Stricter containment, firmer grip on economic recovery

A tiny little invisible virus has already infected more than 1.7 million taking close to 1,08,838 lives. It has cornered everyone without any discrimination.

It infected the first 100,000 in 87 days but taking a little over 30 hours now to do so. The pandemic knows no vaccine nor is there a medicine to cure.

One saving grace is stated to be a death: infected ratio between 1 to 1.5. No wonder a friend of ours writes from Canada, "..... never in our nightmare did we expect to witness such a debacle where self-imprisonment is the only defence." In Bangladesh, it is this physical (social) distancing is what we have not yet fully succeeded to enforce. General holidays, lockdowns, pleadings from the highest quarters, exhorting by the ulemas, campaigning by  the media and even disciplining by the law-enforcers have not achieved the hundred per cent quarantine essential to get rid of the pandemic at some point of time soon.

Expert knowledge asserts that increase in the number of identification and testing of samples will lower the mortality ratio down towards 1.5.

In Bangladesh, an increase in the number of samples tested resulted in higher infection, for example, 4, 5, 18, 35, 54, 81, 112 and 94 cases. Total number of death from the pandemic in Bangladesh is 27 now in an infected total of 424 producing a ratio of 6:37 with a declining trend. Unfortunately, however, our health and healthcare preparedness has not been commensurate with the spectacular gross domestic product (GDP) growth and even its social transformation.

For instance, Bangladesh has one fully equipped intensive care unit (ICU) for 1,30,000 people whereas Nepal has one for 33,000. Testing has been awfully slow to start with; even after a month after the first Covid-19 death on March 08, Institute of Epidemiology, Disease Control and Research (IEDCR) could manage testing about 1,250 samples from 17 facilities on April 10. Top priority is thus essential to help the dedicated physicians, nurses, assistants, cleaners and others concerned to be able to test 3000+ samples a day. Equipping, training, and bringing new facilities, Gonoshasthaya Kendra (GK) and some private medical college hospitals should be done soonest. Disbursement of the incentive rewards in the form of insurance and cash grants will help too.

THE ECONOMICS OF COVID-19: Simultaneously with taking precious lives, more of the unprivileged, the pandemic is also causing massive economic devastation. International Monetary Fund (IMF) has seen a worst downturn. The Secretary General of the UN says, corona damage to the world economy will be the worst since WW2. Depression has already started in Africa. Orgnanisation for Economic Cooperation and Development (OECD) fears up to 2.0 per cent reduction in GDP. Due to the stress, the Italians are predicting a disintegration of the European Union (EU). In the USA, a 3.6-trillion dollar rescue stimulus package has been approved with a special sub-component of $260 billion for the small and medium enterprises (SMEs) revival in the rural and municipal areas. The big industries pump up the GDP growth and the SMEs subsector creates more than 60 per cent jobs in the USA. Covid-19 pandemic has forced a record 6.6 million new registration for unemployment benefits. The Covid-19 onslaught and the uncertainty surrounding the Saudi-Russian oil talks have created a topsy-turvy in the Wall Street. There is an ominous cloud in the horizon predicting that no amount of financial stimulus and currency forced on the US economy will deter reducing the purchasing power from $1.0 to fifty cents.

Leaders of Some European economies and President Trump are indicating that they will open up the economies. WHO (World Health Organization) forecasts total disaster in rushing the economic recovery initiatives before the flattened curve of the Covid-19 casualties nears the bottom. President Trump seems not to care and says, he will start up with a "BANG". The sports and games bodies are also dancing to the tune of the president.

THE BANGLADESH SCENARIO: The general holidays followed by lockdown in Dhaka plus a few other towns seem to be working but not quite. The kacha bazaars (kitchen markets), relief distributions before the TV camera and people on streets and lanes without abiding by the social distancing norms bore that out. Some are simply incorrigible. Meanwhile, defying stern warnings from the head of the government, the robber barons are preying on the relief food bags of some uprooted ones. One incident has it that a chairman after the TV photo opportunity snatched away the relief bag. The incidents in Bogura, Satkhira, Ishwardi and Shariatpur as reported in the media cannot be overlooked. The light punishment may not deter the other such culprits. The RMG KANDO (malcordination? conspiracy!) and the Fatulla plus procession are ominous both for governance point of view and the spread of the virus perspective.

WHY TOUGHER MEASURES THE NEED OF THE HOUR: The national efforts led from the front by the gutsy Prime Minister has saved the country going to gutters by the novel coronavirus (Covid-19). Still more seems to be needed. The health care services need a major shake up, improvement, expansion and capacity enhancement. Quite importantly, physical (social) distancing norms will have to be forced on an apparently too much relaxed segment of the people. Finally, Major organisational economic recovery strategy has to be constructed, among other things, on the immediate attention to the agriculture sector - the massive vegetable, fruits, fish and flower outputs awaiting a supply chain delivery before these rot. Paramount, of course, is the task of distributing the food grants and 10 tk/kg rice to the unemployed small shopkeepers, rickshawalas, vanpullers, cleaners and RMG workers in the wake of the Covid-19 pandemic. As the Prime Minister rightly pointed, there are many who will not extend hand for relief; they need to be contacted. A matter of overarching concern is that the local lockdowns imposed by the local administration, with assistance from law enforcement and security personnel and in some instances by the 'private elements', are not compatible with central control and oversight that is key to a successful countrywide containment operation. Thus stricter controls spearheaded by a composite and empowered committee will have to be put in place. That will be the environment for IEDCR and its partners to identify all Covid-19 suspects and test the samples for getting to the last infected.

WHAT GOOD HAPPENS TO THE ECONOMY? There are complains that the general stand-off and the lockdown are causing enormous damage to agriculture and related sub-sectors not explicitly mentioned in the Prime Minister's stimulus package. May be different modalities can be better introduced under a well-monitored system. The Tk 30-billion (30000 crore) segment of the stimulus package for the large industrial revival would be handled through the banking sector. But the financial and banking sector require major repairs and reform to guard against known defaulters benefiting to the neglect of those who are really contributing to the economy. The bank-client relationship as mentioned in the package should be strictly allowed to play through effective oversight by a perhaps stronger central bank. As to the liquidity shortage issue, the fear of shortage may be unfounded. The reduction of CRR (Cash Reserve Ratio) from 5.5 to 5.0 per cent will release Tk 50 billion (5000 crores). Banks' own excess reserves may also be used to the extent of taka five thousand in this emergency time. Why can't the private scheduled banks' cartel make 50 per cent of their second half i.e July-December for financing the recovery package? Incidentally, two of the state-owned commercial banks (SOCBs), Agrani and Janata have sufficient capacity to provide working capital on a bank-client relation basis. After all, this working capital and proper selection of clients (government has to stay off) should create profits from the operation at a 9.0 per cent interest rate. Again the government should keep to the Prime Minister's promise to pay 4.5 per cent interest cost as the subsidy. In fact, this will generate a working capital revolving fund as a six monthly rotation.

Funds to the tune of $2.66 billion is expected from the World Bank, IMF, Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB) and the Islamic Bank. To everyone's surprise the $260 billion Covid-19 reconstruction fund approved on April 07 has almost left out Bangladesh from the Bank's consideration. The allocation for Bangladesh is not even a $1.0 billion dollar -it is only $100 million. Bangladesh economic diplomacy seems to be in tatters; a vigorous revival is necessary to demand a higher share and quick release.

Given that the revenue collection will have a shortfall of Tk 1.0 trillion (100000 crores), the government will have to look for other sources of funds. The windfall profit that is being made by the BPC (Bangladesh Petroleum Corporation) from a much lower crude price has to be shared with the government. Government may rethink the individual limit of saving certificates from Tk 500 thousand (50 lakh)  to 600 thousand (sixty lakh) and directly further borrow from a segment of society whose benefit is like a social safety net contribution by the government. Also the tax on the dividends should be reviewed. May be the government will take advantage of Covid-19 pandemic to unify the harmful multiple exchange rates  (Regular, RMG, Remittance) into an accurately determined single consistent with the exchange rates of the Bangladesh export competitors all of whom have consciously and significantly depreciated their currencies. Such an exercise will reduce import costs of consumption items, increase exports and remittances (the low price of crude will spell major problem for the Bangladesh workers selling their service in the Middle East in particular. A "correct" exchange rate based on real exchange rate or REER (to include the exchange of the competitors) will, certainly reduce the reasons for money laundering as well as under- and over-invoicing.

The fear of import dependence is a fake one which can be minimised by a diversification of the production base starting with major textile production.

THE SURVIVAL FIRST AND PROSPER NEXT STRATEGY: Singular attention will be needed to restore the supply chain for marketing the perishables like the foods, vegetables, fruits, fish and flowers from rural to the urban centres. Should not the government think of incentivising big retail successes like Agora, Meena Bazar, Swapno, Unimart, Lavender and others to scale up their procurement and selling through a Mail Order (AMAZONDOTCOM of Bangladesh) marketing mechanism? Given that the footwear and some other industries have already been using delivery companies, this mechanism may be set up quite rapidly as a major positive outcome of the Covid-19 pandemonium.

The micro, small and medium enterprises (MSMEs) sector is accounting for 20 per cent of the jobs (ADB) to 33 per cent of the jobs (Planning Commission). If it were possible to look at the potential of the 2.3 million MSMEs in the manner in the USA, Japan and India, the contribution from these could be enormous in employment (particularly self-employment) generation, poverty reduction and disparity denting. India has announced a Rs 75,000-crore SME Development Fund as a major auxiliary help in fighting Covid-19 devastation.  Bangladesh may seriously translate its commitment into concrete steps in rejuvenating the sector starting with an institutional, organisation, personnel, legal and financial strengthening of MSMEs.

THE PREPAREDNESS: When the global economy will rebound and this may happen sooner than thought, opportunities will arise for the competent to metamorphose and find the DIAMOND. Is the Bangladesh planning and finance outfit ready to find out and reap it!