Readjustment of fuel price in local market needed for economic productivity : CPD
Dhaka December 23 2021:
Researchers pointed out readjustment of fuel price needed for economic productivity and competitive economic environment.
Inflation rate hike is affecting consumers with high price burden in consumer markets of the country.
Rice consumption, demand and supply in the market should be reassessed for better productivity and sustainability.
Effective monitoring, maintenance and recognition required by the government to ensure sustainability and efficiency of different projects and development programs.
Besides, revenue mobilization, export growth, remittance inflow are needed to be ensured for positive growth at the end of the fiscal year 2021-2022.
For policy formulation, effective decision making, project implementation and sustain growth real time, timely information remained as challenge for the government.
Accurate, valid, timely information have to be ensured by the government institutions.
Moreover, making the valid timely information available to the users, researchers, decision makers must be done by the responsible government institutions.
There are data deficiency, lack of actual information, imaginative data and reluctance to disseminate available data to users. It is hindering development works, decision making and abuse of government finance mechanism.
It will help to take proper decision making on time sustainably. It will not help the government spending effectivity but also reveal the actual scenario of the socio-economic situation of the country.
The research also highlighted that post pandemic economic planning required to be considered by the government.
Corruption, Abuse and implementation lagging are affecting the sectors like health, gender equity, poverty reduction, education, youth development, employment and all other economic activities.
Overall it is destroying the development achievements earned by the government. People are not getting benefits from development projects and programs despite government expenditure.
Maintenance and correction programs are more important than development of new projects. For sustainability it must be achieved by the government.
Such findings were revealed from a press briefing organized by Center for Policy Dialogue (CPD) on Thursday at its office to disseminate research paper findings titled ‘State of the Bangladesh Economy in FY2021-22’ under its regular program Independent Review of Bangladesh’s Development (IRBD).
Dr Fahmida Khatun presented key findings of the research paper while Professor Mustafizur Rahman, Distinguished Fellow; Dr Khondaker Golam Moazzem, Research Director; and Towfiqul Islam Khan, Senior Research Fellow, CPD were present during the briefing.
According the report, as the country navigates through a critical phase of the COVID-19 pandemic and seeks a trajectory of sustainable recovery, the report provides an assessment of the performance of the key sectors of the Bangladesh economy and traces the trends in critical macroeconomic correlates during the early months of FY 2022.
Despite exhibiting improved performance of NBR revenue collection compared to the previous fiscal year, the annual revenue mobilisation target remains challenging.
During the Jul-Oct FY22, NBR revenue mobilisation rose by 16.6 per cent the growth is much lower than the annual target set by the national budget.
Need to grow by 30.7 per cent for the remainder of the fiscal year to attain the annual growth target of 27.0 per cent which is a highly daunting task.
The trends of key macroeconomic correlates during the early months of FY22 evince that many of these are in a recovery trajectory, led by export-oriented sectors. However, macroeconomic stability is not in a comfortable state anymore. Uncertainty is looming large at the global level as well.
Consequently, policy space for tackling the prevailing and emerging challenges has become comparatively limited. In this backdrop, trends in recovery, emergent risks and the available policy space should receive due cognisance while designing and implementing policy responses.
The government needs to opt for a focused and targeted expansionary fiscal policy reinforced by accommodative monetary policy.
Given the current context, a targeted flow of fiscal resources towards the more vulnerable households alongside the relatively small (and informal) enterprises will generate more ‘aggregate domestic demand augmenting’ effect and offer some protect.
One of the critical measures to be pursued by the government should be downward adjustment of diesel price in order to decrease tillage, irrigation and transportation costs so that production cost is reduced.
If the policies within the external sector are primarily focused on holding the exchange rate steady at around the current level, energetic steps to reduce cost of doing business and proper incentive initiatives of exports will be necessary.
The two per cent cash incentive on inward remittance should be continued and investment in wage earners’ bonds should be encouraged to dissuade transfer of money through informal channels given the widening gap between official exchange rate and curb market rate.
The government may need to gradually discontinue some of the prevailing support measures while carefully observing the evolving pandemic scenario. Since the pandemic is still not over and the resultant fallouts are still vivid, the Bangladesh economy will require a recovery package 2.0.
The new package will have to be based on distributive justice to support the marginalised and the vulnerable people at a time of rising prices of daily necessities and by taking into account their hardships during the pandemic.
The increased cost of investment induced by rising inflation needs to be accounted for in this new recovery package.
Execution of unfinished support agendas such as loans to smaller entrepreneurs and fuller implementation of programmed social protection programmes (including cash transfer) must be ensured by the government.
The experience during the pandemic times spotlight that, perhaps the ability to effectively and efficiently carry out expanded public expenditure programmes, including any additional stimulus packages, in quantitative and qualitative terms, is the foremost binding constraint.
Moreover, effective design, implementation and monitoring of the required policy packages demand real time and updated data on key macro-fiscal indicators such as poverty, employment, inequality and budget execution.
The lost reform and good governance agendas must be revitalised by the government in order to address the newly emerging challenges.
Researchers, Experts, Analysts and Journalists took part in the media briefing session.
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