Dr Salehuddin Ahmed, former governor of Bangladesh Bank, shares his take on the steps – like refinancing MSMEs – needed to prevent an economic crisis
Bangladesh needs to take robust measures, both monetary and fiscal, to help the economy avert a large crisis. The measures Bangladesh Bank has taken, so far, are inadequate and conservative.
The repo rate at which the central bank lends to commercial banks should be reduced at least by 100 basis points – instead of a mere 25 – to increase the money supply.
Bangladesh Bank's decision not to classify loans until June 30, even if a borrower fails to repay banks, is not practical. It should postpone or waive interest on the loans, but has ignored this.
There should be a refinancing scheme of Tk4,000crore to Tk5,000 crore for micro, small and medium enterprises (MSMEs) so that they can obtain low-cost loans.
All these measures have to be taken simultaneously and immediately – not the way the policymakers have done until now.
On the fiscal side, the government has to announce immediate measures to salvage the export-oriented industries so that they can continue their activities.
Some corporate taxes can be postponed or waived. Tax benefits must be given to other sectors and individuals as well.
Those who will be unemployed due to the impact of coronavirus must be given cash incentives. This low-income group – be they rickshaw-pullers or street shop owners and employees – have no income now. So, how will they live?
The government should try for the much-needed money from the World Bank, the Asian Development Bank, the Islamic Development Bank or from any bilateral party
The central bank and the government must adopt an expansionary stance to sustain growth.