Tk 677 bn new stimulus packages to face corona economic shock

Dhaka, April 05 – Prime Minister Sheikh Hasina on Sunday announced four new stimulus packages of Tk 67,750 crore (Tk 677 bn) to overcome the possible economic shock from the ongoing shutdown enforced due to the deadly COVID-19 outbreak.
With the previously announced Tk 5,000 crore stimulus package, the amount of the whole package now stands at Tk 72,750 crore (TK 727bn).The announcement came from a press conference of the Prime Minister held at her official residence Ganobhaban. It 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.
In the four new packages, Sheikh Hasina said her government will provide working capital of Tk 30,000 crore for the COVID-19 affected industries and service sector institutions.
The commercial banks will provide the loans from their own resources to the industries or business entities concerned on the basis of bank-client relationship.
The interest rate of this loan facility will be nine percent, of which the loan taker will provide 4.5 percent while the government the rest of the interest to the respective bank as subsidy.
In the second package, which will be for the small and medium industries, the government will provide Tk 20,000 crore as working capital.
The commercial banks will provide the loans from their own resources to the industries or business entities concerned on the basis of bank-client relationship.
Here the interest rate will be the same as nine percent, but the four percent interest will be borne by the loan-taking industry while the rest of the money will be paid by the government to the respective bank as subsidy.
In the third package, the Bangladesh Bank will expand its EDF (Export Development Fund). Aiming to increase the facility for importing raw materials under the Back-to-back LC system, the central bank will enhance its EDF facility from US dollar 3.5 billion to US dollar 5 billion.
As a result, some Tk 12,750 crore, equivalent to US dollar 1.5 billion, will be added to the respective fund.
The current interest rate of the EDF is LIBOR (London Inter-Bank Offer Rate) + 1.5 percent (which is actually 2.73 percent). It will be decreased to two percent, she said.
For the last package, the Prime Minister mentioned that Bangladesh Bank will introduce a new loan facility system titled ‘Pre-shipment Credit Refinance Scheme’. The amount of this loan facility will be Tk 5,000 in total where the interest rate will be seven percent.
While addressing the nation on March 25 on the occasion of the Independence and National Day 2020, the Prime Minister announced a stimulus package of Tk 5,000 crore for export-oriented industries to fight the adverse impact of coronavirus on the country’s economy. This money will be used for providing the salaries and wages of workers and employees only.
“The total amount of these stimulus packages will be Tk 72,750 crore (Tk 727) bn which will be 2.52 percent of the GDP,” she said.
Sheikh Hasina hoped that the country’s economy will bounce back if the stimulus packages implemented quickly. “And we’ll be able to go to close to the desired economic growth, Inshallah.”
She also put emphasis on giving special attention to local products beside the export-oriented sector to overcome the possible global and domestic economic crisis.
In this connection, the Prime Minister urged all to increase production and the use of local products.
On Thursday evening, the Prime Minister held a high-level meeting at Ganobhaban in this regard. Finance Minister AHM Mustafa Kamal, PM’s Principal Secretary Ahmad Kaikaus, Bangladesh Bank Governor Fazle Kabir, Finance Ministry Senior Secretary Abdur Rouf, and PMO Secretary Md Tofazzel Hossain Miah were present.