SANEM suggests plans to tackle economic headwinds

South Asian Network on Economic Modeling (Sanem) on Thursday recommended mobilisation and co-ordination between different sector’s stakeholders for implementation of various plans and policies in the country.

Stating that the entire world is going through an economic shock that has caused economic crisis worldwide, SANEM said that, Bangladesh has its own issues and structural problems which should be resolved on priority basis for the shock resilience.

The non-profit research organisation also suggested expansion and coverage of food security and social safety programmes to survive the immediate effect of the economic blows in a key-note speech of a virtual seminar

The seminar was titled ‘Bangladesh Economy: Areas of Concern and Actions’ organised by South Asian Network on Economic Modeling (SANEM) on online platform on Thursday.

SANEM, highly recommended forming a penal of experts who will address the rising problems and find out their possible solutions.

Inherent structural problems of the economy and Bangladesh has one of the lowest tax or GDP ratio in the world which have created additional pressure on the economy.

SANEM, asserted fiscal responsibility, prudent debt management, exchange rate management and supply side issues, interest rate management and banking sector governance (banking sector reform), public spending on health, education, dealings with subsidies, SEZ, FDI Padma Plus etc for possible solutions.

Selim Raihan, executive director of SANEM, said that, in the transition from the current crisis, the marginal population should be brought under the social security programme in short term and the scope should be increased as many will be at risk of food safety again.

“We have already suggested reforms in sectors like health, education and taxation and banking. All those are in agreement and policy documents but yet to be implemented that is called policy paralisis which means things will be in papers but won’t be implemented”, said Selim Raihan.

According to the key-note paper, inflation rate in recent months was 8.91 per cent in Bangladesh while Vietnam had only 4.3 per cent inflation rate and Indonesia 5.71 per cent.

SANEM has reported four major reasons behind the inflammatory pressures including import inflations due to escalated world prices of food, fuel and other commodities, shortage of domestic production, anomalies in domestic market and supply issues and currency depreciation.

SANEM in its “Garment Worker Dairies” displayed food security index of RMG workers and their family members in 2022 that was based on weekly observation and indicators.

In the index, food security quality dropped both for workers, head of household and worker’s children while the fall became drastic after the month of August. It suggested boosting agricultural production, facilitating imports, monitoring market and expanding social protection.

Besides, foreign reserves of the country steadily declined since January this year, SANEM said and suggested restraining of import, managing banking interest rate and exchange rate, restricting hundi business.

Mentioning that Bangladesh has highest exchange rate among neighboring India, Indonesia, Vietnam, SANEM blamed pending adjustment, slow adjustment, improper adjustment, multiple rates, credibility trap, and hundi for high exchange rate.