The SANEM (South Asian Network on Economic Modeling) Netizen Forum on COVID-19 Pandemic placed six suggestions and proposals to overcome the adverse impact of COVID-19 for Bangladesh.
The prescription came from the fifth episode of SANEM Netizen Forum on COVID-19 Pandemic that was held on Saturday (May 2), through videoconferencing where the Executive Director of SANEM, and Professor, Department of Economics of University of Dhaka Dr. Selim Raihan acted as moderator and 34 others participated, according to a press release.
The Forum pointed out there has been ‘incongruence’ in the directives of the BGMEA. Strict instructions from the Government regarding the workers’ health and safety that must be followed by the factory owners are thus necessary.
Laying off workers should be stopped. Government and garments factory owners can share the burden of salaries for workers during this crisis period.
The spread of infection in factories can result in Bangladesh losing its international market. For ensuring the safety of the export-oriented manufacturing sector workers, the government should produce region-specific and sector-specific health protocols.
Secondly, before easing the lockdown in Bangladesh the number of daily tests runs in each district should increase by several folds. Bangladesh could follow the path of the East Asian countries such as Vietnam and South Korea, where the governments emphasized testing and contact tracing.
Thirdly, so far, Bangladesh has been following the European model of lockdown. Given the different country contexts, Bangladesh needs to develop its own model of lockdown and similar measures to contain the virus.
Fourthly, Bangladesh is facing a liquidity shortage. However, the injection of money in the economy in the form of money printing should be considered as the last resort.
Fifthly, in the upcoming budget, the Government must focus on the health sector and social safety net programmes. Even if it requires a wider budget deficit, the government should take that path.
The Government should not hesitate in deficit financing. The upcoming budget might have a higher deficit than the last couple of years; however, the government must not hesitate to implement it.
Sixthly, Bangladesh’s Debt GDP ratio is comparatively lower than many other countries, including the South Asian comparators. The current account balance of the country is modest, the debt GDP ratio is moderate, and the foreign reserve is sufficient enough to meet several months of import payments.
Under this context, Bangladesh is comparatively at a better standing at the global financial market in terms of exploring the option of issuing sovereign bonds. However, the government needs to be extra cautious to avail of this avenue as misuse of this instrument might bring catastrophic consequences in the long run.
The Forum also said that plummeted oil prices in the international market have two fold effects. On one hand, a large portion of our migrant workers are in the Gulf countries. A fall in oil prices might cause a fall in inflow in remittances from those countries.
On the other hand, due to the oil price fall, the BPC will have surplus earnings during this time. If the oil price in the country is not lowered, the profit earned from this price fall should be used by the Government to finance the social transfer programme. This can be a source of revenue for the Government at this time.
Dr. Selim Raihan expressed his concern that the spread of the pandemic in Bangladesh has not been slowing down. He also briefly discussed the debate around ongoing lockdown around the world. The problem in enforcing the lockdown reflects the institutional weaknesses existing in Bangladesh.
He briefed the forum about SANEM’s recent research on Poverty Impact of COVID-19 Pandemic in Bangladesh.
As he shared the findings of SANEM’s study with the participants, he explained how the pandemic can overturn Bangladesh’s decades of achievement in poverty reduction.
SANEM’s initial findings show that the poverty rate in the country could be doubled from the existing 20.5 per cent to more than 40 per cent by this pandemic.
The pandemic can push a significant portion of the country’s vulnerable poor population into long-term poverty.