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The government will reprioritise 1,800 projects currently being implemented in different sectors to reduce pressure on the central bank’s foreign exchange reserves and stymie volatility in the economy, said Planning Minister MA Mannan yesterday.
All the projects are not equally important and there will be no problem if the implementation deadlines are deferred, he said.
The minister also said the government would reduce spending on the purchase of goods for different projects to save money.
Mannan said the government would continue to provide subsidies to the agriculture sector through the upcoming budget for the next fiscal year so that production remains unaffected.
However, among all the factors, social harmony is also a major aspect for maintaining a good economic growth, the minister said.
Mannan was speaking at a roundtable on the “current state of the macro economy – Bangladesh perspective” jointly organised by the Institute of Chartered Accountants of Bangladesh (ICAB) and Economic Reporters’ Forum (ERF) at the ICAB office in Dhaka.
Although Bangladesh need not worry about the economy’s current state, some important homework needs to be done for maintaining good macroeconomic stability, said Binayak Sen, director general of the Bangladesh Institute of Development Studies.
For instance, the four economic growth drivers — export, non-exporting manufacturing sectors, agriculture and remittance — have been performing well until now, he said.
Remittance inflow has only dropped a bit recently and it is expected to make a rebound soon, Sen said.
“Of the four growth drivers, three have been performing strong,” Sen said, adding that there was no reason to be worried about the economy in the short term.
The sudden rise of the import of food items and machinery with the recovery from the fallouts of the Covid-19 pandemic has put pressure on the US dollar deposited with the central bank, he said.
Sen suggested that subsidies be continued in the agriculture and export sectors as those were considered the lifeline of the economy. He also suggested providing rations to the over 80 lakh workers employed in the organised sectors.
Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, said the economy has been undergoing unprecedented pressure.
The export of apparel items is still very much volume driven, as a result of which the profitability of exporters has been not increasing, he said.
For instance, the export growth of Bangladeshi garment items to the US increased by 46 per cent between July and March of the current fiscal year, said Rahman.
But the volume increased by 36 per cent while price by only 7 per cent whereas the price of cotton increased by 53 per cent in international markets over the last one year, he said.
Local garment exporters should have received at least 53 per cent of the price of cotton from the exports as Bangladesh is nearly wholly dependent on cotton imports and 75 per cent of the garments being shipped is made from cotton fibre, he said.
However, international retailers and brands are not paying accordingly and passing low rates onto local suppliers, Rahman said.
He suggested signing comprehensive economic partnership agreements to retain duty privileges once the country makes the status graduation from a least developed to a developing country.
He also recommended bringing about diversification in the garment sector to grab a bigger market share of the global supply chain.
Ahsan H Mansur, executive director of Policy Research Institute, said the government should control its expenditure.
The exchange rate of the taka with the US dollar was fixed in the range of Tk 82 to Tk 84 per US dollar almost 10 years ago and the rates jumped to Tk 95 to Tk 96 because of the accumulation of pressure, he said.
The exchange rate has been adjusted to the market very reluctantly but it needs to be stabilised with proper monetary and fiscal policies, Mansur also said.
Mansur suggested increasing the price of liquefied natural gas (LNG) and allowing its import by the private sector for reducing subsidies.
He also suggested involving the private sector in railways to make it commercially viable.
M Masrur Reaz, chairman of the Policy Exchange of Bangladesh, suggested discarding unnecessary projects.
The government should focus on some specific issues, including on maintaining robust economic recovery from the fallouts of the Covid-19, fuel price, export led growth and fiscal measures, to insulate the economy from the current situation, he said.
Md Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry, said the Savar tannery estate should be made fully functional through modernisation as the leather and leather goods industries were becoming major export sectors.
M Abu Eusuf, executive director of research firm Research and Policy Integration for Development, said inequality in society was a growing concern and it was creating a mismatch between micro and macro economy.
Abul Kasem Khan, former president of the Dhaka Chamber of Commerce and Industry, said Bangladesh needs to improve on the ease of doing business here so that production costs can be reduced to attain more competitiveness.
Shahadat Hossain, the ICAB president, Sharmeen Rinvy, the ERF president, M Shafiqul Alam, the ERF vice-president, and SM Rashdul Islam, the ERF general secretary, also spoke.
Economists, researchers, businesspeople, exporters and importers participated in the discussion.
(TDS)
