Govt should look for low-cost long-term loans to keep economy afloat: CPD

Centre for Policy Dialogue (CPD) on Thursday asked the government to look for loan from global lending agencies that offer long-term and low-interest funding to keep the country’s economy afloat amid a global economic slowdown that has a rippling effect in Bangladesh. 

The Dhaka-based think tank said in the wake of a looming food crisis and higher prices of fuel and high inflation Bangladesh needs to be extra cautious in seeking foreign funding. 

For such funding for the country’s infrastructure development or budgetary support it said that the government should prefer agencies like the World Bank, the International Monetary Fund (IMF), the Islamic Development Bank (IDB) and the Japan International Cooperation Agency (JICA).  

The suggestions came at a press conference organised by the CPD where the independent think-tank highlighted its observations on ‘Slowdown in Global Economy and Challenges for Bangladesh—How to Tackle’ in Dhaka.

The CPD says it sees seven obstacles for Bangladesh considering the economic challenges the country has been dealing with amid falling foreign reserves and a serious energy crisis.

It says dollar shortage, energy supply crisis, higher inflation, food deficit, supply chain disruption stemmed from the Russia- Ukraine war, adverse impact of Covid-19 pandemic and climate change have posed real challenges before the country.

It said the government should form a committee with representatives of the Prime Minister’s Office, Ministry of Finance, Ministry of Planning, Ministry of Commerce, Ministry of Power, Energy and Mineral Resources, Ministry of Food, Ministry of Agriculture, the Bangladesh Bank and National Board of Revenue to tackle the growing economic crisis.

CPD’s Executive Director Dr. Fahmida Khatun said that the government should focus on energy supply from domestic sources by strengthening production capacity of the gas fields and enhancing renewable energy supply to reduce the burden on foreign reserves.

She said the NBR should immediately consider removing the advance income tax (AIT), advance tax (AT) and regulatory duty (RD) on all imported essential food items to give some relief to the people amid higher inflation.

She suggested that, at the same time the Bangladesh Competition Commission should take a strong stand against any business cartels by showing zero tolerance toward manipulative practices.  

The inflationary pressure will hamper a sustainable and inclusive pandemic recovery since the real purchasing power of many people has declined, causing further inequality, she observed.

To keep the domestic economy vibrant, the CPD suggested following ‘a new consumption basket. for calculating inflation based on research on consumers’ behavior and purchasing pattern.

The minimum wages should be enhanced in all industries so that workers can afford basic food, it said.

Private sector companies should also consider at least 5 percent increment this year to help them cope with higher inflation.  

The distribution of essential commodities must be managed effectively and without any corruption so that the eligible people have access to these items at low price, it said.

Dr. Fahmida also emphasised action against money laundering and following a national strategy for prevention of money laundering and combating financing to terrorism.

Import-related recent restrictive measures should be continued to reduce pressure on forex and put focus on implementation of foreign aid projects, she said.