Photo: Collected
Dr. Selim Raihan, Executive Director of the South Asian Network on Economic Modeling (SANEM), has stressed the urgent need to get Bangladesh’s economy back on track and to reinforce its foundations. Speaking at a press conference today at the BRAC Centre, Dr. Raihan emphasized the importance of institutional reform and outlined a specific roadmap for achieving it.
“Our economy was running on a track, but it has deviated. Without strengthening the economy, we will face more problems. What we primarily need is reform—institutional reform. For this, a specific roadmap for reform is necessary,” said Dr. Raihan, also a Professor of Economics at Dhaka University.
Reflecting on the period from 2010 to 2019, which he described as a golden era for Bangladesh, Dr. Raihan noted that despite the upward growth trend, underlying issues in the financial and banking sectors were overlooked, leading to current economic challenges.
The press conference aimed to present SANEM's observations on the proposed national budget for FY 2024-25, as introduced by the Finance Minister on June 6 during the National Parliament’s budget session. Dr. Sayema Haque Bidisha, Research Director of SANEM and Professor of Economics at Dhaka University, delivered a presentation.
Dr. Raihan raised three fundamental questions regarding the proposed budget: Do we have a proper understanding of the current economic crisis, and is this reflected in the budget? Are the measures proposed in the budget sufficient to address the crisis? What actually should have been done?
Dr. Bidisha highlighted several pressing economic challenges, with high inflation being the foremost issue. She also pointed to macroeconomic problems such as the negative trend in foreign exchange reserves and the overall depreciation of the taka against the dollar. According to SANEM, foreign exchange reserves have fallen to around $25 billion, which, considering various liabilities, is effectively less than $20 billion.
SANEM noted that maintaining the dollar exchange rate had not positively impacted the market. The sudden increase in the dollar price has further strained the economy.
Regarding inflation, Dr. Raihan remarked that conventional monetary policy alone is insufficient to curb it. SANEM proposed a two-year economic plan to boost business confidence and private sector investment. Additionally, measures should be taken to restore depositor confidence in banks.
In response to a question, Dr. Bidisha stressed the need for both financial and non-financial incentives for remittance providers. On the matter of the taka’s value against the dollar, Dr. Raihan advocated for a smoother implementation of the crawling peg system, warning against administrative controls that hinder a market-based exchange rate.
Addressing the legalization of black money, Dr. Bidisha criticized the policy, stating, "This step is against the principles of our economic philosophy. It will discourage those who conduct their business honestly."
Dr. Raihan also commented on the increasing burden on lower and middle-income individuals, criticizing the proposed tax increase on mobile phones, which he described as essential items, while many wealthy individuals remain outside the tax net.
The SANEM budget research team included Dr. Selim Raihan, Dr. Sayema Haque Bidisha, Senior Research Associates Israt Hossain, Eshrat Sharmin, and Afia Mubasshira Tiasha; Research Associates Khandakar Iffah and Shafa Tasneem; and Research Assistant Nafisa Zaman.
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