Handling a chaotic and vulnerable banking sector along with a huge amount of bad loans is going to be the biggest challenge for the new government in this year (2019), the country's leading economists warned.
At the same time, stimulating the private sector investment and reforming the tax system will also remain among the major tasks for it in the coming months, experts observed.
"Ensuring good governance in the banking sector remains the number one challenge for the country for the new year," said A B Mirza Azizul Islam, a leading economist and former finance adviser of caretaker government.
"There has to be a strong political commitment for overcoming the challenge," he added.
"We need fundamental structural reforms in our banking sector," said Dr. Zaidi Sattar, Chairman of Policy Research Institute (PRI), one of the country's leading think-tanks.
"The problems in the banking sector have not been created in a day. The solution to those problems is also not simple."
"The banks are in trouble because they have happily doled out loans to the big names without proper judgment and monitoring. Now these institutions are being compelled to reschedule the loans," Mr. Sattar observed.
The PRI chairman pointed out, "There is a huge lack of supervision in our banking system. Unless there is a political will, it would be very difficult to solve these problems."
The new year is also coinciding with a time when a new government is going to be formed following the general election, held this week.
Against this backdrop, the economists have observed that the new government should take some immediate actions to solve the chaos in the banking arena.
"The new government should be tough to tackle the bulging of non-performing loans (NPL), and should take measures immediately," said Dr. Selim Raihan, Executive Director of South Asian Network for Economic Modeling (SANEM), another prominent research institute.
"There is a visible lack of confidence regarding the banking sector, and it is impacting our industrial sector. Getting loans from the banks is also becoming difficult (for it)," he added.
Apart from the banking sector, the economists also emphasised creating an investment-friendly environment for accelerating private investment in the country.
"The private sector investment has remained in a state of doldrums for almost a decade, and it needs to be accelerated now," Mirza Azizul Islam said.
"Issues like poverty reduction and higher employment generation depend on enhancing the private sector investment," he added.
"To increase private investment, things like ensuring efficient infrastructure, including ports and transportation, energy generation, increasing ease of doing business, and good governance are also critical."
"The big infrastructure projects that have been initiated in the recent years need to be implemented quickly to accelerate private investment," opined Selim Raihan.
"The planned special economic zones (SEZs) need to be operational soon. This, in turn, would encourage investment and export," he added.
The experts also focused on bringing fundamental reforms in the tax system to make it more business- and investment-friendly.
"We need complete modernisation of our tax system. We are one of the lowest economies as far as tax mobilisation or revenue mobilisation is concerned. Our tax-GDP ratio is one of the lowest in the world," said Dr. Sattar.
"We have a tax system, which is hurting our trade, investment and growth performance," he added.
The experts also underlined the need for formulating a trade policy that will encourage export diversification.
"Modernisation of tariff structure will remain as a major challenge for us in the coming days. Our tariff structure is much more suited for the least developed countries (LDCs) or the low-income ones," Mr. Sattar observed.
"But, as we are moving towards high middle-income strata, our tariff structure also needs to be suitable for that."
"We have to be an export-led economy. For that our tariff system should be much more export-oriented," he added.
Professor Selim Raihan noted that export diversification has become even more important in the context of the ongoing global trade war.
"We have to provide appropriate incentives to various other potential export sectors to accelerate export diversification," he noted.
The experts, meanwhile, warned that poverty has been reduced substantially in the country, but the rate of poverty reduction is actually slowing down in the recent years.
"For that, we need to increase allocation to social safety-net programmes," said Mirza Azizul Islam.
"We need to increase the skills of the poor people by providing them quality education," he added.
"We have done a lot in terms of human development. But we are lagging behind in terms of human capital development and skill-oriented human development," said Zaidi Sattar.
The economists also observed that the government should be more attentive to the distributive aspect of growth in the light of growing inequality in the country.
"To make this growth more inclusive and distributive, strengthening governance and institutions is crucial," said Professor Mustafizur Rahman, Distinguished Fellow of Center for Policy Dialogue (CPD), the leading economic think-tank.
"A number of crucial reform programmes, acts and policies have remained pending for a long time until now. These need to be implemented expeditiously," he opined.
Noting a recent slowdown in remittance growth, Mirza Azizul Islam said the country should focus more on exporting skilled workforce overseas instead of depending mainly on unskilled workforce for earning remittance.
Dr. Zaidi Sattar observed that the new government should go for forming high-level commissions or taskforces to carry out necessary reforms.
"These commissions or taskforces need to be manned with competent people, and they need to formulate forward-looking policies," the PRI chairman opined.
"The new cabinet needs to bring in some young and dynamic ministers, who bear the vision of a modern and prosperous Bangladesh," Dr. Selim Raihan concluded.
© 2017 - All Rights with The Financial Express