Eminent economist Wahiduddin Mahmud has suggested that the central bank should not provide the government with high-powered money as it causes high inflation and puts impact on the country's economy.
He made the suggestion at a meeting with Bangladesh Bank governor Abdur Rouf Talukder held at the headquarters of the central bank on Thursday.
Bangladesh Bank sat with Wahiduddin Mahmud and sought his advice on overcoming the country's ongoing economic crisis.
Four deputy governors of the central bank--Kazi Sayedur Rahman, AKM Sajedur Rahman Khan, Abu Farah Md. Nasser and Nurun Nahar--were also present at the meeting.
Chief economist of Bangladesh Bank Habibur Rahman presented the economic challenges being faced by Bangladesh.
At the meeting, the central bank said that in the current situation, curbing inflation is more important than GDP growth. It also thinks that the country's current economic situation is not good. So, Bangladesh Bank now wants to take measures to curb high inflation, sources said.
Economist Wahiduddin Mahmud said that classified loans are the major problem in the banking sector. People are losing interest in investing in deposits. It's also creating an unhealthy banking sector. “If the banking sector is affected by non-performing loans, overall private investment will slow down,” he was quoted by sources as saying.
The renowned economist suggested that the central bank take necessary steps to prevent money laundering from the country. Because in recent times, many unexpected incidents occurred in banks which weakened the banking sector as well.
Dr Wahiduddin further said that some steps taken by the central bank were not correct. The central bank has succeeded in reducing imports although exports and remittances have remained as before, sources said.
After the meeting, spokesperson for Bangladesh Bank Mezbaul Haque told journalists that they held a meeting with economist Wahiduddin Mahmud.
“He (Wahiduddin) suggested that the central bank should not make high-powered money now. Though we have already stopped creating high-powered money, he has stressed the need for curbing high inflation and implementing the policy."
Mezbaul Haque, also executive director of the central bank, said that Wahiduddin called for proper implementation and monitoring of the economy by the central bank.
The Bangladesh Bank will formulate a policy in the next monetary policy statement, he added.
Talking to The Business Post, Wahiduddin Mahmud said, “The government should devise plan to curb high inflation and make it public because the government has to gain credibility among the people. Public trust in the government and the banking sector is very important right now.”
