The corona-hit world economy dictates the introduction of special packages and requires timely attention for economic revival and maintaining fiscal discipline.
Developing countries like Bangladesh exposed to globalization are badly in need of immediate plans and actions for economic recovery.
Researchers estimate that Bangladesh had a loss of more than 33bn BDT daily due to lockdown and the GDP growth rate rapidly went down from 8.2 in 2019 to 2.4 in 2020.
Although it is almost impossible to regain the economy by a single country’s sole try, enhancing collaboration with the engagement of development activities and financial assistance are worth mentioning.
Bangladesh has already started emphasizing communication with countries and multilateral international organizations for financial assistance to maintain its economic activities.
The key areas of recovery are infrastructural development, internal and overseas employment, remittance flow, readymade garment sector, and healthcare.
To tackle the socio-economic impacts of the COVID-19 pandemic, the Bangladesh government expects $850 million from World Bank, $750 million from International Monetary Fund (IMF), $600 million from Asian Development Bank (ADB), $250 million from Asian Infrastructure Investment Bank (AIIB) and $150 million from Islamic Development Bank (IsDB).
Additionally, Bangladesh continues to attract support from Nordic countries with an expectation of $5 million aid from Sweden, Norway and Denmark.
Financial assistance achieved from international organizations through bilateral and multilateral negotiation is viewed to help reduce poverty, expand the employment market, and sustain livelihood and economic growth.
Global financial support is a much-focused issue at the moment when a big portion of the budget is allotted for the health sector and social safety net programs.
Moreover, the country’s shrunk economic activities, declining foreign remittances, and big deficit budget demand support from the external and internal market where global assistance seems to be the best choice.
It is also mentionable that combatting COVID-19 in Bangladesh differs from other countries of the world as its economy is greatly influenced by readymade garments, migrant workers, unemployment as well as more than 22 percent of people living below the poverty line.
A survey recently conducted by the Centre for Policy Dialogue shows that about 62% of people lost their jobs because of the COVID-19 pandemic. Moreover, from 8.8 to 35 million people are added to this group posing a threat to the recovery process.
Bangladesh’s communication responded quickly. The World Bank approved a $1.05 billion fund for three development projects namely the ‘Private Investment and Digital Entrepreneurship’ (PRIDE) Project, ‘Enhancing Digital Government and Economy’ (EDGE), and Second Programmatic Jobs Development Policy Credit Project.
Similarly, IMF has approved a disbursement of $ 732 million to tackle the challenges posed due to the coronavirus outbreak.
Their assistance aims at the financing health sector, social protection, stabilizing macroeconomic measures, meeting urgent balance-of-payments and fiscal needs.
A similar response was also received from the ADB as it started assisting with a $300000 grant to the health sector and approved $100 million in emergency loan for this sector.
ADB announced an assistance package of $6.5 billion for Bangladesh, China, Sri Lanka, Mongolia, the Philippines and Tajikistan is a big collaborative partnership to grapple coronavirus. Because of this $1 billion grant, the worst-hit health sector is expected to provide improved services to COVID-19 patients.
The diplomatic endeavor of Bangladesh can claim success as Japan International Cooperation Agency (JICA) has also announced to stand with Bangladesh to counter the present crisis.
Bangladesh expects $1 billion from the long-trusted development partner JICA. The assistance will be helpful for upgradingChattogram-Cox’s Bazar highway with flyovers and bypasses financing to Dhaka Mass Rapid Transit Development, Urban Development and the Fourth Education Development program.
Ceremonial signing program may delay during the pandemic for which Bangladesh has taken measures so that it does not impact negatively.
Because of continuous try and communication, European Union (EU) has announced a mobilization fund of 221 million Euros to Bangladesh for cash assistance to factory owners and 113 million (93 million euros in EU grant and 20 million euros in German grant) Euros to support readymade garments workers affected as jobless due to the coronavirus mayhem.
In addition, the French Development Agency is expected to provide Bangladesh with 150 million Euros to improve countries’ social protection measures.
The aid emphasizes the health sector and vulnerable groups as 64.8 million EU grants will be provided to support Rohingyas in Cox’s Bazar, 246000 Euros to Directorate General of Health Service for operational and technical support.
Sweden is supporting the health sector through the UN and NGOs with the projects such as, ‘Urban Health on Risk Communication and PPE in Urban Setting’ (1385000 Euros); ‘Wash, Handwashing Facilities and Information in Urban Slums’ (462000 Euros); and the ‘Midwifery program with PPE, Training and Triage’ (462000 Euros).
EU transferred 46.12 million Euros for building institutional capacity towards comprehensive education and skills development approach will impact greatly on country’s economy, as education is considered as the fundamental for economic growth.
As the pandemic is a worldwide crisis hitting the world economy severely, economic recovery from the crisis requires a collaborative approach.
The continuous communication and comprehensive plan of different agencies of Bangladesh create the basis to get the approval of the loans from the international organizations.
The recovery plan of these organizations is also treated with positive support. IMF’s announced $50 billion packages that can be increased to $1 trillion is expected to be utilized for lower-income countries to handle the fallout from the pandemic.
It is estimated that the corona-hit damage could be about $2 trillion (2.3 percent of the world’s GDP) with an account of 36 percent in Developing Asia including Bangladesh.
Bangladesh may take measures for revenue mobilization through the continuation of various projects as low revenue diminishes the country’s capacity to sustain higher economic growth and reduce poverty.
Although ADB forecasted 5.5 percent GDP growth for Bangladesh is much higher and rosy compared to 2.2 percent in this region.
However, it is forecasted that about 0.2 to 0.4 percent of Bangladesh’s GDP may be lost due to the spillover effects of the coronavirus outbreak.
The impact is thought to influence employment, development projects, migrant workers, small businessman, private organizations and most importantly readymade garment sectors. This loss coupled with the education loss enhanced unemployment to a great extent.
Financial assistance achieved from international organizations through bilateral and multilateral negotiation is viewed to help reduce poverty, expand the employment market, and sustain livelihood and economic growth.
Fueling to big projects is expected to bounce back by creating more and better jobs through private investment in economic zones; for example, the PRIDE project is expected to create more than 150000 new jobs including the emphasis on women’s employment; EDGE project to create 100000 jobs and train 100000 youths on digital technology.
The creation of jobs during this crisis appears as the good news when the country’s employment is extremely affected due to this havoc.
The government’s economic activities accelerate higher government spending, greater imports of liquefied natural gas, oil, and construction materials, favorable power production, policy support to boost exports. Economic Relations Division of the Ministry of Finance and Ministry of Foreign Affairs (MoFA) of Bangladesh are at the front to communicate, negotiate and achieve a win-win partnership with the donor agencies.
MoFA has recently requested Spain to import agriculture workers from Bangladesh that has the underlying assumption of increasing employment opportunities for the migrant workers who came back to the country because of the present crisis.
It is believed that global partnership with regional integration can not only accelerate an individual country’s economic recovery but also contribute to gain the loss globally happened.
MoFA is also continuously trying to repatriate migrant workers to stable the employment market and remittance flow.
Moreover, Bangladesh can search for a new employment market either inside or outside of the country through job diversification, skill-upgradation.
In line with the diplomatic endeavor, the central bank of Bangladesh took appropriate plan and monitoring to keep the 5.6 percent inflation rate on food prices and non-food prices and support environment and enforcement of single-digit lending rates in Banks.
Bangladesh may take measures for revenue mobilization through the continuation of various projects as low revenue diminishes the country’s capacity to sustain higher economic growth and reduce poverty.
The global partnership will also create more quality jobs and accelerate economic recovery from the COVID-19 pandemic and build resilience to encounter a future crisis.
Continuous involvement is necessary for this turmoil situation otherwise many countries may come forward to grasp the market and force competitors out.
In addition, various institutional mechanisms of the government should play an effective role in utilizing the financial support to get the most out of the financial assistance and maintain transparency and accountability.
It is obvious that only prudent public policy can foster economic growth and proper implementation can sustain the accelerated economic recovery.
It is believed that global partnership with regional integration can not only accelerate an individual country’s economic recovery but also contribute to gain the loss globally happened.
Moreover, a comprehensive plan with assistance from global partners and the country’s internally consistent market can build the economy back better.
(Dr. Mohammad Rezaul Karim is a faculty member at Bangladesh Public Administration Training Centre, Bangladesh)
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