Immediate exploration efforts at former gas sites are needed to address the current electricity and fossil fuel power crisis, says the Center for Policy Dialogue (CPD).
He urged the government to realize that renewable energy can play a vital role in energy diversification.
According to the CPD findings, given the uncertainty of future war trends, the price of energy is expected to decline at a slower pace in the coming months and is expected to continue into 2023.
The global energy market saw higher prices in 2022 mainly due to the post-Covid-19 economic recovery followed by sanctions on Russian oil in view of the war in Ukraine, the think tank added in its latest independent study on the development of Bangladesh (IRBD). report entitled “Recent Challenges Facing the Bangladesh Economy: A Brief Overview”.
The report’s findings were unveiled at a press conference at its Dhanmondi office in the capital on Sunday.
The government, by borrowing from the Islamic Development Bank (IDB), IMF, World Bank (WB) and bilateral sources (such as Saudi Arabia, Kuwait and Qatar), can arrange adequate foreign exchange for energy imports.
The IRDB report said relying solely on imported LNG would be too burdensome for the country and would make the uninterrupted supply of gas for the domestic industry and power sector uncertain.
The CPD also made several recommendations to combat inflation, public financial management and the external sector.
- The money supply must be controlled to contain high inflation by increasing the lending rate
- Monetary policy should be made more efficient through a market-determined interest rate regime
- Poor households should be supported Micro and small businesses should be boosted as most of them could not access credit support provided during Covid
- The austerity measures announced by the government must be continued
For public finance management:
- The austerity measures already introduced such as stopping the purchase of vehicles by government entities, reducing overseas travel by government employees, stopping fees for attending meetings, pausing the implementation of ADP category C projects (i.e. low priority projects) and the reduction of expenses (by 20-25%) due to fuel and electricity by government agencies should be continued
- Subsidies for fuel, electricity and agriculture are expected to be maintained over the coming months. It must be taken into account that any increase in administered prices will have a negative impact on inflation
- Tax evasion must be contained by all means in order to generate resources for the
- priority sectors
- To this end, the BNR should promote electronic-based measures, including e-TDS, electronic filing and cross-checking of transaction data from multiple sources.
- The Transfer Pricing Unit (TPC) should work closely with the Bangladesh Financial Intelligence Unit (BFIU) and the Customs Intelligence and Investigations Directorate (ICID) to combat trade-based money laundering.
For the outdoor sector:
- Bangladesh Bank has taken four measures, such as halving the dollar holding limit (Net Open Position – NOP) of banks, monetizing 50% of dollar holdings in Exporter Repatriation Quota (ERQ ), the halving of the deposit limit as ERQ and the transfer of foreign currency funds from offshore banking units to domestic banking units Although these are positive measures, they will not solve much of the problem
- In the short term, tighter imports should be the main strategy. Priority should be given to the import of basic products and essential inputs for production
- Given the current situation, commercial misinvoicing must be limited at all costs
- There is an urgent need to review the various incentives prevailing in the external sector