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Dhaka Tribune

Experts: Reforms needed to addressing current economic challenges

The govt should prioritize controlling inflation in the budget for FY25 as people have been suffering with the soaring living costs 

Update : 03 Apr 2024, 08:38 PM

Economists and experts at an event on Tuesday suggested that the government should prioritize reforms in four areas, including tax regime, exchange rate management, banking sector and public spending management in the national budget for the forthcoming FY25 to address the economic challenges the country is facing.

At a pre-budget consultation "Fiscal year 2024-24 budget: seeking directions for addressing key challenges" organized by the Research and Policy Integration for Development (Rapid) at the National Press Club in the capital, they also said that this was the right time for the government to go for reforms overcoming the policy inertia.

Economists at the event said that the budget for FY25 was being formulated amidst a confluence of formidable economic challenges such as soaring inflation and tumbling foreign exchange reserves.

The government should give utmost priority to controlling inflation in the budget for the financial year as people have been suffering with the soaring living costs for the past two years, they said.

Rapid Chairman MA Razzaque presided over the event while State Minister for Planning Md Shahisuzzaman Sarker and Md Nasser Shahrear Zahedee Mohul, MP, attended the program as chief guest and special guest respectively.

Rapid Executive Director M Abu Yusuf presented the keynote paper while former National Board of Revenue chairman Muhammad Abdul Mazid, Dhaka Chamber of Commerce and Industry President Ashraf Ahmed, Prothom Alo Head of online Shawkat Hossain Masum and Economic Reporters Forum President Mohammad Refayet Ullah Mirdha also attended the event as panel discussants.

Yusuf identified sluggish global growth, inflation, low tax-GDP ratio, foreign exchange crisis, high non-performing loans, increasing external debts and slow growth in employment opportunities as the key challenges for the economy of Bangladesh.

To address the challenges, he recommended preparing strategies to deal with sustainable transition from LDC status, tariff rationalization, domestic resource mobilization and withdrawal of cash assistance or exploring alternatives.

Yusuf also suggested generating more revenue from direct tax instead of indirect tax to reduce income inequality, saying that Bangladesh’s tax revenue collection, especially from direct taxes, was one of the lowest in the world.

He suggested implementing stricter measures to deter loan default and recover outstanding loans and said that the banking sector was hit by crises like high NPL ratio, low efficiency, unhealthy competition and liquidity shortage, which eventually led to the decision to merge.

Terming policy reform an imperative, Razzaque said that the current political stability presented an unparalleled opportunity for advancing comprehensive policy reforms.

The critical reform agenda encompasses such pivotal areas as enhancing domestic resource mobilization, rationalizing tariffs, managing exchange rates and optimizing public expenditure management, he said.

State Minister for Planning Md Shahisuzzaman Sarker said the national budget is the reflection of the political commitment of the government and a document of responsibility to people.

He said that Bangladesh’s economy has made significant improvement in the past one and a half decades, but the country needs to achieve more.

Former NBR chairman Mazid stressed making the NBR transparent and not incentivizing those who evade taxes and are engaged in capital flights.

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