State of economy: Hard times may be in store

The government may face the next election with the most unstable economic situation in over a decade, which is going to affect the low- and middle-income brackets most, said a citizens' platform yesterday.

Macroeconomic stability has never been under so much strain since 2007-08, and in such a situation, the government needs to focus on increasing the purchasing capacity of the communities left behind, it observed.

The media briefing, styled "Current Socio-Economic Condition, National Budget and Perspectives of the 'Left Behind' Communities", was organised by the Citizens' Platform for SDGs, Bangladesh, at CIRDAP auditorium.

Debapriya Bhattacharya, convener of the platform and a distinguished fellow of the Centre for Policy Dialogue, presented a paper at the briefing, saying there are three major backdrops of the upcoming budgets -- firstly, the country's economy is yet to come back to the pre-pandemic level.

Secondly, the Russia-Ukraine war created uncertainty in the global market, raising commodity prices and dislocating the supply chains. And finally, the internal economy is also facing uncertainty.

"Our foreign income, including export, remittance, foreign aid and investment, was strong enough in the previous years, which properly balanced the export-import costs."

He said the deficits in the trade balance, current account and overall balance have been increasing.

"We have forex reserves that can cover only five months' import bill," he said.

"If the price hike in the international market continues, we will face a big crisis in foreign reserves. Our exchange rate is under pressure."

Debapriya urged the government to make curbing the inflation the main theme in the upcoming budget.

"If the situation becomes unstable, the main victims will be the poor, the low- and middle-income people. Their income will not increase in keeping with the inflation rate."

He added the government data of the inflation rate is not realistic or scientific, as it is based on a 17-year-old survey. The real inflation rate may be 12 percent if the prices are updated.

He suggested increasing the limit of tax-free income to Tk 3.5 lakh from Tk 3 lakh.

"Women and disadvantaged groups may be given further leeway."

Other suggestions were to bring 10 percent of the unemployed youth under social safety net programmes; more food support and financial assistance; employment after targeting and tracking those who require it; allocating more for children under local government budgets; supporting non-MPO teachers; introducing education credit cards for students; and additional and specific allocation for the education of indigenous groups and Dalits.

CPD distinguished fellow Prof Mustafizur Rahman presided over the programme, while Farah Kabir, country director of ActionAid Bangladesh, Rumana Haque, economics professor at Dhaka University, Ferdaus Ara Begum, chief executive officer of Business Initiative Leading Development, and Tony Michael Gomes, director of World Vision Bangladesh, spoke at the event.