CPD for coordination between monetary and fiscal policies to tame inflation

The Centre for Policy Dialogue (CPD) today recommended for raising the coordination between monetary policy and fiscal policy alongside ensuring institutional reforms to tame inflation and maintain stability in the financial sector.

The civil society think tank came up with the recommendation at a press conference to reveal the "Bangladesh's economy 2022-23: Third interim review" held at its office in the capital's Dhanmondi area.

While presenting the written review, executive director of CPD Dr Fahmida Khatun said that the ensuing budget poses four key risks before the government which are maintaining economic stability, maintaining balance of the external sector, controlling inflation and ensuring food security.

"Currently, the inflationary pressure is affecting people. Global price hike of commodities is liable for internal inflation, on the other hand, some poor financial policies are also instigating the inflation," she added.

She said that due to low revenue mobilization, the government is taking a hefty amount of loan from the central bank which is indirectly raising the price of commodities. "Besides, the Taka and US dollar exchange rate is also playing a role to raise the price of commodities,"

Stressing the need for identifying the main reason for rising inflation, Dr Fahmida Khatun suggested for proper policies and steps in this regard.

She said that there is a need to ensure proper coordination between monetary policy and fiscal policy side by side undertaking reform programmes for the sake of national interest. "The National Board of Revenue (NBR) should also search for newer sources of revenue income,"

The CPD suggested for reorganizing the subsidy structure in the upcoming budget alongside distributing the subsidies prioritizing health, education, agriculture sectors and social safety nets.

Stressing the need for unearthing the cause for lowering trend of inward remittance, distinguished fellow of CPD Dr Mustafizur Rahman said that some 21 lakh Bangladeshis went abroad in between 2021 and 2023, but despite this, the inward remittance flow is not increasing. "Are they sending money through Hundi? We'll have to find out the reasons behind these."

Dr Mustafizur said that due to the lowering trend of foreign currency reserve, the macroeconomic stability of the country is under threat to some extent for which there is a need to avail remittance through formal channel.

Suggesting the government for implementing the concerned provisions of the law against the willful loan defaulters, Dr Fahmida Khatun said that there is a huge scope for taking tough administrative measures and legal action against those who are amassing wealth and thus sending those abroad. "The government should not show any relaxation in this regard."

She also recommended for taking necessary measures in the ensuing budget in line with the current practical condition to maintain macro economical stability of the country.

CPD research director Dr Khandaker Golam Moazzem and senior research fellow Toufiqul Islam Khan also spoke at the press conference.

Source: Bangladesh Sangbad Sangstha