PM unveils Tk 72,750cr package to overcome coronavirus impact...

Dhaka, Sunday   29 November 2020

PM unveils Tk 72,750cr package to overcome coronavirus impact

 Staff Correspondent

 Published: 01:29 PM, 5 April 2020   Updated: 02:14 PM, 5 April 2020

Prime Minister Sheikh Hasina unveiled the government work plan to overcome the possible coronavirus impact on the country’s economy, declaring an allocation of Tk 72,750 crore under a set of stimulus packages. 

The Prime Minister came up with the announcement at a press conference held at her official residence Ganobhaban around 10:00 am on Sunday. The press conference was arranged to brief journalists about the possible impacts of the coronavirus outbreak on the national economy and the ways to face the challenges in the coming days.

The stimulus packages, announced by the Prime Minister, are -

Package-1: The first of the packages involved Tk 30,000 crore, to be provided to affected industries and service sector organizations as working capital through banks as low-interest loan. The commercial banks would provide the amount as loans from their own funds to concerned industries and enterprises on the basis of bank-client relations.

The interest rate of this lending facility will be 9 percent, and the concerned industries and business organisations will pay 4.50 percent interest, meaning half of the interest of that loan, while the government would pay remaining half to banks as subsidy. 

Package-2: Under the second package, small and medium enterprises (SMEs) including cottage industries would get Tk 20,000 crore as working capital. A mechanism would be devised to reach the amount to the SMEs as low-interest loans through banks which identically will disburse amounts to the SMEs on the basis of bank-client relations while the government, in this case, would bear the greater share of the interest amount.

The interest rate of this lending facility will be 9 percent and the concerned industries and business organisations will pay 4 percent interest of that loan, while the government will provide the remaining 5 percent as subsidy.

Package-3: The third package was meant for enhancing Bangladesh Bank’s Export Development Fund or EDF size from US$3.5 billion to $5billion to facilitate raw materials imports under back-to-back LC. The package would result in adding an amount of additional Tk 12,750 crore equivalent to $1.5 billion to the EDF while its interest rate would simultaneously be brought down to 2  percent. The existing EDF interest rate is 2.73 percent in line with current London Interbank Offered Rate-LIBOR + 1.5 percent.

Package-4: Under the fourth package, the central bank will introduce a new credit facility of Tk 5,000 crore as “Pre-shipment Credit Refinance Scheme” and its interest would be 7 percent.

Package-5: Earlier the Prime Minister declared a Tk 5,000 crore (emergency) incentive package for paying salaries and allowances of export-oriented industries workers and employees. 

With the four fresh allocations, the total amount of financial assistance would stand at Tk 72,750 crore, which is nearly 2.52 percent of GDP. 

“I hope our economy will rebound and we could reach near the desired economic growth, if the stimulus packages, the previous and the fresh ones, could be quickly implemented,” Sheikh Hasina said.

The premier said the government simultaneously took four programmes under the work plan to be implemented in phases categorized as “immediate, short and long”. The four programmes are: increasing public expenditure, formulating a stimulus package, widening social safety net coverage and increasing monetary supply, she said.

Due to the in time and proper action, there was no major transmission of coronavirus in Bangladesh, the Prime Minister said, adding that the situation is still under control.