Bangladesh : COVID-19 Active Response and Expenditure Support Program

Public sector management / Public expenditure and fiscal management - Social protection initiatives

Coronavirus disease 2019 (COVID-19) has had a devastating health, social, and economic impact on Bangladesh. The economic downturn has seriously affected livelihoods, especially of the poor and vulnerable. Many informal workers (85.1% of the workforce) lost their livelihoods instantly after the nationwide lockdown. The lack of social safety net coverage will lead to dire consequences for the more than 20% of the population who live below the poverty line and the many newly jobless who will join them.

The Government of Bangladesh acted quickly to mitigate the health, social, and economic impacts of the pandemic. It implemented aggressive containment measures and announced a countercyclical economic package amounting to $11.2 billion (3.3% of GDP), which includes urgent expenditure to expand the social safety net and stimulate the economy to protect jobs. With rising expenditures and declining revenues, the government urgently needs external financing to support key pro-poor initiatives and to inject fresh liquidity into the economy to increase aggregate demand.

The program will support the government to implement its pro-poor, gender and socially inclusive COVID-19 response plan which expands and strengthens social safety nets to address the needs of poor and vulnerable groups. The government program will also protect employment in the key industries, such as the labor-intensive RMG sector where the majority of the workers are vulnerable low-skilled female workers. The proposed program is aligned with Strategy 2030 (ADB), including operational priorities on addressing remaining poverty and reducing inequalities, accelerating progress in gender equality, and strengthening governance and institutional capacity.

Inequality and unemployment reduced (Seventh Five Year Plan FY2016 to FY2020 of Bangladesh)

Adverse economic impact of the COVID-19 pandemic mitigated (Comprehensive Response to the COVID-19 Pandemic 2020 of ADB)

Effect of the reform

Adverse socioeconomic impact to vulnerable groups reduced

As of May 2022, national poverty incidence was 18.5% below the 2019 level of 20.5%. (Power and Participation Research Center-BRAC Institute of Government Development Survey 2022).

As of October 2021, 18.5 million poor and vulnerable people (of whom at least 51% were women) benefited from at least one economic assistance program.

As of October 2021, 3.8 million workers (of whom 53% were women) in export-oriented industries benefited from extended salary support through the program.

Social safety net to vulnerable groups expanded

Employment opportunities protected

Program implementation supported, and critical structural reforms identified

1a. 24,877 doctors, nurses, and other frontline medical workers received two months basic pay as honorarium. The payment of the honorarium is ongoing, and it will continue in FY20212022.

1b. 1.3 million senior citizens from 262 most poverty stricken upazilas newly enrolled in the National Old Age Program and received TK6,000 (Tk500 per month) of whom 46% are women.

1c. 775,000 eligible women from 262 most poverty stricken upazilas newly enrolled in the National Allowance Scheme for Widowed and Husband-deserted Distressed Women or WA program and received TK6,000 (Tk500 per month).

1d. 3.50 million poor families (2.64 million male and 0.86 million female-headed households) received Tk2,500 one-time cash transfer among the selected 5 million families (25% families are headed by women).

1e. The government has distributed 211,117 MT rice to approximately 12.93 million vulnerable families (70% male and 30% female-headed households) with 20 kg rice per month per family under the Special GR program.

2a. Tk49.45 billion utilized to provide wage subsidies to 3.8 million workers in export-oriented industries (53% women).

2b. Tk551.86 billion loans provided to the affected industries and micro, small, and medium-sized enterprises. Tk375.47 billion loans provided to 3,619 businesses in affected industries and Tk176.39 billion loans provided to 115,190 SMEs.

3a. TA consultants have organized training for 60 staff of DSS.

3b. TA consultants have proposed new tools and solutions to improve poverty targeting and service delivery and they are under development.

3c. TA consultant recruited and guidance notes on inclusive and gender-responsive social protection and welfare services developed.

3d. Three consultants have been onboarded in this area; the team has worked on the capacity assessment of the relevant agencies. Monitoring and evaluation capacity gaps for the program identified and enhanced M&E systems and process supported in all delivery channels to provide timely and accurate sex-disaggregated M&E reports.