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News Analysis: Where the stimulus package falls short

  • Published at 12:47 pm April 12th, 2020
Stacks of Bangladeshi takaMehedi Hasan/ Dhaka Tribune

The first and immediate thing to do is allocate a healthy budget to solve the biggest healthcare crisis in recent memory

The government must be praised for coming out with a stimulation package that is equal to around 2.5% of GDP. 

But the five-part stimulus package is more indicative of what is not there, instead of what is there.

At this moment, Bangladesh is undergoing four imminent crises that need immediate attention. The package surprisingly offers nothing to resolve these most pressing issues. 

Public health crisis

The impending health crisis due to coronavirus has exposed our health system, which was underfunded and also was ravaged by corruption.

Doctors don't have PPE or proper masks, emergency rooms do not have pressure chambers, there are not enough ventilator machines, our testing capacity is shockingly low, people are being refused entry in hospitals or being refused treatment once there, etc.

The list goes on and on. The first and immediate thing to do is allocate a healthy budget to solve the biggest healthcare crisis in recent memory. The package even does not mention this. 

Food security and starvation

Right at this moment based on various estimates, up to 40 million face different kinds of food crises. Brac has conducted a survey which found that 14% of the people -- that is 23.8 million -- have no food on their plate.

Social media is awash with pictures of formerly waged people desperately searching for food in the streets. Hungry mobs have robbed food trucks in different areas. 

Government has distributed only a meagre 49,000 MT food through VGA program, and there are newspaper reports that the politically connected exploit even these food grains. 

As such, the most critical crisis at this moment is the food shortage for millions of people. 

But the government still has not woken up to this sombre reality and is continuing its days as business as usual.

The 72,000 crore stimulus package reflects this. 

Supply chain crisis

The country is witnessing a supply chain and logistics crisis. Khatunganj the most significant food grain distribution point of the country is witnessing workforce crisis, with workers leaving their work area for fear of contamination. 

As a result, goods which previously took a few hours to unload are now taking 48 hours to do the same. 

Chittagong port authority has reported that against backlog of 44,836 containers on April 8, only 3,000 containers were handled. 

The port on usual days used to handle three to four times this amount. 

The whole logistics network of the country has been ransacked. This has resulted in a scenario where markets have empty shelves but producers are unable to transfer their goods. 

As such, perishable products are rotting on an industrial-scale, bringing massive loss to the producers, while people are facing starvation. There is a risk that this may be exacerbated in the coming weeks. 

Fall of aggregate demand

Along with this supply-side crisis, we are also witnessing a rapid fall of aggregate demand. Several industries have reported that their sales and prices have fallen dramatically. 

This has been most notable with poultry, milk, fish, vegetables and various other perishable goods. 

It is understood the demand for non-perishable industrial goods has also fallen, but that information is not available yet. 

However, the stimulus package completely ignores the above scenarios. 

It offers nothing to address the public health crisis or food security problem or the logistical breakdown and a rapid fall of aggregate demand across all sector. 

Solving the wrong problem

Countries across the world have designed their stimulus packages to provide helicopter money to businesses and people directly. 

It is not only the advanced economies, but India and Pakistan and many other developing countries have also followed the same route. 

Pakistan, for instance, is on the verge of bankruptcy. Their reserve is half of what Bangladesh has. 

But even Pakistan has unveiled an emergency cash support program of 14,400 crore rupees which will directly provide cash to 1.4 crore families using their national identity documents directly from banks. 

It is perplexing that in the face of the grave crisis that is facing the nation, the Bangladesh government's so-called stimulus package solves the wrong problem.