Structural issues like caps on interest rates and highly appreciated exchange rates are having a detrimental impact on the economy of Bangladesh.
Besides, the persistently higher inflation due to the printing of paper currencies by the government is also creating an adverse impact on the socio-economic arena.
These were disclosed at a seminar styled 'The Bangladesh economy: Emerging structural issues and correcting policy measures' hosted by Unnayan Shamannay (UnSy) at its Bangla Motor office in Dhaka on Tuesday.
PM's economic affairs adviser Dr Mashiur Rahman attended the event as the chief guest while former Bangladesh Bank chief economist Dr Biru Paksha Paul presented a keynote paper.
Dhaka University Professor Emeritus and former governor Dr Atiur Rahman chaired the event where Bangladesh Securities and Exchange Commission (BSEC) commissioner Dr Mizanur Rahman, among others, also spoke.
Addressing the event, Dr Mashiur said some critical political interventions were required to address the structural issues in economy.
In his keynote, Dr Paul said some structural issues have been emerging in Bangladesh, especially in the recent years creating setback on overall economy.
"The structural issues are kicking in after 2019. We are facing setbacks following interest caps were introduced in 2020," he said.
Mistakes in exchange rates and interest rates aggravated structural issues in the economy, added Mr Paul who now teaches economics as a professor of the State University of New York.
He suggested leaving interest and foreign-currency exchange rates on the market, allowing the banks to work freely.
Explaining the basic concept of economic structure, Dr Paul said an economy could be compared to a human body needing to shake off extra fat to ensure good health.
"Inflation is like blood pressure, as too high is bad and too low is also unwelcome," he continued.
Any country - developed or underdeveloped - might have some structural issues in economy, the professor said, citing Japan as an example of a developed economy and India as a developing one.
Highlighting sectoral structural aspects, the keynoter said agriculture's contribution to Bangladesh's economy was declining as other sectors were growing as usual.
"But agriculture still constitutes 40 per cent of the labour force that needs to absorb," he told the event.
About banking, Dr Paul said deposit growth came down from 22 per cent in 2012 to 7.0 per cent this year while private credit growth was over 11 per cent that was unsustainable.
"Private credit growth lacks quality and inclusion. It is a conduit to cater for default loans that fuels illicit financial transfers," reads the keynote.
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