CPD recommends new stimulus for small businesses 

The Centre for Policy Dialogue (CPD) has recommended formulation of a new stimulus package for the small businesses, which are struggling to recover from the coronavirus pandemic impact. 

The CPD, a research think-tank, has suggested further for reducing the role of bank in the new package to reach its beneficiaries faster.

The recommendation was made in a CPD report titled "State of the Bangladesh Economy in FY2021" on Monday. 

Presenting the report at an online press conference, CPD Senior Research Fellow Towfiqul Islam Khan said that while large and medium enterprises were ahead in recovering Covid-19 losses, the small and medium businesses were lagging far behind. Considering this, the current recovery speed is K-shaped. 

Globally, the possibility of a K-shaped recovery is being discussed widely. This implies that stimulus packages and liquidity support will help large industries and public organsiaitons recover at a faster pace while they will lag behind. 

In the report, CPD said, Bangladesh is likely to follow a similar shape as smaller firms, people belonging to the low income category and the poors in general have been affected disproportionately and have not received adequate government support. Given that SMEs are important sources of employment, the slow recovery of this sector could lead to further rise in inequality. This could jeopardise the sustainability of the recovery. Therefore, policymakers need to chart out the recovery path in a manner that does not leave out the weaker but critically important sectors of the economy.

The stimulus announced by government for recovery from coronavirus was not distributed equally. Half of the announced stimulus in agriculture sector was not distributed till January. Along with this, Entrepreneurs of small sectors are not getting stimulus for not having relationship with bank, Towfiqul Islam added.

"If the government expenditure and money flow to the people increase, it raises the demand of products and services, and subsequently result into new investments and employments opportunities," said CPD Distinguished Fellow Md Mustafizur Rahman. 

"But the government reduced the expenditure in this difficult time, instead of using the opportunity," he added.

Suggesting the government to increase its expenditure instead of saving now, the CPD Distinguished Fellow added that initiatives should be taken to create employments in the rural areas.

The implementation process of rural infrastructure reform projects needs to be strengthened, he said further. 

Regarding the sources of financing, Mustafizur Rahman said that loans are still available from abroad with low interest. Apart from that, the bank also has a surplus liquidity of more than Tk2 lakh crore. In this situation, the size of the government's budget should be increased without thinking of deficit.