Staff Reporter :
Experts and economists have suggested the government prioritizing reforms in four areas including tax regime, exchange rate management, bank sector and public spending management in the national budget for the forthcoming financial year 2024-25 to address the ongoing economic challenges.
They made the call while speaking at a pre-budget consultation on ‘Fiscal Year 2024-24 Budget: Seeking Directions for Addressing Key Challenges’ organized by the Research and Policy Integration for Development (RAPID) held at the National Press Club in the city.
They said the upcoming budget was being formulated amidst a confluence of formidable economic challenges such as soaring inflation and tumbling foreign exchange reserves.
The government should give utmost priority in controlling inflation in the budget for the upcoming fiscal year as people have been suffering with the soaring living cost for the past two years.
In his presentation, RAPID Executive Director Abu Eusuf identified sluggish global growth, inflation, low tax-GDP ratio, forex crisis, high non-performing loans, increasing external debt and slow growth in employment opportunities as the key challenges for the economy of Bangladesh.
To address the challenges he recommended preparing strategies to deal with sustainable transition from LDC status, tariff rationalisation, domestic resource mobilization and withdrawal of cash assistance or exploring alternatives.
Yusuf also suggested generating more revenue from direct tax instead of indirect tax to reduce income inequality saying that Bangladesh’s tax revenue collection, especially from direct taxes, was one of the lowest in the world.
He suggested implementing stricter measures to deter loan defaults and recover outstanding loans and said that the banking sector has been hit by crises like high NPL ratio, low efficiency, unhealthy competition, and liquidity shortage, which eventually led to the decision to merge.
Terming policy reform as an imperative, Abdur Razzaque said that the current political stability, contrary to the anticipated uncertainties following the general elections on January 7, 2024, has presented an unparalleled opportunity for advancing comprehensive policy reforms.
The critical reform agenda encompasses such pivotal areas as enhancing domestic resource mobilisation, rationalising tariffs, managing exchange rates, and optimising public expenditure management, he said.
“The persisting macroeconomic uncertainties, coupled with the looming graduation from LDC status, necessitate earnest reform measures aimed at augmenting economic efficiency and competitiveness,” the economist added.
State minister for Planning Md Shahiduzzaman Sarker said the national budget is the reflection of the political commitment of the government and a document of responsibility to the people.
He said that Bangladesh’s economy has made significant improvement in the past one and a half decades but the country needs to achieve more.
“Once upon a time propels’ demand was food and clothes but those days are over. Now people demand for a higher living standard and this is the achievement of the government,” the state minister said.
