Differing views on interest cap

Economists and experts at a conference on Saturday made differing views on the withdrawal of the banking rate cap in order to tame inflation and weather macro-economy.

Almost all the economists favoured withdrawal of the interest rate cap while some policymakers and businessmen disfavoured it.

They were addressing a session styled 'Economic policy: Addressing post-Covid challenges' of the Annual BIDS Conference, moderated by BIDS director general Dr Binayak Sen, at a city hotel.

Economists Dr Sadiq Ahmed, Dr Debapriya Bhattacharya and Prof Mustafizur Rahman laid emphasis on the withdrawal of both interest and deposit rate caps.

PM's private-sector adviser Salman F Rahman, principal secretary Ahmad Kaikaus, Towfiq-E-Elahi Chowdhury, businessman Anwar-ul-Alam Chowdhury and FBCCI president Jashim Uddin favoured the current interest rate cap for protecting domestic industries.

Meanwhile, most of the speakers agreed to go for massive reforms in the revenue board to boost local resources income amid the current economic shocks.

Centre for Policy Dialogue (CPD)'s Distinguished Fellow Dr Debapriya Bhattacharya said Bangladesh's present economic crisis is not fully for global crisis, rather it is a failure to implement some government policies.

"There are some legacy issues in the country, which is affecting our macro-economy more than the impact of the external crisis," he said.

"Many people say that the external shock is the main reasons for Bangladesh's present economic crisis. But that is a partial one and the local legacy problem is much more influential than that. Our low base of tax-GDP ratio, absence of quality public fund spending, and lack of quality development expenditure are the major concerns for the economic crisis now."

Meanwhile, another CPD fellow, Prof Rahman, questioned the suggestion to the government to limit the interest-deposit rate. He also criticised the government for offering black money-whitening provisions and banking directorship reforms.

Mr Kaikaus said, "If the low interest rate expedites the local investment, why will we withdraw it?

PM's adviser Salman Rahman said, "Since the size of domestic economy is about 70 per cent, we have to think of them regarding their cheap bank loans."

Dr Zaidi Sattar laid emphasis on making trade competitive rather than protectionism to compete with other trade partners in global markets.

The three-day BIDS conference ended on Saturday.

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