Selim Raihan is a professor of economics at Dhaka University and the executive director of the South Asian Network on Economic Modelling (SANEM). A recent survey run by SANEM has revealed the weaknesses in the stimulus package announced by the government to tackle the Covid-19 situation. In an interview with Prothom Alo, Selim Raihan talks about various aspects of the survey as well as healthcare during Covid times, harm faced by the education sector, and the overall state of economic recovery.
The South Asian Network on Economic Modelling (SANEM) recently published the fifth survey on the government's stimulus package, exposing various weaknesses in the initiative. Overall, what is your assessment of the stimulus package?
The stimulus package was an extremely praiseworthy initiative of the government. The government announced this before the other countries of South Asia. The stimulus was proffered to several sectors including export-oriented industries, agriculture, small and medium enterprises and more. The amount was considerable too, totalling 4 per cent of the GDP. Funds were not a problem either. Most of the stimulus was provided through banks. The government subsidised to an extent. But there was the institutional infrastructure and manpower required to distribute such a huge sum was inadequate.
The banks were not very eager about providing loans to the small and medium industries. Then there was the matter of lobbying and influence. It was difficult to overcome all this in order for the stimulus to reach the entrepreneurs who had actually been hit hard. There were discrepancies. There was bribery. But there was no one to monitor all this. All this has been exposed in SANEM's survey.
You all ran five surveys in this regard. Were the results this time even worse than before?
A question asked in the survey which we ran in January-March, was whether it had been possible to revive business from the state it was at this time last year. In reply, 57 per cent said it had been possible. In the case of large industries, this was 70 per cent. But in the April-June quarter the response was that 35 per cent of business had revived. That means things have deteriorated.
You all have said that 20 to 21 per cent of the entrepreneurs received the stimulus. That means a huge percentage remains outside of this assistance. How have they tackled the situation?
On one hand the banks were reluctant, and on the other hand there were procedural problems too. It was not possible on the part of many small and medium entrepreneurs to provide the bank with the papers required to avail the loan. Many small entrepreneurs were outside of the banking system. So instead of bank loans, they turned to friends and relations to take loans on a personal basis for the businesses to survive. Some have used up their capital and so it will be difficult for their businesses to survive. They are being forced to change their businesses.
What is the state of economic recovery programmes in other South Asian countries?
I would say all the countries are struggling. However, not all countries provided the same volume of stimulus. India has the highest stimulus, that is, 11 to 12 per cent of the GDP. India has regional diversity. Some regions there are faring well, and some are doing poorly. Pakistan provided 2.5 per cent of the GDP. Countries like Bhutan, Nepal and others where tourism is the mainstay of the economy, have been hit the hardest. Other than Nepal and Bangladesh, everyone is seeing negative growth. In that sense we are doing well. We have managed to hold on to positive growth.
You are a teacher. How would you assess the harm done to education during these Covid times?
We are in an alarming state when it comes to education. The challenge is how to overcome the negative impact this will have on the future generation. We must keep in mind, Covid is here to stay and we will have to learn to adjust and live with it. We will have to fix our socioeconomic and economic strategy accordingly. Education and healthcare in particular requires long-term planning.
Educational institutions have been closed for a year and a half. Many students have dropped out in the meantime, many girls have been married off. We will fall way back in human resource development. We can no longer delay. Educational institutions must reopen immediately. We cannot shove an entire generation into the depths of uncertainty.
The health sector has the major role in tackling Covid-19, but are they managing to bring the situation under control?
There is an alarming crisis in the health sector. This sector has been facing a crisis for long and this has become more pronounced in these Covid times. Firstly, our budget for the health sector is very low, less than 1 per cent of the GDP. No other country in South Asia has such a low budget for health. And unfortunately, we can't even spend whatever allocation there is. Funds are being returned. Medical equipment imported from abroad is lying idle.
At the outset of the pandemic, there were shortcomings in the initiative to procure the vaccine. It was wrong to rely on just one source. While vaccines have later been procured from other sources, we do not have enough vaccines in stock to meet our demand.
The budgets of two financial years were passed during the Covid pandemic. Coronavirus was at an alarming state when the budget of FY2021-22 was announced. But how far was that reflected in the budget?
The budget did not reflect that the damage done to the economy by corona could be even worse in the future. As a result, the measures adopted to make up for the losses were inadequate. There needed to be a more detailed analysis of the damages, based on which short, mid and long term plans could have been drawn up.
Other than economic recovery, how can we recover from the socioeconomic damages caused by Covid? How long do you think it will take to overcome the crisis and return back to normal?
Firstly, Covid is not going away anytime soon. It will remain for a long time to come. We must keep this in mind when take up socioeconomic plans. We also have to take into consideration the sector and regional-wise problems. The initiative taken for Dhaka may not necessarily be appropriate for Rangpur. The restructuring undertaken for the health sector may not work for the agriculture sector. Sustainable plans of action must be taken based on each different sector and region in order to ensure the optimum benefit.
What would you say about the role of the donor agencies or development partners? Do you think their assistance has been adequate? Will we be entangled in debts all over again?
The Covid problem is global and so it is only natural that there will be a competition for assistance from the World Bank, ADB, IMF or other development partners. All countries will want more assistance. Their assistance to Bangladesh is fine, I would say, but they can discuss with the government about their experiences in other countries in successfully overcoming the crisis and whether this would be effective here. They need to have their planning and we need to be prepared to learn from those experiences. Many countries have taken much more loans than us, so I would say we haven't reached that level of concern. Our problem is that there is a lack of accountability in where and how the loans are being spent. The quality of the projects is also questionable.
Bangladesh is about to emerge from the least developed status to the status of a developing country. What additional challenges does this pose for us?
We would get certain facilities in trade and business as a least developed country. When we enter the developing country ranks, competition will step up. Many facilities will be dropped. We have to redress all the weakness we have in our planning. Above all, we have to change our mindset. We have to accept the reality of Covid and make our development plans accordingly. We need to enhance our administrative and management skills.
Thank you
Thank you too