To ensure prompt access to loans, Microfinance Institutions should disburse loans to small and medium enterprises (SMEs) under the Bangladeshi government stimulus package. This will help generate a quick medium of finance to combat the negative repercussions of the pandemic. The recommendation is made on the authority of South Asian Network on Economic Modeling (Sanem) at the Sanem Netizen Forum on Covid-19 Pandemic.
According to Selim Raihan, Sanem Executive Director, the assistance of the entrepreneur’s community gets compromised due to the delay in opportune extension of loans, since the banking system follows a slow-moving process.
To realize the true potential of previously announced Tk 20,000 crore stimulus package by the Bangladeshi government, the executive director proposed to take the microlenders into serious consideration for this is the ruling sector specialized to cater to the SMEs.
In appreciation of the stimulus package, Raihan added that this action will help revive the sector parallel to the economy if transparency is maintained and the process is administered properly.
Commenting on the social safety net program, he added that the COVID-19 outbreak has rendered people poor and unemployed. However, the government is yet to takes measures in the direction of extending financial cooperation to the eligible people.
Furthermore, tapping into the foreign reserves to cushion the fallout was said to be a good initiative. Though the government must not go overboard with the practice as it will discourage Foreign direct investment (FDI), he added.
Research director of SANEM and professor of economics at the University of Dhaka, Sayema Haque Bidhisha said that the remittance hike is observed since the outbreak. This poses a challenge to the economy since the expatriates are likely to make a return to home to little or no economic activity whatsoever. So, this sector has to be brought under social safety net as well, she added.
Bidhisha also referred to the government to ease the interest rate from 4% to a lower rate, since SMEs won’t be in a position to comply with the criteria.
Given the uncertain dynamics of the pandemic, the situation calls for a vigilant and quick response amongst various sectors. With special emphasis on balancing the various segments of the society under institutionalized reforms.
