A domestically financed Padma bridge could slow down economic growth by drying up funds for crucial sectors like health and education, says a monetary economist who has worked for central banks and the UN.
Currently Chairman of the Department of Economics at Marquette University in Milwaukee, US, Abdur Rahim Chowdhury said diverting funds for bridge would also compel stiff austerity measures and hinder social development.
He said that even though Bangladesh had witnessed a steady six percent growth, this growth was yet to be inclusive.
In an email interview with bdnews24.com, the former researcher for the Finnish central bank also warned that high inflation was in the offing due to a likely food price hike triggered by a draught.
"Second, the quick rental plants have increased our import bill for petroleum products. This will gradually pass through to domestic inflation rate," says Chowdhury.
Also a former chief economist for the United Nations Economic Commission in Europe, the international finance specialist does not take well to the central bank's contractionary monetary policy as it "is not helping the economy very much".
The former member of the Chicago Federal Reserve Bank's academic advisory council said, "The contractionary monetary policy would lead to a drop in economic growth and further increase the fiscal mismanagement."
While he acknowledged that this might help 'contain inflation', "Continued government borrowing would result in increased domestic debt which will crowd out private investment. It may also create a liquidity crisis in the banking sector."
The economist said he believed that Bangladesh Bank could have taken a more selective approach as regards 'import demand for raw materials, intermediate goods and capital goods; and also increase the flow of credit to productive sectors such as garments'.
A former visiting professor at Johns Hopkins University, Chowdhury raised a couple more concerns for building the Padma bridge with own funds.
He said this would likely result in a weaker taka against the dollar since most of the investment would have to be in that currency. Furthermore, he said, foreign aid could shrink as donors become cautious fearing corruption in the 6-km mega structure to bridge the Padma.
Asked about Bangladesh's challenges ahead, Abdur Rahim Chowdhury reeled off a number of points.
Referring to Bangladesh's moderately high growth level, he said, "We should emphasize more on the quality of growth rather than the rate of growth. Our economic growth should be inclusive so that a larger proportion of the population could enjoy the fruits of growth. Also growth should be environmentally sustainable."
He noted that Bangladesh government still lived off taxes paid by the entire populace rather than the richer sections. "There should be more emphasis on direct tax collection including avoidance of tax evasion. In Bangladesh, the rate of increase in income tax collection is less than that of the domestic VAT."
Chowdhury cautioned that Bangladesh may not be able to sustain its current economic growth since there has not been enough investment in infrastructure.
Currently Chairman of the Department of Economics at Marquette University in Milwaukee, US, Abdur Rahim Chowdhury said diverting funds for bridge would also compel stiff austerity measures and hinder social development.
He said that even though Bangladesh had witnessed a steady six percent growth, this growth was yet to be inclusive.
In an email interview with bdnews24.com, the former researcher for the Finnish central bank also warned that high inflation was in the offing due to a likely food price hike triggered by a draught.
"Second, the quick rental plants have increased our import bill for petroleum products. This will gradually pass through to domestic inflation rate," says Chowdhury.
Also a former chief economist for the United Nations Economic Commission in Europe, the international finance specialist does not take well to the central bank's contractionary monetary policy as it "is not helping the economy very much".
The former member of the Chicago Federal Reserve Bank's academic advisory council said, "The contractionary monetary policy would lead to a drop in economic growth and further increase the fiscal mismanagement."
While he acknowledged that this might help 'contain inflation', "Continued government borrowing would result in increased domestic debt which will crowd out private investment. It may also create a liquidity crisis in the banking sector."
The economist said he believed that Bangladesh Bank could have taken a more selective approach as regards 'import demand for raw materials, intermediate goods and capital goods; and also increase the flow of credit to productive sectors such as garments'.
A former visiting professor at Johns Hopkins University, Chowdhury raised a couple more concerns for building the Padma bridge with own funds.
He said this would likely result in a weaker taka against the dollar since most of the investment would have to be in that currency. Furthermore, he said, foreign aid could shrink as donors become cautious fearing corruption in the 6-km mega structure to bridge the Padma.
Asked about Bangladesh's challenges ahead, Abdur Rahim Chowdhury reeled off a number of points.
Referring to Bangladesh's moderately high growth level, he said, "We should emphasize more on the quality of growth rather than the rate of growth. Our economic growth should be inclusive so that a larger proportion of the population could enjoy the fruits of growth. Also growth should be environmentally sustainable."
He noted that Bangladesh government still lived off taxes paid by the entire populace rather than the richer sections. "There should be more emphasis on direct tax collection including avoidance of tax evasion. In Bangladesh, the rate of increase in income tax collection is less than that of the domestic VAT."
Chowdhury cautioned that Bangladesh may not be able to sustain its current economic growth since there has not been enough investment in infrastructure.
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