The White Paper on Bangladesh economy will recommend measures for the government to boost the confidence of foreign investors and lenders, encouraging them to continue their activities here.
“Development partners and investors want clarity on the continuity and predictability of their relationship with Bangladesh, and we will provide the government with guidance on this matter,” Debapriya Bhattacharya, chairman of the White Paper preparation committee, told The Business Standard on Thursday (28 November).
At a seminar on the dya, Debapriya said the final White Paper document will be submitted to the Chief Adviser Muhammad Yunus next Sunday (1 December) and the committee’s findings will be made public through a press conference the next day.
The economist told TBS that the government should hold meetings with foreign lenders and investors within the next two months.
“We will offer suggestions to strengthen confidence among four key foreign parties including those providing development aid to Bangladesh, countries granting market access for our exports, and foreign investors,” Debapriya added.
A member of the White Paper preparation committee, speaking anonymously, told TBS that the final document will also include details about the large sums provided as tax exemptions under the previous government, along with the beneficiaries of these exemptions.
Currently, the country’s tax-to-GDP ratio stands at just 7.5%, while the annual tax exemption rate stands at 6%, the member said, adding that the white paper will also highlight these issues, as well as the reasons behind the lack of automation in the revenue collection system.
‘Embezzled wealth must be returned to the people’
Addressing the seminar held at the Economic Reporters’ Forum (ERF) auditorium in the capital on Thursday, Debapriya questioned why wealth gained through corruption and plunder has not yet been confiscated.
“If we cannot return the stolen wealth to people, what kind of revolution have we had?” he asked.
Regarding concerns of Bangladesh’s development partners, the economist said, “Foreign lenders and investors have invested in many big projects in the previous regime, and they are worried if these projects will continue in future. They want to know how Bangladesh will remain connected with the global economy.”
He urged the government to hold a forum to bring back relief among the donors and investors. Discussions should be held with those who have wanted to invest in Bangladesh for a long time but have yet to do so.
Debapriya pointed out that the slow pace of private sector investment is due to the ongoing liquidity crisis and shortages in energy (gas and power).
To bring the economy back on track, he emphasised the need to prioritise five key areas, starting with controlling inflation.
The other priorities include addressing issues related to individual investment, resolving the energy crisis, speeding up project completion by removing government financing barriers and implementing effective measures for proper tax collection, he said.
Debapriya, also a distinguished fellow at the Centre for Policy Dialogue (CPD), stressed the need for economic stability and improvements in law and order.
“If economic stability and security are not ensured, the government’s objectives will remain unachieved,” he said.
Debapriya suggested that the interim government should promptly inform the public about the steps it has taken for economic recovery since taking office and its plans for the next budget.
He noted that the economic situation is more complex than typically thought, with no quick solutions for an inherited stagnant economy.
The economists also pointed out that public impatience may stem from a lack of trust, despite the government’s efforts to stabilise the economy. “If people feel insecure in both the economy and law and order, no reforms will achieve their intended goals,” he added.
The Economic Reporters’ Forum (ERF) and Research and Policy Integration for Development (RAPID) jointly organised the seminar titled “Current Economic Situation and Launching of Open Budget Survey 2023 Results”.
Improving the supply chain can ease inflation: RAPID
Presenting the keynote article at the seminar, RAPID Chairman MA Razzaque said that the government has implemented several demand-side measures to control rising inflation, but they have not been effective as supply remains interrupted.
Bangladesh has been grappling with elevated inflation for over two years, with the rate climbing to 10.87% in October. However, He attributed the high inflation to the previous Awami League-led government’s reckless macroeconomic management.
“Bangladesh is facing high inflation, shrinking foreign exchange reserves, and a depreciating currency, all worsened by poor governance and pervasive corruption,” he added.
Alongside normalising supply, Razzaque also recommended steps to boost foreign currency reserves. “High inflation, coupled with a foreign reserve crisis, creates a vicious cycle of economic instability, diminishing purchasing power, disrupting trade, and eroding investor confidence.”
He said, “Supply-side improvements can help ease inflationary pressures by increasing the availability of goods and services, thereby ensuring economic stability. Effective supply-side management involves boosting domestic production, streamlining supply chains, and facilitating essential imports to stabilize prices and control inflation.”
He urged the government to enhance domestic production by providing subsidies or incentives for key sectors like agriculture to boost output.
He also emphasised addressing transportation and logistics bottlenecks, reducing other business costs to improve market accessibility, and prioritising foreign exchange for importing food, fuel, and industrial inputs to prevent shortages.
The RAPID chairman further highlighted the need for reducing tariffs, saying, “Adjusting trade policies by temporarily lowering tariffs on essential imports can make goods more affordable while supporting a stable foreign exchange strategy.”
He also recommended adjusting cash support for exports and raising rates over the next six months to boost remittances.
Bangladesh’s budget transparency score below global average
At the seminar, RAPID Executive Director M Abu Eusuf presented findings from the Open Budget Survey 2023, conducted by RAPID in collaboration with the International Budget Partnership (IBP). The survey, covering 125 countries, evaluates budget transparency, public participation, and oversight.
According to the survey, Bangladesh scored 37 out of 100 in budget transparency, below the global average of 42. In public participation, Bangladesh scored 11, compared to the global average of 14. For budget oversight, Bangladesh scored 37, significantly lower than the global average of 52.
Abu Eusuf said, “Bangladesh’s score was higher in 2015 but has since declined due to the government withholding certain information and delaying its release.”
The seminar was attended by ERF President Refayet Ullah Mirdha, General Secretary Abul Kashem, Joint Secretary of the Finance Ministry Anarul Kabir, and Head of Online at The Daily Prothom Alo Shawkat Hossain Masum.