The South Asian Network on Economic Modelling (SANEM) has raised alarms about Bangladesh’s worsening economic crisis, citing the inadequacy of the proposed national budget to address the turbulent macroeconomic environment.

During the SANEM Budget Analysis 2024 event, Professor Selim Raihan, Executive Director of SANEM, expressed deep concerns about the economic outlook, especially as the country approaches its graduation from the least developed country (LDC) status in 2026.

Professor Raihan, who is also an economics professor at Dhaka University, painted a grim picture of Bangladesh’s economic fundamentals. “The economy is already in crisis. Our concern is that it will face even greater challenges after one year than it does now,” he stated. He criticized the proposed budget’s conventional approach, arguing that it lacks the robust measures needed for economic recovery.

The budget has set ambitious targets, including a 6.75% economic growth rate and an inflation target of 6.5%, despite inflation averaging over 9% in the past two years. SANEM views these targets as unrealistic without significant policy shifts and effective implementation of fiscal measures.

The transition from LDC status is expected to bring new challenges, potentially exacerbating the economic crisis. Professor Raihan warned, “Bangladesh’s graduation from the LDC club in 2026 will present new challenges, possibly leading to a further crisis in the medium term.”

Both Professor Raihan and Professor Bidisha emphasized the need for structural reforms to stabilize the economy. Professor Raihan called for forming a powerful “parliamentary committee against corruption” to tackle corruption, irregularities, and money laundering issues. He criticized the government’s handling of these issues, stating, “The government has failed to tackle money laundering. Instead, it has allowed dishonest people to launder their illegal money.”

Professor Raihan attributed persistent inflation partly to mismanagement in the domestic market, which led to unjustified price hikes. He argued that better market management and regulatory enforcement are essential to stabilizing prices and protecting consumers.

Modifications in tax nets and social safety nets, as well as the promotion of private investment and a two-year recovery plan, were recommended.