Development economics textbooks portray Bangladesh and Turkey as the two success stories of human development and poverty reduction, considering their recent achievements. However, like many other countries, the COVID-19 pandemic has resulted in a crisis in both counties in terms of distorting macroeconomic indicators such as an apparent reduction in economic growth, acceleration in unemployment, inequality and poverty.
Besides the recent reports of international organizations such as the World Bank and the United Nations Development Programme (UNDP), several studies conducted by government and non-government research organizations have shown that the pandemic has posed a serious threat to the existing poor, demonstrated the vulnerable economic status of the people living slightly over the poverty line and pushed millions of people below the poverty line.
To measure the impact of the pandemic on poverty in Bangladesh, the South Asian Network on Economic Modelling (SANEM), a private research organization, has recently conducted a survey of 5,577 households by telephone interview.
The SANEM’s survey found that the upper poverty rate has increased from 21.6% in 2018 to 42.0% in 2020, while the lower poverty rate has risen from 9.4% in 2018 to 28.5% in 2020.
While the upper poverty rate has nearly doubled, the lower poverty rate has nearly tripled, which is an abnormal increase within just three years. In addition, the poverty rate has increased in both urban and rural areas.
On the other hand, a recent study by a group of Turkish economists claims that Turkey, just like Bangladesh and the rest of the world, could too face the same crises at home.
In this section, we briefly look over the policy and programs that both countries have undertaken to address COVID -19 pandemic-induced poverty in order to eventually provide a way forward.
Bangladesh issued 23 COVID-19 stimulus packages with an overall outlay of $14,42 billion, which is 4.44% of its gross domestic product (GDP) of $323 billion. Bangladesh's stimulus packages have been designed to provide low-cost loans to impacted industries and service sectors to ensure food security, enhance social protection and provide special allowances and incentives to the new and existing poor.
Some packages are targeted directly to the poor, for example, the allocation of $34.88 million for poor senior citizens, the allocation of $26.69 million for those with disabilities, the allocation of $24.42 million for widows and women deserted by their husbands and the allocation of $11.63 million to be put toward creating self-employment opportunities in rural areas.
Recently a further $13.95 million has been allocated to incorporate the poor, widows and women abandoned by their husbands in the government allowances in the 2021-2022 fiscal year.
However, economists and policymakers are not that optimistic about the implementation of this massive stimulus package. They are concerned that the financial packages may be ineffective due to poor execution, unplanned allocation of funds and weak accountability.
The stimulus package in Bangladesh is not pro-poor because a major part of it is credit-based as the government is providing interest rate subsidies.
Moreover, the lack of capacity and efficiency of the public management system is a big challenge in implementing a large stimulus package.
Somewhat worryingly, media reports show that corruption at the local level is also creating an impediment to the implementation of these packages.
On the other hand, the economic stimulus package introduced by the Turkish government is comparatively more diverse and multifaceted than that of Bangladesh. Turkey has launched the 21-point stimulus package "Economic Stability Shield" worth $15.4 billion (2.1% of the GDP, which is $736 billion) to tackle the pandemic.
The stimulus-driven measures are mostly applicable to banks and are intended to provide liquidity to the Turkish markets. The government has adopted several urgent measures to support the liquidity of companies and ensure business continuity.
Fiscal policy measures include tax breaks and deferrals along with credit guarantees and delays in loan repayments. Thus, the package introduces a mix of financial support, credit support and employment-related measures to help sustain citizens and businesses during the COVID-19 crisis.
Different government entities have also undertaken several measures through various decrees, legislative amendments and omnibus laws since mid-March 2020 to provide the necessary support to struggling businesses through legal, fiscal and financial incentives.
Moreover, to address the vulnerable population, several key initiatives that directly benefit the underprivileged have been established;
More importantly, Turkey is very willing to share its experience in the fight against COVID-19 with the world. Turkey has organized training sessions entitled “Methods to Combat COVID-19” in various countries, especially in Central Asia and Latin America.
Observing the Turkish experience, Albanian Prime Minister Edi Rama rightly said: “Turkey is one of the countries where we have the opportunity to exchange experiences and follow closely with continuous communication. Turkey's Scientific Committee has a special significance. Thanks to prior experience, Turkey was one of the most prepared countries when the outbreak struck.”
Given the discussion above, we would like to conclude that Bangladesh and other developing countries should learn from Turkey's experience in fighting COVID-19 in terms of how the nation ensured transparency and accountability in the implementation of its stimulus package.
To ensure that management and distribution of the stimulus package funds are monitored, forming an independent and credible national monitoring committee may be very effective.
This committee should represent different stakeholders including government agencies, nongovernmental organizations (NGOs), civil society, the business community and labor organizations.
We must remember that given the nature of the current humanitarian crisis, the cost of mishandling the financial packages is very high.
Hence, we must pay the situation the attention it desperately needs in order to overcome human suffering, particularly the more deprived communities.
*Economist based in Dhaka, Bangladesh
**Ph.D. candidate in Islamic Economics and Finance at Istanbul Sabahattin Zaim University
