Efforts to mobilise incentive fund

17 May, 2020 12:00 AM printer

In a resource constraint country like that of ours, the government had to roll out a number of stimulus packages involving taka one hundred thousand crore with the twin objectives of mitigating the sufferings of the poor and people of the low-income groups as an immediate target and, in long term perspective, to fend off the looming economic recession in consequence of the global coronavirus pandemic. Such financial packages are of dire necessity for standing by millions of jobless people at times of countrywide shutdown and keeping afloat the economy badly impacted by internal and external compulsions induced by the pandemic.

However, mobilising such a huge fund for the purpose is a challenging task. Naturally, the government has been pondering over a number of options including printing paper money notes to gather the colossal amount. But, as is evident, printing notes can be the last resort only in unavoidable circumstances.

As part of the initiative of sourcing the huge stimulus fund, Bangladesh Bank, the country’s central bank, has introduced a360-day special repo against repurchase agreements of usually one-day, 14-day and 28-day durations. Obviously, it is intended to increase liquidity supply for the stimulus packages and funds announced by the government and the central bank. The BB has already sent a circular in this regard to the schedule bank authorities.

Relaxing for the time being the ceiling on the purchase of saving certificates can be another option to mobilise funds. Withholding less important development projects and diverting a part of the fund from them is already under active government consideration. It is expected that the liquidity situation in the money market will improve soon and enable the government to promptly and efficiently implement the urgently needed stimulus packages.

Once necessary fund is mobilised, the next challenge would be the flawless disbursement of the money. Business leaders are already apprehensive of disruption in fund distribution for lack of coordination among the agencies concerned. They demanded an environment free of complications and of what they termed as harassment so that the incentives can really function to boost the economy. The government needs to pay attention to this aspect of the reality.


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