Economists and experts at an event on Tuesday suggested that the government should prioritise reforms in four areas, including tax regime, exchange rate management, bank sector and public spending management in the national budget for the forthcoming financial year 2024-25 to address the economic challenges the country is facing.

At a pre-budget consultation ‘Fiscal year 2024-24 budget: seeking directions for addressing key challenges’ organised by the Research and Policy Integration for Development at the National Press Club in the capital Dhaka, they said that this was the right time for the government to go for reforms overcoming the policy inertia.

Economists at the event said that the budget for FY25 was being formulated amidst a confluence of formidable economic challenges such as soaring inflation and tumbling foreign exchange reserves.

The government should give utmost priority to controlling inflation in the budget for the financial year as people have been suffering with the soaring living costs for the past two years, they said.

RAPID chairman MA Razzaque presided over the event while state minister for planning Md Shahisuzzaman Sarker and parliament member Md Nasser Sharear Zahedee attended the programme as chief guest and special guest respectively.

RAPID executive director M Abu Yusuf presented the keynote paper while former National Board of Revenue chairman Muhammad Abdul Mazid, Dhaka Chamber of Commerce and Industry president Ashraf Ahmed, Prothom Alo head of online Shawkat Hossain Masum and Economic Reporters Forum president Mohammad Refayet Ullah Mirdha also attended the event as panel discussants.

Yusuf identified sluggish global growth, inflation, low tax-GDP ratio, foreign exchange crisis, high non-performing loans, increasing external debts and slow growth in employment opportunities the key challenges for the economy of Bangladesh.

To address the challenges, he recommended preparing strategies to deal with sustainable transition from LDC status, tariff rationalisation, domestic resource mobilisation and withdrawal of cash assistance or exploring alternatives.

Yusuf also suggested generating more revenue from direct tax instead of indirect tax to reduce income inequality, saying that Bangladesh’s tax revenue collection, especially from direct taxes, was one of the lowest in the world.

He suggested implementing stricter measures to deter loan default and recover outstanding loans and said that the banking sector was hit by crises like high NPL ratio, low efficiency, unhealthy competition and liquidity shortage, which eventually led to the decision to merge.

Terming policy reform an imperative, Razzaque said that the current political stability presented an unparalleled opportunity for advancing comprehensive policy reforms.

The critical reform agenda encompasses such pivotal areas as enhancing domestic resource mobilisation, rationalising tariffs, managing exchange rates and optimising public expenditure management, he said.

He identified enhancing domestic resource mobilisation, rationalising tariffs, managing exchange rates, and optimising public expenditure management the critical reform agenda.

‘The persisting macroeconomic uncertainties, coupled with the looming graduation from LDC status, necessitate earnest reform measures aimed at augmenting economic efficiency and competitiveness,’ the economist said.

State minister for planning Md Shahisuzzaman Sarker said the national budget is the reflection of the political commitment of the government and a document of responsibility to people.

He said that Bangladesh’s economy has made significant improvement in the past one and a half decades, but the country needs to achieve more.

‘Once upon a time people’s demand was foods and clothes, but those days are over. Now people demand for higher living standard and this is the achievement of the government,’ the state minister said.

He also said that Bangladesh was yet to adopt the open market economy in its full form rather the government adopted a mixed economic policy to ensure the betterment of people.

Nasser blamed NBR’s inefficiency in expanding its tax net up to rural area, saying that the government agency had no infrastructure to communicate with people beyond the district level.

He said that people would be encouraged to pay tax if they get assurance that their money would not be misused.

Nasser also said that controlling inflation should be the utmost priority in the next budget.

Mazid urged the government to involve parliamentary standing committees with the budget making process so that they can put pressures in implementing the fiscal policy properly.

He also stressed making the NBR transparent and not incentivising those who evade taxes and are engaged in capital flights.