Friday, April 3rd, 2020

ADB country chief for injecting more cash into economy to fight COVID-19

Published 7:26 pm | April 03, 2020

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Online Desk ; The Asian Development Bank (ADB) Country Director Manmohan Parkash has underscored the need for injecting more cash into the economy, scaling up heath expenditures and tapping all sources of affordable funding to help Bangladesh tackle the impact of novel coronavirus (COVID-19) pandemic.
“There is unanimity that the Covid-19 pandemic will affect the economy. Bangladesh economy is largely dependent on trade, remittances and domestic consumption. The challenge is how to minimize it. The interventions and response plan need to be designed from this perspective,” he said.

The ADB country director said this in an exclusive interview with BSS today in connection with the release of the Asian Development Outlook (ADO) 2020, the flagship publication of ADB.

The outlook said the economy of Bangladesh is expected to remain strong in the current fiscal year (FY20) with a growth rate of 7.8 percent.

Parkash said whether the recovery will be “V shape” or “U shape” will determine how much will be the impact and how long it will last.

The ADB country director said the government of Bangladesh needs a mix of fiscal and monetary interventions like injecting cash into the economy by providing stimulus package as a priority.

He said this could cover social safety net payments; cash support to the vulnerable including informal workers and daily wagers; liquidity support to businesses, including small and medium-sized enterprises; tax rebates; tax incentives; tax holidays; tax reliefs; tax cuts; delayed interest payment opportunities for businesses and industries; and soft loans or interest free credit, among others.

“Health expenditure should be scaled up, cash payments to people and businesses should be prioritized and started immediately. Implementing actions quickly is critical. Quick actions will help restore confidence and ensure quick recovery or V-curve.”

Parkash also suggested that all sources of affordable financing, including grants, low cost debt and reserves, should be tapped.

“A cash stimulus equal to the likely economic impact, may help economy jump-start quickly. This must be done in tandem with addressing the health emergency on a ‘war footing’. If done in a coordinated manner, this will not only help flatten the curve but will also make it a temporary shock.” he said.

Appreciating Bangladesh government’s recent interventions to face this deadly virus, Parkash said these are actions in right direction.

He suggested addressing cash management challenges and broader resiliency issues due to Covid-19 related shutdowns and economic knock-ons could help minimize impact on Bangladesh economy.

Mentioning that Bangladesh has a reputation of managing adverse situations in a remarkable manner, Parkash said, “I’m sure the country can rise to the occasion with strong leadership, prudent macroeconomic management, and well-coordinated response to manage this pandemic.”
(BSS)

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