Bangladesh's macroeconomy now stable: Adviser Salehuddin
“Our capacity, macroeconomic stability and balance are more or less stable although the current account balance and financial account was negative a few months back,” he said.
The government sees the country's macroeconomy – which bottomed out under the previous government and worsened further in the aftermath of the July uprising – is now improving.
"The macroeconomic situation is good now. There has been significant progress in the current and financial accounts," Finance Adviser Salehuddin Ahmed said during an event organised by the Bangladesh Secretariat Reporters Forum on Sunday (9 February).
"Foreign exchange reserves are also strong and are expected to improve further. Inflation is around 10%, and it is anticipated that it will decrease," he added.
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Later in the day, the chief adviser's Press Secretary Shafiqul Alam echoed the finance adviser, saying the interim government expects inflation to drop to 7.5% by July as the economy recovers.
Speaking at a press briefing at the Foreign Service Academy in the capital, he said a meeting on "Bangladesh Economy: Recent Challenges and Future Way Forward" was held at the Chief Adviser's Office, chaired by Chief Adviser Prof Muhammad Yunus.
The meeting covered various sectors, including the economy, power and energy, revenue, banking, and foreign trade, said Shafiqul, adding that participants noted positive economic indicators, with import growth, job creation, and a decrease in inflation to a single digit.
Addressing the event on the "Role of Remittances in the Economy of Bangladesh", Finance Adviser Salehuddin said, "Remittances are the most important source of net foreign exchange earnings, with $2 billion coming in per month.
"Although ready-made garment exporters claim to earn the most foreign exchange, their imports for exports are also significant."
"Foreign exchange reserves are also strong and are expected to improve further. Inflation is around 10%, and it is anticipated that it will decrease"
He further said efforts are underway to bring remittances into the banking channel and ensure a market-based exchange rate, as foreign currency and gold are crucial for backing currency printing.
However, there are aggregators in the remittance market, primarily based in Dubai, who buy large sums of foreign currency. The government is evaluating their role, said the finance adviser.
He also said the cost of going abroad for work from Bangladesh is higher than in India, Sri Lanka, and other countries due to the influence of recruitment agencies, whose reach has expanded internationally, prompting the need for government action.
Salehuddin highlighted that a major issue in Bangladesh is the high number of unskilled workers going abroad, making them a push factor in the global market when they should be a pull factor, attracting foreign employers.
He also pointed out the challenge of illegal Bangladeshi expatriates, particularly in Saudi Arabia, many of whom are either in jail or living in hiding, with insufficient attention given to their plight.
He noted that many workers send money home for years but return destitute, with no savings or employment, despite spending heavily on building homes.
In response to a query, the finance adviser mentioned that the universal pension system will undergo further review to enhance benefits for participants.
Regarding the VAT increase, the finance adviser explained that public policy cannot always cater to popular demand. While many advocate for reducing VAT and increasing taxes, the government must assess where taxes can be raised.
He noted that increasing VAT is an easy way to generate revenue, which is necessary. He responded to criticism about VAT hikes on glasses, biscuits, and slippers, arguing that glasses priced at Tk200 are rare worldwide, and such pricing should not be the norm in Bangladesh.
As for biscuits and slippers, VAT applies only to items above a certain price, such as biscuits priced over Tk200, which buyers can afford to pay, he added.
