DHAKA, April 2, 2024 (BSS)-Experts and economists at an event today suggested that the government should prioritize reforms in four areas including tax regime, exchange rate management, bank sector and public spending management in the national budget for the forthcoming fiscal year (FY25) to address the ongoing economic challenges. 

At a pre-budget consultation titled ‘Fiscal Year 2024-24 Budget: Seeking Directions for Addressing Key Challenges’ organized by the Research and Policy Integration for Development (RAPID) at the National Press Club here, experts said that this is the right time for the government to go for reforms for overcoming the policy inertia.

Economists at the event said that the budget for FY25 was being formulated amidst a confluence of formidable economic challenges such as soaring inflation and the tumbling foreign exchange reserves. 

The government should give utmost priority in controlling of inflation in the budget for the upcoming financial year as people have been suffering with the soaring living cost for the past two years. 

RAPID chairman Dr M A Razzaque presided over the event while state minister for planning Md Shahiduzzaman Sarker and parliament member Md Nsser Shahrear Zahedee attended the programme as chief guest and special guests respectively.

RAPID executive director Dr M Abu Yusuf presented the keynote paper while former national Board of Revenue chairman Dr Muhammad Abdul Mazid, Dhaka Chamber of Commerce and Industry president Ashraf Ahmed, Prothom Alo head of online Shawkat Hossain Masum and Economic Reporters Forum president Mohammad Refayet Ullah Mirdha also attended the event as panel discussants.

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 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. 

 He also said that Bangladesh has yet to adopt the open market economy in full form rather the government adopted a mixed economic policy to ensure the betterment of the people. 

Abdul Mazid urged the government to involve parliamentary standing committees with the budget making process so that they can put pressure on implementing the fiscal policy properly. 

He also stressed for making NBR transparent and not to incentivize the people who evade taxes and flight capitals.

Abu Eusuf in his presentation 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.

The persisting macroeconomic uncertainties, coupled with the looming graduation from LDC status, necessitate earnest reform measures aimed at augmenting economic efficiency and competitiveness.

He identified enhancing domestic resource mobilisation, rationalising tariffs, managing exchange rates, and optimising public expenditure management as the critical reform agenda. ‘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 said.