Urgent reforms are required, according to Ahsan H Mansur, executive director of the Policy Research Institute (PRI), to prevent the country's forex reserves from dropping below the $15 billion threshold.
"Right now, we have to take a short-term plan to maintain the level of the forex reserve. Bangladesh must explore all possible options, including getting the second tranche of loan from the International Monetary Fund (IMF), support from the World Bank and other bilateral sources, to save its reserves,” he added.
Long-term reforms in Bangladesh's economy, despite being long overdue, have taken a backseat mainly due to depleting foreign exchange (forex) reserves and inflation.
Given this context, before the National Election that may be held early January next year, economists in a discussion on Sunday recommended making a few short-term changes in the financial sector.
The seminar was jointly organized by the World Bank and South Asian Network on Economic Modeling (Sanem) titled “Fiscal Challenges in South Asia.”
Even after borrowing, they advised maintaining a forex reserve of $15 billion.
The continued economic crisis, according to the discussants, will invariably be extended. Hence, any opportunity should be targeted with coordinated action, they commented.
They also called for a committed political effort for the financial reforms.
Ahsan H Mansur, the former IMF economist also believes that although government debt is rising, it is not alarming as of yet.
To strengthen the greenback, he emphasized on export diversification.
However, due to lower revenue collection, debt repayment capacity is decreasing.
Mansur feared it would create risks in the future. He urged raising the capacity of the National Board of Revenue (NBR) to increase revenue collection.
According to the latest data from the Bangladesh Bank, the country's foreign reserve stood at $21.05 billion.
Earlier Franziska Lieselotte Ohnsorge, chief economist, South Asia, World Bank Group, delivered the keynote presentation.
Regarding fiscal policy, Prof Selim Raihan of the Department of Economics, University of Dhaka, and executive director at Sanem, said: “The next 2-3 months are very important for the country's economy. If no effective short-term plan is adopted within this period, considering the national election ahead, the situation will not be promising at all, it could even be worse.”
The economist emphasized political commitment to economic reforms of the country.
Barrister Md Sameer Sattar, president, Dhaka Chamber of Commerce and Industry (DCCI) also presented at the seminar.
