Stakeholders give finance ministry tip about incentive package during coronavirus

The Ministry of Finance has received 13 recommendations from policymakers, donors, economists and bankers for the implementation of incentive packages to protect industry, trade and reduction of poverty amid ongoing second wave of coronavirus.

Besides, five major obstacles have been identified in the implementation of the incentive packages including lack of trust in state-owned banks to provide loan to small and cottage industries entrepreneurs, according to the official observation of the Finance Division.

Some of the notable recommendations are to introduce a monitoring system for the implementation of the package, to identify the reasons for the delay, to monitor the export sector and to assist the workers.

The finance ministry recently held series of meetings on the implementation of incentive packages announced by the government. At the meetings, policymakers, donor agencies, economists, bankers and business leaders identified the recommendations and obstacles as per minutes of the meetings from the Finance Division. 

Sources from the Finance Division further said that the Ministry of Finance will send these identified obstacles and recommendations to the highest policy-making level of the government and work is underway to prepare a report in this regard.

On the basis of these recommendations, necessary initiatives and directions will be given from the highest policy-making level to further protect the economy in the face of the second wave. Then those initiatives and directions will be implemented by the Finance division.

Senior Finance Secretary Abdur Rauf Talukder said the recommendations made at the meeting on the incentives would be taken up at the policy-making level. Any decision will then be made on the basis of recommendations to deal with the second wave. 

He said two types of damages have been inflicted by the Coronavirus pandemic. The first is on the health sector and the second is the economic loss incurred. The damage to the health sector is being revealed every day. However, it will take more time to calculate the economic loss, the Secretary pointed out.

Selim Raihan, Executive Director of a private research firm said a recent survey on the implementation of the package revealed that after the announcement of the incentive packages, 4 per cent of firms or institutions had recovered the same with loan facilities. 

Therefore, as far as the implementation of the package is concerned, financing, management and monitoring should be looked at. Then it will be effective, he also said.

According to sources of the Finance Division, the government has announced loans, cash and food aid worth Tk 1.21 lakh crore through 21 incentive packages to revive the economy in Coronavirus pandemic. 

As per Ministry of Finance, the concerned banks, ministries and agencies failed to disburse Tk 66,665 crore from these packages till October. In such a situation, the finance department has held a meeting with all quarters to identify the problems with the disbursement of package loans and future actions. Among the obstacles identified at the meeting was the lack of trust in state-owned banks as the banks feel it risky to disburse loans under the packages. That is why the loan money is not being released quickly. There is also complexity and opacity in the loan disbursement process. 

Besides, banks are not looking after the interests of small and medium customers. Many affected customers are are not getting any package benefit as they have no transactions or involvements with the bank.

In this regard, Planning Minister MA Mannan said, the banks are not distributing the package money properly. 

I think banks are legally obliged to disburse package loans. The finance department needs to sit separately with those who agree, he also said. 

The Minister said "You need to know the problem of disbursement of an incentive package and why the banks are not interested in disbursing the loan".

Meanwhile, the second wave of corona has started. To address this situation and expedite the implementation of the packages, the recommendations include evaluating the progress of the implementation of the incentive packages independently (by a third party), to provide more assistance to SMEs, to bring small entrepreneurs under the benefits of the packages. 

In addition, the real victims are guaranteed to receive their loan repayments. The package for the SME sector has a quick discount along with the availability of digital platform. 

At the same time, a nationwide OMS programme will be launched to help the poor. It has also been suggested to make the process of implementation of insurance system and package easier in order to increase interest in agriculture. The recommendations also said that in order to create employment, the SME sector incentive package loans need to be released quickly.

During the meetings, Miss Mercy Myang Tembon, Country Director of the World Bank in Bangladesh and Bhutan, said that special attention should be paid to the implementation of the packages. The implementation should focus firstly on the export sector workers and secondly on the entrepreneurs in the SME sector. 

In his recommendation, Manmohan Singh, Country Director of the Asian Development Bank (ADB), said the stimulus packages would need to be increased to revive the economy. Weak infrastructure needs to be identified and reformed. At the same time the supply system must be kept on the right track.

ask/wi