CPD urges govt to cut oil price

The think tank made the suggestion yesterday at a press conference on an assessment report titled “State of the Bangladesh Economy in FY2016-17” in the capital. Country passed a successful financial year 2016-17 with boost in private sector investment but some basic indicators were weak, said Debapriya Bhattacharya, distinguished fellow of CPD. He said, remittance, export and agriculture growth, the basic strength of a country, was in downward. Remittance inflow was mainly hurt by wide difference in exchange rate between institution and curb market. The gap between bank and market rate grew up to Tk4 against US dollar, the review report found. Bhattacharya urged the central bank to devalue local currency to support remittance and export. “Remitters are sending money through illegal channel due to higher dollar price in curb market,” he said. Though, Bangladesh Bank is planning to import cash dollar to reduce the gap but CPD doubted whether it will really work to tackle the crisis. It suggested the central bank to balance the exchange rate before announcing the new monetary policy. Debapriya apprehended that coming days are not good for global economy as Brexit and US election already signaled. So he suspect that export earnings will be slow in the next fiscal year and Bangladesh should put more focus on making up domestic market. Next budget should have a policy in this regard that how local market can be developed, he said. The think tank advised government to cut down interest rate on national saving certificates to reduce non development expenditure. Bhattacharya said government could not spend enough in other sector due to higher expenditure in paying interest against saving certificates. He emphasized on the need of cutting down interest rate on NSD and suggested to set ceiling on buying government instruments. NSD sell was 63.2% in the FY16, according to the CPD report. Export growth was 9.7% in FY16 against the target of 7.3%, according to the CPD’s economic review report. Arguing that retail consumers did not enjoy the benefit of oil price fall in global market, CPD urged the government to slash down oil price in the local market to distribute benefit among the consumers to reinforce private sector. Private sector investment is booming and the new fiscal year will see a huge spark in this sector, Bhattacharya hoped. CPD projected huge revenue shortfall of Tk40,000 crore in the FY17 as government did not reform the policy as it committed in the budget. Government still did not implement the new VAT law. Finance minister committed to form banking commission in the budget, but there is no implementation. Revenue earnings shortfall was Tk37,057 crore in FY16, close to the CPD projection of Tk38,000 crore. Budgetary targets are becoming more challenging to the government and huge revise may need in the FY17, CPD suspected. Capital machinery import registered a significant growth of 24.5% in July-November of FY17 amid lack of investment. CPD smelled over invoicing with this high import growth amid falling price of goods in global market. The think tank urged government to inquiry the real cause of the capital machinery growth. CPD expressed dissatisfaction over the weak performance of banking sector as new scams were found as well as default loan rate went up.