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A V-shaped economic recovery is still within reach. But the general public must play its part.
Says ADB’s country director in an interview
Zina Tasreen
Optimism is a disease, the polemical British-Indian novelist Salman Rushdie once said, and talking with Manmohan Parkash, the country director of the Asian Development Bank, one can’t help but catch that disease.
He is sanguine about Bangladesh’s long-term growth; he feels the country is now where South Korea was about 30 years ago. And he is holding out for a V-shaped economic recovery from the coronavirus-induced slowdown.
“The Bangladesh growth story is very interesting. In 1971, when Bangladesh was born, not many predicted a very bright future,” he told The Daily Star in an interview recently.
But those naysayers were proven wrong with what Bangladesh has achieved in the last 10 years, whether it is in terms of human development indicators or in terms of economic growth.
“We can always debate about percentages here and there. And I am not a person who goes too much into percentages, but I look at the progress made on the ground when I go to rural areas, when I talk to people, when I go to some of these far-flung areas.”
There is enough for people to eat, they have electricity, people have access to mobile telephones and people are generally happy, he said.
“So I think that’s what I take as an index of development. I think it’s a good story. And we must contribute to the story,” said the Indian national while sat in his home in Chandigarh.
Which is why, ADB has rallied around Bangladesh as soon as the country announced its first confirmed cases of COVID-19 in the first week of March, hoping to save both lives and livelihoods.
The Manila-based multilateral lender has provided $601.3 million in loans and $1.58 million in grants since the pandemic began, all to quickly send Bangladesh back to its high growth path.
“It is a work in progress. This is just our immediate response. But, I think, as time progresses, and there is a need for more, we will certainly work with the government to make sure we can help them in this difficult time.”
On the economic recovery front, two scenarios are possible: a V-shaped recovery and a U-shaped recovery.
In a V-shaped recession, the economy suffers a sharp but brief period of economic decline with a clearly defined trough, followed by a strong recovery.
A U-shaped recession is longer than a V-shaped recession and has a less-clearly defined trough. GDP may shrink for several quarters, and only slowly return to trend growth.
But Parkash, who has been in Bangladesh for the past two-and-a-half years and in Manila in the previous 15 years, is leaning more towards the former.
“If you look at it before the pandemic, Bangladesh happens to be a country with moderate fiscal deficit, moderate government debt, moderate current account deficit, inflation in control. Before the pandemic, things were going quite well.”
But the pandemic has brought an end to this purple patch.
Parkash is hopeful that the disruptions from the export market and remittances and others can be offset through an increase in domestic consumption. And that can be done through more proactive actions on the fiscal and monetary sides.
“So what we are hoping is that the V-shaped recovery could take place,” he said, adding that the difference between a U-shape and V-shape recovery is how quickly the health crisis can be brought under control.
And the onus of flattening the curve on coronavirus does not lie squarely on the government’s shoulders; cooperation from the people is going to be very critical.
“Whether you will wear a mask, whether you will do social distancing, whether you will follow the lockdown rules, this is all about behaviour change. It is less on the government and more on the people to maintain those things.”
And getting people to modify their behaviour to suit the pestilential time we are in has not been easy. But behaviour change is fundamental to managing the health crisis and staging a quick economic recovery.
“I think one of the big challenges for us in this part of the world also is how do we get people to really obey what is good for them?”
But it is not that the government does not have a part to play.
Health should take centre stage in the budget for fiscal 2020-21 that Finance Minister AHM Mustafa Kamal is set to unveil tomorrow.
“Countries that invested more in health, they have been able to manage this pandemic much more easily, they have lost fewer lives,” he said, citing Germany, Japan and South Korea as cases in point.
The health budget should not just go towards increasing the number of hospital beds but also towards prevention, health management and the surveillance side of it.
After health, social protection should get the focus.
“Bangladesh has achieved good progress in poverty reduction in the last few years but this pandemic has put that progress in peril. So suddenly more attention will be needed for social protection support.”
The budget could look at making the social safety net more sustainable and it could also look at how to get the benefits directly into the hands of the beneficiaries more quickly, more transparently, with no leakages, said Parkash, who holds a postgraduate degree in Management of Public Enterprises from the University of Punjab and a bachelor’s degree in Mechanical Engineering from the Indian Railway Institute of Mechanical and Electrical Engineering.
Agriculture and food security should get the third priority in the upcoming fiscal year’s budget.
Modernisation of agriculture, mechanisation in harvesting, and storage and warehousing should get emphasis.
The budget should also have an oversize employment generation programme given the hordes of returning migrants and the numbers that have lost jobs for the two-and-a-half-month-long pause of economic activities.
This brings us to the topic of lives versus livelihood debate. Was the government right in lifting the movement control order from June 1, at a time when the caseload and death toll was escalating?
Parkash appeared to be sympathetic to the government’s compulsion. But a staggered opening would have been judicious.
“One needs to really understand that both lives and livelihoods are very important.”
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