Bangladesh’s policy makers or higher authorities’ response to the economic threats

of COVID-19

Government response: Bangladesh is a small country and it has seen many diseases and crises in recent

years. For this reason, Bangladesh economy had many ups and downs. But for Bangladeshi government

covid-19 pandemic situation is very new and unpredictable. So, they had to act differently this time

because they had to both think for welfare of the people of Bangladesh and also run the economy. The

first case of corona virus is detected on 8 th march,2020 in Bangladesh. After that the government locked

down the whole country on from 17th march and extended this lock down in various time. As of the

JOHNS HOPKINS UNIVERSITY & MEDICINE website, the total positive cases of corona virus in

Bangladesh are 249,651 and the total deaths are 3,306 but it also recovered about 143,824 cases which is a

good thing. At first, when the government find out that the virus is spreading from the international

airport, they monitored every passengers and installed screening devices and temporary quarantine

facilities. But the number was huge and the passengers did not respond well to cooperate with the

government and from there the virus spreads through all over the country. After that the government

took decision to stop all the flights for some time. Then the government took many steps to aware people

and requested everyone to stay at home. They are also alerting people through mobile phone operators.

The economic threats: Bangladesh government has taken many steps to fight this covid-19 pandemic.

Prime minister of Bangladesh announced an emergency stimulus package of 8.5 billion dollar which is

equivalent to 2.5% of GDP. The government had to provide financial help to people because Bangladesh

is poor country and many people are living under poverty. The world economist intelligence said that in

2020 the global economy will be damaged by 2.2% and this will affect our Bangladesh economy. Because

Bangladesh economy’s major sector is garment factories and they mostly provide their products in the

Europe and other western countries. Because of this covid-19 pandemic their standard of living will be

harmed and there will be less demand for garments products which will affect our garment sector.

Bangladesh economy’s another major sector is remittance. many Bangladeshi live in foreign countries and

they send money to Bangladesh every month but the whole world is locked down and there is no work

for anyone. For this reason, those people could not send remittance to their people and most these people

are from rural areas. In short, the economy of Bangladesh is hampered by this covid-19.

What more needs to be done : Till now, what have been done by the government of Bangladesh and

prime minister are appreciable. Because being a poor country they have taken well care of the people. But

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in some areas, they have to do more to support and establish again the economy in a good way. The

prime minister has taken steps to help those worker level peoples but there are more than 50 million

workers in the informal sector. So, she has to make sure that everyone get support and be helped from

the government. The government of Bangladesh have to spend money in these recent years in health

sector rather than in developing sector. They need to take steps and monitor those plans so that it can be

executed as planned. But the government also have to keep the economy going so they have to aware

people more and ensure a safe environment for those people so that the labors can start their work and

continue in a healthy way.

Public-private cooperation: Covid-19 is a very serious situation not only for Bangladesh but for the

whole world. All countries have to work cooperatively to overcome this situation. In a country, only

government can not do all the work the private sectors also have to step up. There is an ongoing

curriculum going on in the name of “COVID action platform” by the world Economic Forum for this

pandemic situation. So, Bangladesh should be a part of this to have a better control in economy. Beside of

public sector, the private sectors can also provide financial help to those who are suffering in this

situation. This will release a lot of pressure from government.

Country image: In this pandemic where other countries who are developed, they are facing problem to

ensure their standard of living Bangladesh is far away from them. According to world bank research, 15%

Bangladeshi people earn more than 5 dollar per day which is very less amount. So, in this situation those

85% people for sure could not earn enough to fulfill their basic needs. And majority people are informal

sector level workers which means if they do not get any help from their organization than there will no

other source of income for them. It is a very challenging situation for everyone of them. And for those

who lives in rural areas they live their life on daily work basis. If they can not work for one day, they

have to spend that day without having any meal which is a horrible scenario. If a worker has to earn

money and have three times meal for a day, they have to sacrifice their safety because it is not possible to

maintain distance if one gets out of home. The entire country is facing real problem with managing their

basic needs and safety.

Adversity in business and job market: In Bangladesh most of the people are staying in home for this

covid-19 pandemic. The private sectors organization could not continue their work and had to shut

down. And because of this most of the companies haven’t seen any profit in these past months. In

addition, they had to provide half salary to their employees. Now the situation is out of control so many

of them decided to reduce their employee from organization. for this reason, many people are jobless

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now. And the private and public sector organization could release job circular for this situation. So, it is

very much possible that Bangladesh have to face big number of unemployment rate in the coming years.

Areas of appreciation: Though Bangladeshi government had to face many problems they somehow

managed in some areas to tackle them properly. Government of many other countries could not give

proper medication or food supply to their people but the government of Bangladesh did it. the medical

team and the doctors gave proper service for every one of the patients. The governments tried to help all

the poor people who could not manage their needs. They opened a call service and asked everyone to

inform to their near police stations or assigned authorities and they provided every kind of goods and

products so that people do not have to go out which is very much appreciable work. Not only the

government but also some private organization or social workers came forward in this to provide help

alongside with them. It would not be possible without them to maintain this social distance. If they did

not come forward than the situation would have far more horrible from now.

Drawbacks: Bangladesh economy had to face some drawbacks for the current situation. The economy of

Bangladesh was doing pretty well before corona hits our country. After that the whole country faced

lockdown and most of the companies had to shut down themselves. The work of every sectors was on

hold and there were no earnings for anyone except medicine sectors. But the expense did not decline

actually it increased for most of the people. In these recent months all people had to live on their savings

because of this all people are now falling behind in standard of living. And the unemployment will rise

more than ever because many people are thrown out of their workplace. So, it is definitely a drawback of

our economy. It will take a lot of time to recover from this situation. Because to recover at first the

government have to fight and overcome this situation and only than the government can implement

some initiative steps to stable the economy once again.

Impacts of corona virus on financial institutions and market

Impacts of covid-19 on banking industry : Covid-19 damaged the economic situation not only

Bangladesh. The downfall of economy has been seen in all over the world. In banking industry there is a

huge impact for this pandemic. The bank industry was struggling even before the corona virus in our

country. “the covid-19 crisis added salt to the wound for the banking sector.” Said by Beidi Gu, managing

director at the Rohatyn group. The banking industry mostly depend on the individual’s deposits. But

those who have savings in bank they are withdrawing their money to live by. So, in this situation bank

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may face shortage of money and the central bank is also not providing money to them because if the

central bank provide money than there will be a higher chance that the economy will face inflation.

Impacts of covid-19 on Non-bank financial institution: Corona virus affected all sectors of business and

institutions and non-bank financial institutions is no different from them. Non-bank financial intuitions

do their work when there is any deficit in the market, they provide their resources when they have

surplus. Insurance companies, currency exchanges, microloan organizations are examples of non-bank

financial institutions. These institutions provide money or resources to individuals or in any kind of

business so that they can earn through them. But for this covid-19 pandemic these institutions could not

provide or invest because the whole world is in lock down and there is zero production for every

company. So, the profit of these companies is zero or negative figure for other expenses that’s why these

institutions could not generate money from them and provide those who are in deficit situation.

Impacts of covid-19 on capital markets: Capital market is a linkage between investors and savers. In

capital market the individuals deposit their money on bank and bank give those money to the

organizations to do business. Capital markets helps a lot to boost economy. But in covid-19 there is a

huge downfall in capital market. Because the individuals are the main resource for deposit of money but

they are not doing any work in this situation for earnings. If the people do not deposit in the bank than

there will be a shortage of money for this reason the organizations will not have enough money to

withdraw from banks and continue their business. On the other hand, these companies are being shut

down for the covid-19 situation. Because of this they could not produce any goods in these last months

and there is no profit for them. Because of having no profit, they could not pay back the interests to bank.

So, the capital market is being damaged by the both sides.

Mistakes during the pandemic by the financial regulators: The stimulated money by the prime minister

will be mainly execute by the commercial banks because the Bangladesh bank regulated some packages

to avoid liquidity problem. The commercial banks may increase their interest rate once the corona is

gone. So, this is a mistake to give the whole responsibility to the commercial banks. There has also a

budget deficit in the 2020-21 annual budget because of this stimulus packages. Bangladesh bank have to

regulate some rules to face the upcoming possible recession on which they haven’t worked yet.

Some good initiatives by the monetary authorities: after the prime minister of Bangladesh launched a

stimulus package of BDT 1 trillion the central bank also launched some stimulus to ensure bank liquidity.

In these packages the banks have to pay less than 5% interest rate. Bangladesh bank also formed schemes

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for agriculture sectors so that the banks can provide capital loans for the farmers. Bangladesh bank will

also distribute the stimulated fund to the commercial banks so that the low-income people can get loan

also the small business owners will get loans by the micro-finance institutions.

Strategy/actions to overcome: In Bangladesh the covid-19 pandemic has been from the beginning of the

year. And the whole country is been locked down since then. The economy of Bangladesh is in a great

risk and only the financial institutions and markets can help to overcome this situation. The government

and the Bangladesh Bank have taken some steps to make the economy stable. The government and the

Bangladesh bank have to monitor all the beneficial group of people or organizations who have taken help

from this stimulus. Because if those who gets help from the government does business properly with

those money it will add in our economy and it will take a part in our GDP otherwise the economy of

Bangladesh will fall behind beyond imagination.

References:

1. Daily Ittefaq online newspaper ( https://www.ittefaq.com.bd/print-edition/opinion/143793)

2. Dr Selim Raihan’s article on covid-19 induced economic crisis in Bangladesh

(https://tbsnews.net/analysis/covid-19-induced-economic-crisis-bangladesh-what-needs-be-done-

80197)

3. World economic forum website (https://www.weforum.org/)

4. The financial express website (https://thefinancialexpress.com.bd/views/views/settling-

bangladesh-economy-into-the-covid-19s-new-normal-1593706599)

5. Research on covid-19 and finance by John W. Goodell

(https://www.sciencedirect.com/science/article/pii/S1544612320303974#sec0010)

6. Databd.co (https://databd.co/stories/mitigating-impacts-of-covid-19-major-economic-policies-
taken-by-the-government-and-bangladesh-bank-11620)

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