman said, although the rural economy, especially the agricultural sector, has played a big role in protecting the country from Covid rampages, farmers and marginal entrepreneurs are lagging behind in terms of getting government incentives.
It needs to escalate the money flow into the rural economy in order to raise the GDP size through job creation and increase in production, he said.
He also said the government should pay more attention to engage the young society into agriculture as well as create skilled manpower to revive the sector.
SME Foundation Chairperson Md Masudur Rahman said 80% entrepreneurs in the CMSME sector are out of government stimulus due to various conditions.
Entrepreneurs in these cottage, small and medium industries – the driving force of the country's economy – have lost capital due to coronavirus, he also said.
FBCCI President Sheikh Fazle Fahim said the share of big entrepreneurs in the stimulus package is higher. Small entrepreneurs who have lost capital are unable to start anew as banks are reluctant to lend them.