The drastic regulatory and austerity measures the government and Bangladesh Bank have taken so far to lessen pressure on the thinning foreign reserves are steps in the right direction and as economists have pointed out they would indeed send a positive signal to the market and economy within a short period of time in the present crisis.
But the fact of the matter that has to be admitted that if authorities played its role duly in maintaining economy of Bangladesh with the maintenance that as a poor but growing economy it deserved, the nation would have been well placed today in this present volatile global economy stemming from the aftermath of Covid-19 pandemic and ongoing Ukraine-Russia war.
The lavishness of government spending always gave an impression that Bangladesh’s economy was a developed one. Take for example the prodigality involved in the prime minister’s foreign entourage and frequent foreign visits by both the junior and high officials. Bangladesh may not face a Sri Lanka like crisis anytime soon as the remaining foreign reserves still can manage about five months’ import cost, the government must cut its unnecessary expenditure. The principle here is for the ease and comfort of a very small section of people, the survival and well being of the whole nation cannot be put in jeopardy.
As matters have turned worse, within a short period of time the authorities have taken a host of measures. First, Bangladesh Bank ordered banks to slap a 75 per cent margin on the opening of letters of credit for non-essential consumer products. Then the government restricted the unimportant foreign tours of the officials, kept aside implementation of less important projects that require imports, devalued taka against the dollar, raised the import duty on 135 products and withdrew the VAT on the import of edible oil. These efforts may help the poor people to withstand the rising cost of living.
Hopefully, Bangladesh would be able to offset an economic disaster in the short term. But economic policymakers here must always remember that Bangladesh is still a vulnerable economy with its fragile export earnings. Moreover, the remittance, strength of the country’s foreign reserves, should not always be taken as an ideal source of foreign reserves. Therefore, as a long term measure, Bangladesh must have a strong export base.
Meanwhile, policy-makers have to see that these regulatory measures taken so far do not negatively impact the domestic economy. Whether economic conditions are critical or not, Bangladesh always needs to be cautious so that it does not become a spendthrift in terms of government spending.
