From last May through October, the country's inflation rate ranged between 7.5 and 9.5 percent. The underprivileged people are starting to feel the harmful effects of this rising inflation. Fish and meat must be left from the food list. Since lower middle-class individuals have just been added to the list of marginalized groups, this number is rising. The food security index for garment workers focused on export is declining. This indicates that food consumption among textile workers and their offspring has decreased.
Based on these findings, the South Asian Network on Economic Modeling (SANEM), a private research organization, claims that the current economy's main concern is the threat to food security. They placed a strong emphasis on broadening the area of social protection, increasing agricultural product production, looking for new sources to import food grains, and keeping an eye on the market in order to resolve this situation.
According to SANEM, maintaining food security is essential as we exit the present economic downturn. Preventing the loss of foreign exchange reserves is also crucial. Otherwise, everyone's confidence will drop.
In addition, the banking and revenue sectors should undergo change in the short- and medium-term. The administration of bank interest rates and the dollar exchange rate needs to alter. In addition, a high-level committee made up of all parties involved needs to be constituted. The committee's recommendations may be put into action.
Salim Raihan, the executive director of SANEM, made these remarks during a seminar he held on Thursday called "Bangladesh Economy: Areas of Concern and Actions" on the online platform. Bajlul Haque Khandkar, the chairman of SANEM, also addressed.
Every month, reserve is losing $1 billion
The foreign exchange reserve for the previous fiscal year 2020–21 was $4,640 million (46.4 billion). The reserve was $4 billion 495 million last January as well. In the 11 months leading up to November, it decreased to an average of $1 billion (1 billion). The reserve currently stand at $3 billion 447 million.
According to Salim Raihan, Bangladesh's reserve situation is not dire. However, if the amount of money that is being subtracted from the reserve each month is not stopped, there is a risk. Additionally, he noted that other nations significantly raised their reserves during the Corona epidemic. They are hence heavily dependent on the crisis at the moment. We also need to reconsider reserve. Reserve should be increased until they can cover import obligations for 8 to 10 months.
According to Bajlul Haque Khandkar, the ongoing loss of reserve must be stopped. Otherwise, everyone's confidence can drop. There will be widespread discontent if it occurs.
Requisites for stopping hundi
Due to illicit hundi, expatriate income cannot be raised. For hundi, there is a problem with both supply and demand, both domestically and internationally. The dollar exchange rate needs to be set in order to stop the hundi. Money laundering in the nation should be eliminated concurrently. Hundi will continue as long as money laundering is not prevented. According to Salim Raihan, this requires political will.
Salim Raihan added that in addition to this, India occasionally changed the exchange rate of its currency in relation to the dollar. However, Bangladesh has not done it in a very long time. As a result, a large amount of money must be rapidly discounted. No one can trust it once more because distinct rates are fixed for import, export, and expatriate income exchange.
Salim Raihan emphasized the need for banking sector reform, stating that the absence of effective banking sector governance is the root cause of a number of economic issues. Willful defaulters are so strong that they are impossible to manage. Within a week after taking office, the current finance minister declared that the number of delinquent loans will not rise. Then, loans in default rose by an additional 30%.
Salim Raihan once observed that rumors are always rumors, and lately there have been many speculations spreading regarding the banking industry. It has no basis in reality. The credibility of more people will rise if reliable information is made available more frequently. The dissemination of rumors will also dissuade those who do it.
Salim Raihan brought up the need to restructure the revenue sector in addition to banking. He declared that Bangladesh's tax to GDP ratio needed to quadruple from its current level. Our ability to spend more money would have increased. Reforms are the only way to boost tax collection.
At that time, the Executive Director of SANEM stated that the IMF's requirements for overhauling the banking and revenue sectors are nothing new in order to obtain a loan from the IMF for 4.5 billion dollars. All of the measures will be implemented, the government has already committed. These reforms have been mentioned in the Sixth to Eighth Five Year Plan. As a result, without a strong political commitment, these measures are not feasible.
Is a famine on the horizon?
The entire amount of foreign debt during the fiscal year 2015–16 was $4,117,000,000. The amount climbed to $9,015,000,000 in the previous fiscal year. However, there have been certain modifications made to the design of foreign loans. Short-term debt was 17 percent in 2015–16; it rose to 21.5 percent in the current fiscal year. However, private debt to foreign governments is also rising.
Salim Raihan stated that the repayment of foreign debt is not now an issue after presenting these figures. The makeup of the foreign debt is altering, though. For exports and foreign income in the upcoming days, there is no positive news. As a result, the amount of foreign debt that may be repaid using reserves and current account is decreasing. In a few years, this will put further strain on the economy.
The highest echelons of government frequently express their fears about famine. Salim Raihan responded that there is little chance of starvation in response to a question in this respect. But repeatedly discussing starvation incites dread. A group may benefit from that. There won't be a famine, although there might be temporary food shortages in some places. If such a threat exists, action should be done beforehand.
No comments:
Post a Comment