A $100-million emergency fund has already been approved to help improve the healthcare system and buy equipment, but Bangladesh needs much more to tackle the economic fallout of Covid-19
The World Bank is ready to reallocate the $6 billion which remain undisbursed on existing projects in Bangladesh so that the country can get emergency funds to fight the economic impacts of Covid-19.
“It is time to make that move [reallocation],” Hans Timmer, World Bank chief economist for South Asia, told The Business Standard over the phone on Friday.
He said the World Bank has already approved a $100-million emergency fund to help Bangladesh improve its healthcare system and buy equipment to fight the coronavirus.
But the government needs much more money to tackle the economic fallout of the virus, Timmer said.
The World Bank has nearly four dozen ongoing projects in Bangladesh and the funds involved in these projects are worth $12 billion, of which $6 billion is yet to be disbursed, said the economist.
The Washington-headquartered multilateral lender on Sunday released a report on eight South Asian economies after analysing the impacts of Covid-19 till April 7. The report painted a gloomy picture for all nations in the region.
Bangladesh’s GDP growth is predicted to dip down to as low as 2 percent, mainly due to a decline in consumption, export-import and remittances. This drastic change in economic growth could make thousands of people in the informal sector jobless, according to the report.
“The urban poor will be hardest-hit while the number of additional poor will be higher in rural areas,” the World Bank said in its update report published twice a year.
Timmer said the Bangladeshi government is doing what it can do, but rising fiscal deficit is a challenge for the country to support more people.
The rise in the pre-coronavirus fiscal deficit in Bangladesh was mostly due to significantly lower than expected revenue collection, which was 30 percent lower than the targeted number in the first half of fiscal year 2019-20.
“Weak revenues, contraction in trade and less inflow of remittance have created less space for a fiscal response to the Covid-19 crisis,” he said.
Hartwig Schafer, World Bank vice president for South Asia, said the Covid-19 crisis is also an urgent call-to-action moment to pursue innovative policies and jumpstart South Asian economies once the crisis is over.
“Failure to do so can lead to long-term growth disruptions and reverse hard-won progress in reducing poverty,” he opined.