MAMUN RASHID

We have seen the year 2022 to be a year of many experiments for regulators, and more importantly, the local and international private sector.

Russia-Ukraine war fallouts, high inflation, surging energy prices, supply side disruption, and import demand reduction in the large markets all had an impact beside the local price and low bank deposit rates impacting the life of the people at the ‘bottom of the pyramid’ and small savers.

Of course, we want our regulators and the private sector to make the best use of the lessons learned. As we welcome a new year with hopes and aspiration, it is imperative to seek:

Political turmoil’s mitigated impact on business and economy:

This is meant to be election year. The 2022 has seen the opposition remerge with more strength and the government to have opened many wrong fronts. The business community is apprehending more chaos on the streets and heavy tolls on the life of the common people and businesses, none of which are suitable for the possible future of an emerging economy awaiting increased foreign capital inflows, as well as local businesses to consolidate, if not flourish.

Hence, tolerance from all groups, more so from the party in power is fundamental in seeking a stable Bangladesh.

Stabilised exchange rate:

Second half of 2022 has seen great volatility in the taka value against the US dollar. Some 2, 3 or even 4 exchange rates were seen in the market, central bank dictates worked on the opposite, high informal market transactions and rates put ‘Hundi’ in command and resultantly, inward remittance dropped significantly.

Especially remittance from Saudi Arabia and the United Arab Emirates (UAE) showed much reduction validating the suspicion re: trade and non-trade-based money laundering, including siphoning out money by political cronies and loan defaulters to other countries.

Reasonable deposit interest rates:

For the last few years, Bangladesh Bank’s interest rates have been kept low in the name of flowing money towards hungry streams of the economy. However, this mechanism and the subsequent high loan default scenario only helped the large and to a great extent the defaulting borrowers instead of small and micro entrepreneurs.

Economists who have studied monetary economics as well as those with good visibility re: macro management have been persistently calling for upward adjustment of the interest rate, more so due to high inflation.

Lower interest rate also exacerbates unhealthy competition among weak banks and financial institutions, further confusing the semi-educated depositors aspiring for inflation-adjusted earnings on savings tools.

Combating trade-based money laundering:

Bangladesh’s high tax rates have always encouraged the business community and entrepreneurs to seek tax evasion or lower tax incidences through under or over-invoicing, at the same time seeking to keep our Tax-GDP ratio as one of the lowest in the region.

Hence, we would echo with all development partners and stakeholders for a technology-biased revenue reform soon.

Independent central bank:

Our central bank gradually became a weapon for the government in their rent-seeking agenda. The role of a central bank in an emerging economy warrants to be diverse and strong in diverting money towards the lower echelon of the economy to create synergy towards a more sustainable future.

To create a minimum possible business environment, we require policy stability and for the government to continuously strive towards moving the entire ecosystem forward.

The writer is an economic analyst.