Bangladesh needs to be careful about imports and should impose more taxes on luxury items to save foreign-exchange reserves in the country, said former Bangladesh Bank governor Dr Atiur Rahman.
Speaking as the chief guest at a webinar on Tuesday night, Atiur Rahman said the government should impose more taxes on the import of various luxurious items, in order to discourage the import.
Institute of Chartered Accountants of Bangladesh (ICAB) organised the webinar on 'Political Economy of Currency Devaluation in the Developing Countries: Comparative Practices and the Bangladesh Story.'
Dr Rahman suggested review of expensive projects in the country to reduce pressure on foreign exchange.
"We need to reduce the number of luxury projects that do not yield direct employment and investment," he said.
"If we give emphasis on the local production of items that are being used for export products like readymade garments, we can save 10 to 15 billion dollars a year," Mr Rahman said.
By improving the service industry, thousands of dollars could be saved which are required for payments in shipments from Bangladesh, he said.
The country needs an integrated financial transaction system to ensure further development of the economy as vested quarters take benefits of organisations due to a gap in the system, said Dr Khondaker Golam Moazzem, Research Director of the Centre for Policy Dialogue (CPD), while speaking as a special guest.
"There are lots of anomalies and gaps for which the benefits of organisations are being taken by vested quarters," he said.
He, however, said that some of the financial systems of the country were integrated, as ICAB and NBR (National Board of Revenue) joined hands to help cross-check financial reporting.
"That is a very positive initiative and it will help reduce the number of false financial statements and ultimately will bring more financial transparency in the financial system," Dr Moazzem added.
He underscored the need for further integration between NBR and the commercial banks as well as foreign exchange dealers, in order to reduce the financial corruption.
ICAB President Md Shahadat Hossain in his welcome speech said the currency market of the country had become jittery and the central bank was forced to devalue Taka several times after a big depreciation in January.
The latest forex crunch will put further pressure on the country's forex reserves, he said, adding that this would impact the country's economy and prices of commodities, foods in particular.
Economies across the world have suffered on account of the pandemic and the steeply rising prices of fuel, said Mr Hossain.
As a result, at home, even utilities are becoming costlier, he noted.
On the heels of the pandemic, currency depreciation has been wreaking havoc on some essential commodities in many countries of the world including Bangladesh, he added.
Dr Jamaluddin Ahmed, past president of ICAB and Chairman of Emerging Credit Rating Ltd, presented a keynote paper at the virtual seminar.
Highlighting the key features of his paper, Dr Ahmed said currency appreciation and depreciation affected all the international transactions of a country as they affected international relative prices.
The devaluation of currency leaves multiple effects on the economic, social, political life of a country, he said.
The currency devaluation emerges as a technique of policy tool that policymakers apply in economic management, he further said.
If policymakers fail to navigate effective mechanisms of currency valuation, Dr Ahmed said, the economy suffers, resulting in the decline of the country's economic growth, social and political instability.
Manzur Ahmed, advisor of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and Dr M Abu Eusuf, executive director of the Research and Policy Integration for Development (RAPID) Bangladesh, were present at the seminar as panel speakers.
Adeeb Hossain Khan, Council Member and Past President of ICAB and Senior Partner of Rahman Rahman Huq, moderated the session.
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