Issue 18

June 2023

In the aftermath of a swift recovery from COVID-19 facilitated by prudent macroeconomic management, the Bangladeshi economy now faces an array of challenges. These include the lingering global economic uncertainty due to the Russia-Ukraine conflict, soaring inflation, energy shortages, balance-of-payments deficits, and revenue gaps. The FY2024 national budget announcement arrives at a critical juncture as it will be instrumental in sculpting the country’s economic path, especially considering the forthcoming national election later this year.

Our cover article in this issue probes the main impediments facing the economy and pinpoints the crucial issues the budget must tackle. These include re-establishing macroeconomic stability, amplifying revenue collection efforts, judiciously financing the budget deficit, and preserving social sector expenditure. Additionally, two other articles delve into various aspects of the current budget. The first scrutinises the fiscal framework, assessing the viability of revenue collection targets based on previous fiscal year performance and appraising the developments against the backdrop of IMF conditions. The second article illuminates the correlation between exchange rates and inflation, discussing how recent events have offered a chance to rationalise tariff rates without compromising revenue.

In light of persistently high inflation, another article compares inflation-restraining measures in Bangladesh to those in other countries. The author concludes that credit demand management has generated positive results elsewhere and suggests that Bangladesh should adopt similar strategies, such as eliminating interest rate caps and reducing budget deficits. Furthermore, this issue includes an article discussing how Bangladesh can capitalise on the IMF loan package to restore macroeconomic stability and promote environmental sustainability by implementing necessary reforms as part of a homegrown agenda.

As globalisation faces setbacks due to various geopolitical complications, one article advocates for the restructuring of Bretton Woods institutions like the IMF and World Bank to bolster good governance in global trade and stimulate inclusive growth. Another insightful piece explores Bangladesh’s need to upgrade its workforce through skill development, technological adoption, and economic transformation into a knowledge-driven, smart economy. Lastly, our concluding article scrutinises the potential opportunities for small farm holders in precision agriculture and discusses how the adoption of this technology can sustainably benefit the nation’s agricultural sector.

We hope this issue provides valuable insights and stimulates thoughtful discussions on the challenges and opportunities facing Bangladesh’s economy.