Must adopt advanced policies to be a developed country

Bangladesh is progressing towards becoming a developed country, and its policies should reflect this journey. The current government's actions to graduate from the status of a least developed country (LDC) are practical steps.

We believe that export subsidies are unnecessary, especially since our fixed exchange rate caused issues, and we have experienced a 30% depreciation in the last 18 months. Although some liberalisation has occurred, further adjustments are needed.

To achieve LDC graduation, adhering to the World Trade Organisation (WTO) rules is crucial. If we don't subsidise exports and have an accurate market exchange rate, there should be no issues.

Bangladesh's garment sector is competitive and holds a strong market position, especially in Europe and America, where we rank second or third in garment exports. Transitioning to a market-based exchange rate, even at Tk125 per dollar, should not threaten our reserves.

We question the government's decision to spend tax money on specific sectors, like energy, and withdraw subsidies. Instead, subsidies should benefit the poor, particularly in essential areas like healthcare, following the global trend seen in countries like Pakistan and India.

Recognising the existing gap in our dollar rate, coordinated efforts beyond the current crawling peg system are necessary. While sudden relaxation may pose risks, the International Monetary Fund (IMF) suggests a gradual approach as a middle ground toward a market-based rate.

To enhance the dollar supply, we must overcome bureaucratic complexities for exporters. Simultaneously, the gradual increase in interest rates by the central bank aims to control inflation and balance demand.

The author is the vice chairman of Policy Research Institute of Bangladesh (PRI).