Immediate exploration efforts in old gas sites are required to tackle the ongoing fossil-fuel-based power and energy crisis, says Centre for Policy Dialogue (CPD).
It has urged the government to realise that renewable energy can play a vital role in energy diversification.
As per CPD's findings, given the uncertainty in future trends in the war, the price of energy is likely to reduce at a slower pace in the coming months and is expected to continue in 2023.
The global energy market has experienced a rise in prices in 2022 mainly due to post-Covid -19 economic recovery followed by sanctions on Russian oil in view of the Ukraine War, the think tank added in its latest Independent Review of Bangladesh's Development (IRBD) report titled "Recent Challenges Facing the Bangladesh Economy: A Brief Overview."
The findings of the report were unveiled at a media brief at its Dhanmondi office in the capital on Sunday.
The government, by borrowing the from Islamic Development Bank (IsDB), IMF, World Bank (WB) and bilateral sources (such as KSA, Kuwait, and Qatar), can arrange adequate foreign exchange for energy imports.
The IRDB report stated that depending on imported LNG alone would be too burdensome for the country and this would make uninterrupted gas supply for domestic industry and power sector uncertain.
CPD also made several recommendations to fight inflation, public finance management and the external sector.
- The money supply has to be controlled to contain high inflation by increasing the lending rate
- Monetary policy should be made more effective through a market-determined interest rate regime
- Poor households should be provided with support Micro and small businesses should be provided stimulus since most of them could not access the credit support provided during the Covid
- Austerity measures announced by the government should be continued
For public finance management:
- The already introduced austerity measures such as stoppage in vehicle purchase by government entities, reduction in foreign travels by government employees, stoppage in providing honorarium for attending meetings, pause in the implementation of C-category ADP projects (i.e., low priority projects) and reduction in expenditure (by 20-25%) owing to fuel and electricity by government agencies should be continued
- Subsidy on fuel, power and agriculture should be continued for the next few months. It must be taken into cognisance that any hike in the administered prices will have adverse impact on inflation
- Tax evasion should be restrained by all means to generate resources for the
- priority sectors
- To this end, the NBR should promote electronic-based measures, including e-TDS, e-filing and cross-checking transaction data from multiple sources
- Transfer Pricing Cell (TPC) should work closely with Bangladesh Financial Intelligence Unit (BFIU) and Customs Intelligence and Investigation Directorate (CIID) to curb trade-based money laundering
For the external sector:
- Bangladesh Bank has taken four measures, such as halving the dollar holding limit (Net open position- NOP) of banks, monetising 50% of dollar holdings in Exporter Repatriation Quota (ERQ), halving the deposit limit as ERQ and transferring foreign exchange funds of offshore banking units to domestic banking units While these are positive moves, but these will not dent much into the problem
- In the short term, tightening the imports should be the main strategy. Priority should be given to the import of essential commodities and inputs for production
- Given the current situation, trade misinvoicing should be restrained at any cost
- There is an urgent need to revisit the various incentives prevalent in the external sector