Inflation will be bearable within next five to six months, said the newly appointed governor of Bangladesh Bank's (BB) Dr. Ahsan H Mansoor calling for reducing foreign exchange deficit and extortion and increase production to increase supply.
He said it to reporters after a review meeting at secretariat on August 14 following his takeover of the charge of Bangladesh Bank governor on Wednesday. He said controlling the country's inflation will be his main priority.
Mansur mulls a 100-day plan to restore discipline in the banking sector like the new government to work with the economy. It would include identifying the problems of the banking sector and its potential solution side by side government plan for overhauling the economy. He said special importance would be given to banking sector reform and capital market reform. Other issues also may be included in the government's 100-day plan.
On controlling inflation Mansur calls for working from three angles. One is to increase supply by increasing production and thereby bring positive impact to the market. Secondly, issues like extortion need to be controlled which increase cost of doing business and we have to work hard on that and thirdly we need to work to stimulate demand side. In fact Bangladesh Bank is already doing this work, he said.
He said another big challenge is that we have shortage of foreign exchange reserves and therefore we can't import as much as we could which can bring positive impact on market.
He said Bangladesh Bank is invariably responsible for bad shape in the banking sector and we must see why it worked through such irregularity. He said it should be remembered that the banking sector is in a bad shape for poor governance and degradation of moral ethics.
Economist Ahsan H Mansoor said the main challenge now is addressing inflation. It will decrease but for that action need to be taken to increase market supply and forex reserves. He said, Bangladesh Bank will work together with the government to prevent money laundering. We will take measures so that traffickers cannot sleep in peace. They will be on run.
Mansur said the country's economic problems are deep and cannot be solved overnight. He said the bad shape of the banking sector calls for priority action. Necessary decisions should be taken to reform the banking sector.
He said there are two aspects to address economic problems. One is collective and the other is individual. The biggest challenge is managing the macroeconomic issues like inflation control. People want to survive high inflation. Let the government say in its plan how much it wants to reduce inflation in the next six months or one year.
He moreover said reforms in the revenue sector are very important. Without proper reforms in tax collection and administration, it is difficult to move the economy forward. The interim government's plans for the country's transition from LDC status should also be announced.
It remains to be seen, he said how much the government will stimulate the local government. The state of local government is very deplorable. If local government is not energized, leadership will not be created.
"If we empower local government, we need to spend on health and education, grassroots people will benefit. If leadership is created from the grassroots, it will also play a role in the economy," he said.
