Macroeconomic framework for FY25 should focus on curbing inflation: CPD

The Center for Policy Dialogue (CPD) on Sunday observed that the macroeconomic framework for the upcoming fiscal year (FY2025) should continue to focus on curbing inflation and stabilising the exchange rate.

“Restoring macroeconomic stability should be the main focus of the policymakers. They must also offer concrete measures for proving respite to the inflation-afflicted common people with limited income,” said CPD Research Director Dr Khondaker Golam Moazzem.

He said this while speaking at a media briefing to share CPD's observations on the state of Bangladesh's economy in the fiscal year of 2023-24 at its office in Dhaka, reports BSS.

Golam Moazzem said the performance of the Bangladesh economy during the first ten months of FY2024 indicates that the remaining months of the FY2024 will continue to face the ongoing challenges despite some positive policy measures taken by the Bangladesh Bank.

This is because it takes a while to see the outcome of any policy, he added.

However, he said, the effectiveness of any policy also depends on complementary polices in other areas.

In the backdrop of formidable economic challenges, the new Finance Minister will present the national budget for FY2025, he mentioned.

He emphasised that while restoring macroeconomic stability should be the main focus of the policymakers, they must also offer concrete measures for proving respite to the inflation-afflicted common people with limited income.

Golam Moazzem said issues such as enhancing fiscal space, prioritising expenditure, and prioritising foreign financing ought to guide the public finance management in FY2025.

For positive outcomes of policy measures and improving macroeconomic performance, he said, complementarity between the fiscal and monetary policies must be ensured.

Along with the immediate and short-term measures, he said, the government should also work towards addressing the structural problems such as establishing good governance and strengthening institutions through reforms.

Golam Moazzem, however, said that the success in controlling inflation will depend on the proper implementation of the policies undertaken by the government.

“No policy can work in isolation. Therefore, relevant ministry and departments will have to coordinate among various policies for containing inflation,” he added.

While monetary policy is an important instrument, fiscal trade and agriculture policies are also crucial in addressing the challenge of inflationary pressure, he said.

He mentioned that the Bangladesh Competition Commission should adopt a strong stance against cartels and a zero-tolerance policy towards collusive practices.

He said the Competition Act 2012 should be revised to address monopolies and include specific anti-trust clauses and concrete penalties for violators.

He noted that the government should provide direct cash support to people experiencing poverty, enhance social protection for low-income families, and extend stimulus packages to small businesses for survival during challenging times.

Distribution of essential commodities sold through the open market system (OMS) must be managed effectively and without corruption so that eligible people can access these items at low prices, he added.