Dr. Monzur Hossain, Research Director of the Bangladesh Institute of Development Studies (BIDS), said that currently, regardless of the measures taken through fiscal policy, no significant results will be achieved within the next six months.
Dr. Monzur, on Monday, made this remark during a seminar titled “Current Economic State and Way Forward," held at the Bangladesh Institute of Social Research (BISR) Trust office in Lalmatia, Dhaka.”
He further stated that the economy's current sluggishness could lead to recession.
“Although government spending has decreased, both public and private investment has significantly dropped. Also the National Board of Revenue does not have a separate research cell. They create policies and also implement them, which is why there are no positive outcomes," Monzur added.
Moreover, Bangladesh's tax-to-GDP ratio is the lowest in South Asia. Therefore, the current tax policy is unlikely to remain sustainable for long, he added.
“The Bangladesh Bank is currently trying to provide liquidity support to fragile banks by arranging cash from other commercial banks. However, it will still be difficult to stabilize the banks. During the previous government, there were no economic policies, which is why countries around us have been able to reduce inflation while we have not. Inflation cannot be controlled solely through monetary policy; if ultra-high rates are imposed, all sectors, including industry and trade, will collapse,” according to Dr. Monzur Hossain.
He stated that maintaining reserves between $25-30 billion is sufficient. At one point, reserves reached up to some $48 billion because imports were not possible after the pandemic, while exports were doing well. He also advised focusing on quality investments.
In response to a question from Munem Ahmad Chowdhury, a research associate at BISR Trust, Dr. Monzur mentioned that even if autonomy is given to the Bangladesh Bank, the central bank of the country, it is crucial to perform such responsibilities. In that case, the governor must act impartially under autonomy; lobbying should not occur.
Dr. Monzur added that the Bangladesh Bureau of Statistics is also not that responsible, where accurate information is not always available.
The seminar was moderated by Dr. Khurshed Alam, Chairman of BISR Trust, who emphasized the need for data to understand any developmental activity or issue accurately.
“Many dismiss data from the previous government as baseless, raising the question of why people should still trust government data. Transparency and accountability are thus crucial,” he remarked.
Dr. Khurshid also noted a common issue in mega projects like the Jamuna Bridge, Padma Bridge, and Karnaphuli Tunnel: weak planning. He questioned whether spending on the Karnaphuli Bridge would have been more beneficial than on the tunnel.
Dr. Md. Murad Ahmed, Senior Researcher at BISR Trust, stated that enabling eficiency of the capital market would restore investor confidence, leading to diversified investments and profits. If some instruments can be input to the country's economy, inflation will decrease, and the economy will move towards a robust position.
AKM Riaz Uddin, Senior Research Fellow at The Hunger Project, remarked that just as abnormal symptoms arise when a drug addict stops using drugs, abnormalities will emerge if economic irregularities are changed all at once. Therefore, patience is necessary to move towards sustainable solutions.
During the discussion, prominent businessman Swapan Kumar Das pointed out that according to previous agreements, loan contracts have caused millions in losses, placing investors in significant danger.
He noted that system is running by words rather than works. If this situation is not quickly resolved, investors will lose interest, leading to an economic collapse, he furthered.
Dr. Mohammad Yakub, CEO of the All Bangladesh Research and Development Group, highlighted the importance of research in ensuring transparency in the financial sector.
The event was attended by officials from various government, private, and development organizations, university students, and researchers from BISR Trust.
The Bangladesh Institute of Social Research (BISR) is a non-governmental, non-profit, non-political organization focusing on social justice, development, and human rights. It aims to promote social change and improve the quality of life for marginalized communities through research, educational support, and advocacy for policy making as well as change.
Bd-Pratidin English/ Afsar Munna
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