NOAB meeting: Trade sanctions will affect economy

Economist Wahiduddin Mahmud said sanctions on individuals or agencies don’t make any difference as it is their concern.

"But, if there’s a sanction on trade, it’s a huge issue for Bangladesh. There’s only one product. If sanctions are imposed on that, it would be a huge blow to the economy," Wahiduddin Mahmud made the remark at a views-exchange meeting organised by the Newspaper Owners’ Association of Bangladesh (NOAB) on the current state and the future of the economy on Sunday.

The views-exchange was held in the capital’s Pan Pacific Sonargaon hotel, says a NOAB press release.

Economists discussed the current state and future course of the country’s economy during the views-exchange. Various issues including inflation, reserves crisis, exports, discrepancy in government data, education system and quality, banking problems and crises, foreign debt, dollar exchange rate, fear of sanctions on economy and trade, preferential trade-facilities in western markets came up in the discussion.

Presided over by NOAB president AK Azad, the meeting held to exchange views was attended by former advisor to the caretaker government and former professor at the economics department of Dhaka University Wahiduddin Mahmud, former Bangladesh Bank governor Salehuddin Ahmed, executive director of the Policy Research Institute (PRI) Ahsan H Mansur, distinguished fellow at the Centre for Policy Dialogue (CPD) Mustafizur Rahman, professor at the economics department of SOAS University of London Mushtaq Khan and chairman of the development studies department at Dhaka University professor Rashed Al Mahmud Titumir.

Wahiduddin Mahmud said, “The foreign exchange reserve is a major topic of discussion now. I had advised Bangladesh Bank to maintain the level to which it has dropped to and not let it fall any further. If it falls further there will be more speculations about the reserve.”

While discussing about the banking sector, Salehuddin Ahmed said that giving all responsibilities of solving the problem to the Bangladesh Bank governor alone won’t do. Overall what’s going on in the country, the way organisations are running, needs to be addressed. If these cannot be solved, there will be no use of giving palliative treatment at the last moment.

Whenever there’s a discussion on the problems of Bangladesh, external problems for example Covid and Ukraine war are mentioned first. All the attention is being paid to the outside only. But most of the problems are inside the country. The problems on the outside will be there, but the problems on the inside have to be resolved, he added.

PRI executive director Ahsan H Mansur said, “We are going through a crisis of exchange balance. It’s a crisis of the medium range and hasn’t yet turned into a full-fledged crisis yet. It might take some time. However, the government has adopted or has been forced to adopt some policy initiative already.”

Ahsan H Mansur blamed the ‘inconsistency’ of the loan interest rate the most for the current state of the economy. In his opinion that’s why the deposit growth has reduced and the money has flown out of the banks.

Distinguished fellow at CPD Mustafizur Rahman said that except for the growth of Gross Domestic Product (GDP) no other index has been achieved as per the goal. There are major glitches in the data. Foreign investment is vital for achieving growth. According to the seventh five-year plan, though there was an investment target of USD 33 billion (3,300 crore), only USD 9 billion (900 crore) came in actuality. The decisions that are being taken aren’t coherent with the data and statistics.

Mushtaq Khan expressed concern regarding foreign loan. He said that the loans are being taken in foreign currency but there are no plans for repayment. In Bangladesh, power stations have been set up at the maximum cost. In consequence, the power sector will turn into a major burden for Bangladesh in future.

Mushtaq Khan also added that the biggest fault in country’s existent system is the syndicate and a community of influential businessmen. That’s why there is no competitive environment there. What’s necessary for the economy now is the creation of a competitive environment. Strong political steps have to be taken for that.

Rashed Al Mahmud Titumir said that the state of the economy is known to all. The question is if this development narrative can be continued in future. For example, take self-sufficiency in food. A huge amount of food is imported in the country. He believes that the inflation is being caused by the government policies. Money will be required to repay the loans in future. Then there will be another phase of inflation.

Among the NOAB members, founding president of the organisation and Daily Star editor Mahfuz Anam, Prothom Alo editor Matiur Rahman, Financial Express editor Shamsul Huq Zahid, Karatoa editor Mozammel Haque and Bonik Barta publisher as well as editor Dewan Hanif Mahmud were present during the view-exchange. Around 25 journalists from various NOAB member media were also present at the time.