Stimulus going to unproductive sectors

Bangladesh Bank yesterday directed the country’s lenders to increase monitoring on how loans from the stimulus packages were being used as it found some cheap funds being channelled into unproductive sectors.

In some cases, borrowers are also adjusting other credits with the loans received under a stimulus package, the central bank said, adding that some lenders were also lingering on disbursing approved loans.

Senior officials of Bangladesh Bank said they found some stimulus funds were even being used in real estate and the stock market as economic activities remained sluggish in the face of recurring waves of Covid-19.

The DSEX, the benchmark index of Dhaka Stock Exchange, hit a new high yesterday.

“The core objective of the stimulus package will be affected unless the directives to implement the incentive packages are properly followed and it is in no way desirable,” said the central bank.

In order to provide businesses much needed liquidity support to combat the havoc created by Covid-induced losses, the government began to offer low-cost loan support since the end of March last year, when the pandemic first hit the country.

Until now, the government has rolled out 23 stimulus packages involving Tk 128,440 crore, which is 4.6 per cent of Bangladesh’s gross domestic product.

Of the sum, the central bank has set a target to inject around Tk 97,000 crore.

Bangladesh Bank had earlier directed banks not to allow the adjustment of any credit of the borrowers through the use of loans granted from stimulus packages.

It also reminded bankers of a suggestion to form a special cell to monitor proper implementation of stimulus schemes.

In yesterday’s directive, Bangladesh Bank also asked lenders to release loans sanctioned in a timely manner.

It also asked lenders to engage internal audit divisions in ensuring that money was not going to unproductive sectors.