Mirza Azizul Islam is a former finance adviser to the caretaker government. He now teaches at BRAC University. The country has been seeing a sort of lockdown since 26 March due to the coronavirus outbreak. Everything is shut except emergency services. In an interview with Prothom Alo, Mirza Aziz talks about the possible impact of this lockdown on the country’s overall economy and how to emerge from the crisis.
A sort of lockdown is prevailing across the world due to coronavirus. How far will this affect our economy?
Mirza Azizul Islam: Exports have a contribution to the growth of our economy. Although the export sector was displaying negative growth anyway before this crisis, it will be hit further. Demands will decrease in the global market. Many countries have cancelled or suspended orders. A total of 86 per cent of cotton for our readymade garment industry comes from China. The situation of China hasn’t normalised as yet. Raw materials are also imported from India. A lockdown is also enforced there. Production will decrease if industrial raw materials are not imported in time. There is a crisis in supply.
Migrant workers are returning from many countries due to the coronavirus pandemic. This will have a negative impact too.
Mirza Azizul Islam: Our growth in foreign remittance is 21.5 per cent. This will plummet due to coronavirus. Wages will decrease in the countries where our people are working. Many will lose their jobs. This will affect our economy.
Any other big challenges?
Mirza Azizul Islam: International communications have shut down. Biman’s revenue will decrease. Communication within the country has shut down too. Transport workers and employees will lose their jobs. If garments factories remain shut, the workers will lose their jobs too. Low income groups will be affected badly.
The coronavirus crisis will accentuate the deficit further. How this can be tackled?
Mirza Azizul Islam: The government’s revenue will decrease due to coronavirus, yet expenditure will increase. Support for the poor and low-income groups will have to be increased people has to be raised. Tax rates will have to be slashed in some cases and written off in some. As a result, budget deficit will increase further. The government has to take loans from the foreign countries and the central bank. The economy will face a big challenge. Asian Development Bank has predicted that the growth will decrease by 1.1 per cent.
The government has declared some incentives. How do you view this?
Mirza Azizul Islam: I appreciate that the government has declared Tk 50 billion for the readymade garments sector. Wages of the workers and employees will be paid from this money. But this incentive will not help increase the export.
Has the government any plan about facing the challenges in the informal sector?
Mirza Azizul Islam: Our informal sector is big. About 85 per cent of our people are employed in this sector. The government has taken some steps under the social safety net programmes. The government has announced that rice will be sold for Tk 10 per kg.
The government has said that those who left Dhaka for the villages will be brought under the ‘Ghore Fera Kormosuchi’, an assistance programme of the government for those returning home.
Mirza Azizul Islam: The target of the programme was to lessen pressure on the city and strengthen rural economy. Those who have gone to the village have not gone under any programme. They were forced to leave Dhaka due to coronavirus. Under the ‘Ghore Fera Kormosuchi’, the government’s target was to take steps so that the people find work in their respective villages.
You were the adviser of the caretaker government when there was an economic recession worldwide in 2008.
Mirza Azizul Islam: Prices of rice and oil increased in the global market at that time. Officials of my ministry were given blank cheques to purchase rice from anywhere it could be found, no matter how much money was required. We had a good stock. When the government has a good stock of food, unscrupulous traders cannot destablise the market. The prime minister in her address said there is a plenty of food grain. Monitoring has to be strengthened so that supply is not hampered.
Do you think the government’s steps are sufficient to face the coronavirus crisis?
Mirza Azizul Islam: The government was in denial before the coronavirus outbreak. They claimed everything was going smoothly. The prime minister in her address admitted the crisis and put forward guidelines to tackle it. Everything cannot be done immediately, but people of the low income bracket have to be protected. We do not know how many days the crisis will persist. The government must have a six-month or one-year plan.
International organisations including World Bank and IMF have talked about assistance to tackle the coronavirus crisis. How will Bangladesh benefit?
Mirza Azizul Islam: These organisations are interested in providing loans. We have to negotiate for soft loans with low interest rates. If we remain firm, it will not be difficult to avail this. These organisations will come up with conditions including good governance and an investment climate. We have to enhance our efficiency.
What should be the next budget be like under such circumstances?
Mirza Azizul Islam: The budget deficit should not exceed 5 per cent. The amount of budget deficit can be lessened by allocating more for the prioritised projects. We notice the approval of many projects at each ECNEC meeting. All these projects are not based on priority. Allocations for these projects must be slashed.
Ramadan is ahead. Prices of daily necessaries may go up further and we will be in a dire situation.
Mirza Azizul Islam: Prices of onion, sugar and lentils increase during the Ramadan. Alongside boosting the stock of these commodities, monitoring has to be strengthened.
How would you describe the overall economy?
Mirza Azizul Islam: The country is certainly passing through a grave crisis. We have to work together. The government can take advice from the experts. The government’s propensity towards denial of the crisis has to be abandoned.
Mirza Azizul Islam: Thank you.
*This interview, originally published in Prothom Alo print edition, has been rewritten in English by Rabiul Islam.