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Stabilizing the Macro Economy of Bangladesh

Bangladesh Institute of Development Studies (BIDS) hosted a book launch event on 9 May 2024 in the BIDS Conference Room. The unveiled book “Bangladesh Stabilizing the Macro Economy" is authored by Dr Sadiq Ahmed, Vice Chairman of the Policy Research Institute of Bangladesh (PRI). 

Dr Mashiur Rahman, Economic Affairs Adviser to the Honorable Prime Minister, Govt. of the People’s Republic of Bangladesh graced the event as the Chief Guest. Mr. M A Mannan, MP, Chairman of the Standing Committee on Ministry of Planning, Bangladesh National Parliament and Former Planning Minister, Govt. of the People’s Republic of Bangladesh was the Special Guest. 

The event featured distinguished discussants, including Dr Mustafa K. Mujeri, Executive Director of the Institute for Inclusive Finance and Development (InM) and Former Director General of BIDS; Dr Bazlul Haque Khondker, Director of PRI and Chairman of the South Asian Network on Economic Modeling (SANEM); Dr Md. Habibur Rahman, Deputy Governor of Bangladesh Bank; Dr Md. Akhtaruzzaman, Director General of the Bangladesh Institute of Bank Management (BIBM); and Dr Monzur Hossain, Research Director at BIDS.

During the book launch event, the author, Dr Sadiq Ahmed, presented five key themes for achieving macroeconomic stability: coordinated policy responses, managing inflation, maintaining a stable exchange rate, fiscal policy management, and banking sector reforms.

The Chief Guest, Dr Mashiur Rahman, highlighted the prolonged inconsistency in the currency exchange rate, which has not been market-based for an extended period. He also recommended that the government should identify high-potential export sectors through thorough evaluation and allocate incentives accordingly. 

The Special Guest, Mr. M A Mannan, criticized the loan defaulters and expressed his disagreement with the proposal to form a banking commission, arguing that it would have minimal impact. 

As a discussant, Dr Mustafa K. Mujeri emphasized the inefficiencies within the banking sector, noting that almost all state-owned banks, along with many private ones, are unhealthy. He urged for proper coordination between monetary and fiscal policies. 

Dr Md. Habibur Rahman suggested that raising interest rates could increase the cost of funds, potentially helping in the effort to reduce inflation. He also noted that increasing the exchange rate could help balance supply and demand, thereby improving reserve management. 

Dr Monzur Hossain pointed out that Bangladesh has recently initiated reforms, including adopting the crawling peg and increasing the policy rate. He linked issues related to the interest rate and current account to the exchange rate.

Dr Binayak Sen, Director General of BIDS, moderated the event. Citing a BIDS survey, he mentioned that food inflation reached 15 per cent in December 2023, with fish prices rising by 20 per cent, significantly contributing to the high inflation. He stressed that low-income people are particularly affected by this inflation. Dr Sen urged the government to withdraw export incentives immediately due to the high cost of US dollars and instead allocate those funds to support low-income groups.

Event Video Link

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