Editorial
Slowdown in the economy
Cut wastage, not constrict business
The Finance Minister AMA Muhith has claimed that the crisis in the economy is not as bad as it was being portrayed by the media and civil society.
Ironically, this remark made during a discussion organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBBCI) on Tuesday contradicts with his statement made in parliament the day before with the words: 'the economy was under a 'dark shadow.' The reason he showed then was uncertainties born of recessionary trends in the global economy.
His two statements put together can lead to confusing public mind further about the actual state of the economy.
In a bid to contain inflationary pressure, the government has increased the interest rates on loans from as well as deposits in the banks. The tightened monetary policy is likely to impact on private sector growth and employment negatively. This is reflected in an overall slowdown in economic growth.
The government is exhorting the businesses to accept this situation for the sake of containing the inflationary pressure.
But who will benefit from this if the cost of business rises thereby affecting investment?
In fact, easier credit policy of the previous year should not be looked upon as the actual culprit behind pushing up inflation. More to the point, factors like erosion of Bangladesh taka against US dollar impinging on rising imports costs, the swelling import bill for buying fuel oil for the rental power plants, increased government borrowing from banks together contributed towards increasing inflationary pressure on the economy.
There is no question that containment of inflation is a key issue. But the solution should not be sought by way of stifling the business as well as increasing the burden on the fixed income group by raising tariff rates on utility service, price of petroleum products and so on.
The focus should rather be on taking prudent measures to curtail unnecessary government expenditures and reduce wastages and corruption from all the sectors of the economy and administration.
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