Current economic crisis could be medium to long term: CPD

Executive director of the Center for Policy Dialogue (CPD), Dr Fahmida Khatun said the steps taken by the government to deal with the economic challenges are not enough. She said, this crisis could be medium to long term.

She said this problem will not be solved with short-term initiatives. Long term initiative should be taken. Because there is pressure in all sectors except exports. The reserve has decreased a lot.

Dr Fahmida made this remarks at a discussion titled ‘Recent Economic Challenges: How Risky It is’ organized by Center for Policy Dialogue (CPD), a private think tank held in its office at Dhanmondi on Sunday. Dr Fahmida gave a presentation on the present economic situation.

She said, there has been a lot of pressure on the economy of Bangladesh. The foreign exchange reserves have decreased to meet the import expenditure and have gone down to the level of four months.

Former advisers of caretaker government Dr AB Mirza Azizul Islam and Dr Hossain Zillur Rahman, ex-governor of Bangladesh Bank Dr Salehuddin Ahmed, professor of BUET and former energy adviser of the caretaker government M Tamim, CPD distinguished fellow professor Mustfizur Rahman and vice-president FBCCI Mostafa Azad Chowdhury spoke on the present economic situation.

Dr. Khondaker Golam Moazzem, research director of CPD, moderated the discussion meeting.

Mirza Aziz said incentive is not enough to increase inflow of remittance. It needs manpower export market diversification and focused skilled manpower export to recover from foreign exchange deficit.

He also called for looking into the import order along with strengthening the monitoring to stop money laundering through over-invoicing and check that goods are really imported or not.

He said a proper list of poor people is required as the rate of poverty may have increased to 30 per cent from 20 per cent in 2019 due to the pandemic, Mirza Aziz said.

Dr. Salehuddin said loan re-scheduling without proper monitoring and deferreed loan repayment would create a liquidity crisis and discrimination in the business sector.

The small entrepreneurs have been deprived of stimulus packages, and loans re-scheduled and deferred repayment facilities, he said.

He also warned about the bad impact on the macroeconomics due to the central bank’s policy influenced by the vested group.

Salehuddin said dollar selling by the central bank is not a solution to forex crisis. Cautionary measures on luxury goods import and limit cut to keep money in the Nostro Account is needed to overcome forex crisis.

M Tamim said the government had deals with oil-based power plants for 3 to 5 years, but even after 12 years 3500 MW electricity is being purchased from oil-run power plants which have created an economic burden now.

He asked why the government failed to set up gas-based power plants instead of the existing oil-run ones.

Tamim favoured foreign investment for gas exploration in the long-term plan and reform old gas wells for boosting gas extraction for short-run solution.

Hossain Zillur said the government should take effective measures to curb the growing inflation before social instability at grassroots is created.

He said in many countries social discrimination and food inflation created instability and famine. Early and long-term measures are required to avert any such untoward situation in Bangladesh.