Ahsan H Mansur, Executive Director of Policy Research Institute of Bangladesh (PRI), said that before the national election, the government should clarify what steps it will take after the polls to stabilise the economy.
“The economy is going through a volatile time. At this moment, the government must explain how it will be run after the national polls because the central bank has mentioned that many initiatives will be taken after the election,” he said.
The economist made the comments while speaking at a press briefing on “IMF and Bangladesh” organised by PRI at its office in Dhaka on Tuesday.
Mentioning that the central bank could not control the high inflation, he said, “If the government can keep the inflation rate below 7.50 per cent, then we consider that the economic situation has improved. But inflation now stands at around 10 per cent due to tightened import LC.”
However, the USD rate should be run on a market-based.
Moreover, the interest rate on treasury bills has increased by more than 10 per cent, which is a significant sign for the economy. This indicator means that the government is not manipulating the interest rate on treasury bills. As a result, the lending rate will increase, he added.
The government is trying to keep money stronger and it tightened the monetary policy. The local currency has depreciated by more than 30 per cent since 2021.
He further said that National Board of Revenue (NBR) does not have the capacity to collect tax from shops. “The tax administration has to work with a third party to collect tax from these shops.”
PRI thinks that this is for the first time there is uncertainty over both politics and economy at the same time. “Political uncertainty is increasing economic uncertainty.”
It said if politics is not right, the economy will not be right. During the last two national elections, foreign involvement was not so sufficient.
Ahsan H Mansur said the economy is under pressure due to high inflation, shortfalls in revenue collection, and dwindling reserves.
The IMF has asked for reforms of these matters. But these reforms were not possible before the election. So, inflation will run at around 10 per cent. It is not possible to say where the exchange rate will stop, he said, adding that to face the challenges of the economy, major reforms must be made.
He also said that since the megaproject is based in the country and depends on foreign loans, it should be implemented with the country's own funds.
