JASIM UDDIN HAROON AND JUBAIR HASAN | August 06, 2024 00:00:00
The upcoming interim government should take the macrocosmic issues seriously as many economic parameters are unfavourable or destabilized, including inexorable inflation, economists say after an unceremonious exit of the Awami League regime.
First to come is the financial sector which they suggest should be given the topmost importance to bring back confidence of the people in banking and other financial markets, including the capital market.
Dr Ahsan H. Mansur, executive director of Policy Research Institute of Bangladesh or PRI, told the FE that Bangladesh needs to form at least five separate taskforces to assess issues relating to the financial sector and revenue board.
He suggests two taskforces for the financial market --- one for the banking industry and the other for the non-banking sector including the stock market.
Dr Mansur thinks three separate taskforces need to be formed for the revenue board-one for direct taxation, one for indirect taxation, and one for customs.
"There is a need for experts to assess and recommend the suggestions, even, if required, international experts to truly assess the health of the financial and public key organs," he says, adding: "The organs need to be assessed properly and recommendation made for how to improve them."
The economist, who had once served the IMF, thinks inflation could be reduced within next four to five months.
He stresses restoring macroeconomic stability as many remain stressed.
He mentions that the central bank has taken some right directions to improve the forex market, but to some exceptions.
"We are now dictating the crawling-peg system-actually it should be market-based."
Former lead economist of World Bank's Dhaka Office Dr Zahid Hussain thinks the first challenge of the possible interim government would be bringing social stability immediately starting the trial for the killings in recent anti-discrimination student movement, which was one of key demands of the protestors.
Alongside creating a congenial atmosphere for bringing the students back to classroom with the opening of all the educational institutions, he says, the interim government needs to rebuild the damaged infrastructure and make those operational.
The eminent economist also suggests they have to start work to address the problems leading to growing inflation, volatility on the forex market and weaknesses in the financial sector.
Citing the just-ousted government's key reform measures in the financial sector under PCA (prompt corrective action) framework, he says the framework is scheduled for implementation from March 2025, based on performance and financial indicators as of December 2024.
"Why do we start it from now?" he questions, adding that the budget expenditure needs to be reviewed for suspending unnecessary and political projects.
Chairman of the Policy Exchange of Bangladesh Dr M Masrur Reaz says the interim government should take immediate actions to stop the bleeding of the system arising from "mismanagement, miss-governance and manipulation of economic data".
"Do an honest and thorough analysis to see what damages have been done. Based on the identification, two types of reforms are required: one is to see the governance failure and the other is forward looking to strengthen the macroeconomic situation," he adds.
The economist thinks there is a need for decoupling trade associations, giving them enough freedom to get engaged in critical and effective discussion with the policymakers for the betterment of the businesses.
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