Dhaka Chamber of Commerce and Industry president Ashraf Ahmed on Saturday said that the policy of higher interest rates and tighter liquidity management adopted by the government to control inflation should be reversed after December, otherwise private sector investments would decline, hindering new job creation.
At a seminar on 鈥楤i-annual economic state and future outlook of Bangladesh economy (January-June FY2023-24): private sector perspective鈥� organised by the DCCI, Ashraf suggested reversing the strategy of higher interest rates and tighter liquidity management once inflation is under control.
He suggested using other tools, including improving the domestic supply chain, reducing food waste and investing in logistics, to help contain inflation.
The DCCI president also said that a reliable energy supply was essential for sustaining the momentum of growing export trend.
Ashraf emphasised the need for mid-term reforms in government policies and procedures to improve the business environment and investment climate.
鈥楾he law and order situation must be restored, and confidence reinstated to maintain production and export flow otherwise, the country will face significant challenges to its foreign reserves,鈥� he said.
He expressed concerns regarding non-performing loans in the country鈥檚 banking sector.
He recommended providing support for good borrowers in struggling banks to help them transition to healthier banks, just as depositors do.
Ashraf said that high interest rates, an increased exchange rate, and rising capital costs had led to a downward trend in the effective credit flow to the CMSME sector.
At the seminar, economists and businesses said that maintaining macroeconomic stability and improving law and order situation were crucial for the overall economic development in Bangladesh.
They emphasised adopting a broad-based inclusive model for realising economic growth aspirations.
Former director general of the Bangladesh Institute of Development Studies Khan Ahmed Sayeed Murshid said that developments in the world occurred rapidly, and Bangladesh must respond swiftly.
Alongside economic challenges, several non-economic issues, including strengthening institutions also require urgent attention, he said.
He underscored the need of broad-based inclusive growth to ensure fundamental food security, energy security, and access to education and skills development.
Murshid highlighted the importance of enhancing public governance and called on the private sector to be ready for emerging opportunities.
Maintaining macroeconomic stability is now crucial for overall economic development, said Mohammad Abu Eusuf, professor at the Department of Development Studies at the University of Dhaka.
He said that accurate data on population size, GDP, and other statistical components were important to assess the true state of the economy.
Eusuf also highlighted the necessity for both the product and market diversification to boost the country鈥檚 export growth.
He called for improving the tax-to-GDP ratio, providing additional facilities for non-resident Bangladeshis who send remittances, and increasing revenue from direct taxes.
Director of Research at the Chief Economist鈥檚 Unit of Bangladesh Bank Md Salim Al Mamun said that a holistic approach has been adopted for reforms in the financial sector.
To contain inflation, the central bank has implemented several measures, including raising the policy rate and tightening monetary policy, which would bring positive results soon, he said.
Mamun also underscored that achieving macroeconomic stability was the primary challenge facing the country.