Interim govt adopting wrong policies at wrong times: Mustafa K Mujeri

Bangladesh Institute of Development Studies (BIDS) for director general and former chief economist at Bangladesh Bank, Mustafa K Mujeri has remarked that the current interim government is adopting wrong policies at wrong times.

The eminent economist said, “It has been six months since the interim government took over. Unfortunately there has been almost no success in the financial sector of the country in this time. The economy has largely stagnated due to some core problems such as high inflation rate and slow pace of financial growth. There has not been much success in terms of other problems we have. As a result the economy is yet to bounce back.”

Mustafa K Mujeri further said, “There is a common pattern of the economic policies adopted so far by the interim government. And that is adopting wrong policies at the wrong time. The consequences won’t be good in the coming days.”

He came up with these remarks at a roundtable under the title “Burden of additional taxes on consumers: What to be done” organised by news portal Jago News 24 at the MCCI conference room in the capital’s Gulshan. Centre for Policy Dialogue (CPD) research director Khandaker Golam Moazzem presented the keynote at the roundtable.

Economist Mustafa K Mujeri said, “Monetary policy alone cannot control inflation in a country like Bangladesh. The Bangladesh Bank (BB) has raised the policy interest rate to more than 10 per cent. There hasn’t been any impact of this initiative on inflation. Inflation is pursuing its own course. Rather, it is doing harm to the country’s economy. It is also hampering the business and production too. As a result the amount of loss is rising.”

The former BIDS director general said, “The policies being adopted by the interim government have no correlation. The government is not thinking much before taking up any policy. The decisions are sudden. The decision to increase VAT is one such decision. It was a sudden decision. The condition imposed by the International Monetary Fund (IMF) played a key role behind the decision. Finance ministry officials think increasing VAT is the easiest way to increase revenue. They think additional VAT will increase the revenue by Tk 120 billion.”

He further said, “The prescriptions provided by the IMF or the World Bank since the 80s haven’t worked. Each of those failed. And so is going to happen this time too.”

The processes must be proper for the economy to bounce back, he said adding “The economy must be dynamic to increase revenue. We will never be able to increase revenue collection by stalling the economy.

Bangladesh Auto Biscuit and Bread Manufacturers Association President Shafiqur Rahman Bhuiyan raised the demand to keep food products VAT-free.

“How much to reduce the amount of biscuits in the packet to adjust with the additional VAT? How much to decrease the size of the packet. If things continue to be like this, then we will have to sell empty packets one day.”

Pran-RFL group chairman and CEO Ahsan Khan Chowdhury said the country would run smoothly if the VAT rate was rational.

He said, “Traders and businesspersons are important to move the country forward. The government needs to enhance contacts with businesspersons and conglomerates.”

Economist MM Akash said the main goal of the government was to reduce the price hike. As they failed to do that despite various efforts, they reduced the tariff. But instead of decreasing the prices of daily commodities, it created a revenue deficit. Following that, the IMF said that it would not disburse the fourth installment if there is a revenue deficit. In these circumstances, the government imposed additional VAT on some products, which created more pressure on low and middle income people.

Jago News Acting Editor KM Ziaul Haque moderated the roundtable discussion, which was attended by Policy Exchange Bangladesh chairman M Masrur Riaz, former National Board of Revenue (NBR) member Rezaul Hasan, BKMEA president Mohammad Hatem, former Dhaka Chamber president Ashraf Ahmed, former BGMEA director Mohiuddin Rubel, Consumers Association of Bangladesh (CAB) vice president Nazer Hossain, ACI Foods chief business officer Faria Yasmin, SMC Enterprise Limited managing director Saif Uddin Nasir, Bangladesh Agro Processors Association (BAPA) president MA Hashem, ERF president Daulat Akhter Mala, former banker Saiful Hossain and Supermarket Owners Association general secretary Md. Zakir Hossain.=