Russia-Ukraine war not an excuse for everything: Fahmida Khatun

The Russia-Ukraine war can no longer be used as an excuse for everything, Executive Director for the Centre for Policy Dialogue Fahmida Khatun said, adding that it was the long period of lack of internal governance and reforms which created "storms and risks" for the economy.

The internal weaknesses of the economy are becoming evident, she said while presenting CPD's recommendations for the budget for the next fiscal year 2023-24 on Monday.

"We have always cited the Ukraine war as the reason [for inflation]. This can no longer be the excuse. Lack of internal governance and reforms have increased the risk to the economy," she said, adding that while the war could be one of the reasons, it couldn't be the only reason.

Highlighting how international prices had fallen, she said, "But we are not enjoying any effect from the price reduction seen in the international market."

Fahida said the budget could be the weapon to deal with the situation.

The executive director of the think-tank said the government has to take strong steps in the next budget to recover the economy and restore stability to the macroeconomy.

She, however, expressed doubts about how many steps the government will be able to take in the budget of an election year.

Fahmida Khatun said the socio-economic indicators of the country have become very weak. The revenue collection in the first six months of the financial year was not comforting, with negative growth. It will be very difficult to meet the target by bringing the revenue collection to a positive trend.

Implementation of the Annual Development Program (ADP) has also not increased to the desired level and the government is restricting the import of certain products to save foreign exchange. She said the net foreign financing has come down, with the government borrowing heavily from the banking system, particularly the central bank. Many banks are unable to lend due to the liquidity crunch. The currency circulation outside the bank is also increasing. But people's purchasing power is decreasing, she added.

Through this, a kind of uncertainty is emerging in the market.

"Looking at the indicators, it can be understood that the overall activity of the economy has slowed down. Not all trends are signs of good economic health. Although the government has taken various initiatives administratively, it has not yielded results. If such a situation continues, there may be some deficits in meeting the conditions of the IMF loan," she said.