The government may need to inject Tk30,000 crore as cash support in three months to help the economy overcome the coronavirus shocks as both global and local demand for goods and services dwindled, a leading chamber says.
The Bangladesh Bank should come up with an initial response, which might be between Tk16,000 crore and Tk24,000 crore, the Metropolitan Chamber of Commerce and Industry (MCCI) said in a statement on Thursday.
The estimation has been made on the basis of workers' wage and other costs of service and manufacturing sectors, it said, advising the government to consider fiscal steps to reduce tax burdens.
It suggested that an independent task force, comprising economists, business leaders, senior bankers and social scientists, should be formed to assess the loss and prepare a detailed support plan.
The required money could be sourced reallocation of budget, reprioritisation of public expenditure, repurchase of treasury bills and availing of zero or low-interest long-term loans from global agencies like the Asian Development Bank, the World Bank, and the International Monetary Fund, the MCCI suggested.
The leading chamber has urged the government to consider stimulus package for the domestic market-based industries, like the one extended to export sectors, to help them survive the coronavirus shocks.
The central bank should meet businesspeople from micro, small, medium and large enterprises to assess their needs and take steps accordingly.
It said the Bangladesh Bank can seek assistance from global financing agencies to build a Tk100,000 crore (Tk1 trillion) fund to help banks and non-bank institutions finance businesses during tough time.
To ensure smooth flow of financing to ailing businesses, the MCCI has requested the central bank to allow borrowing against T-bills and bonds for 90 days, reducing repo rate to 4 percent, allowing zero coup bonds for companies and 12-month moratorium on loan repayment of insolvent companies.
It suggested that the relaxed loan classification should be extended up to December 31 from June 30 now. Interest payment, advance income tax, VAT and hiked utility tariffs be put on hold for now, the chamber demanded.
Business activities and manufacturing – both farm and non-farm – have come to a standstill as Bangladesh has been on pause since March 26 as the government enforced shutdown to slow the spread of Covid-19. Transports remained stopped, shops and offices shuttered and people are asked to stay home until April 11 as the general holiday period has been extended.
The business community on March 24 collectively forwarded a set of recommendations to the prime minister and relevant policymakers to help frame national strategy to overcome shocks from the coronavirus.
Some of the recommendations have been reflected in the steps taken up by the government, the MCCI said, hoping that their other recommendations, including stimulus for local market-based industries, will also be considered.
As the shutdown continues, the chamber sought financial support for small businesses to pay workers' wages and bonus for Eid and food at subsidised prices for tea garden workers.
Citing gloomy outlook of global economy, the chamber said the country's major trading partners might see declines up to 2.5 percent in growth and a recovery may take a longer time. The apparel industry, Bangladesh's main export sector, faced order cancellations and postponements of $2.25 billion in two weeks, while local market demand for food, medicine and essentials is set to drop, it said.
The chamber requested for expanding the coverage of safety-net schemes and distributing food and essentials among daily-wage earners who are out job because of the shutdown.
Additional flow of money is urgent for individuals and businesses during the Pahela Baishakh, Ramadan and Eid-ul-Fitr, it said.