The tax-to-GDP ratio of Bangladesh is 7.5%, which is the lowest among all the countries in the world, said Planning Minister MA Mannan.
The minister made the statement during his speech as the chief guest at the opening session of the three-day Annual Bangladesh Institute of Development Studies (BIDS) conference on Post-Covid Challenges in an Uncertain and Divisive World.
A total of 13 academic papers, five book discussions, and 12 keynote speeches from home and abroad will be presented at the conference, said Dr Binayak Sen, director general of the BIDS.
About the tax-to-GDP ratio the Planning minister said, "It is worse than the worst. But how did the economy grow so much? So, is there any other thing to offset it [lack of tax return]?"
Increasing the tax ratio is not possible overnight, he added saying that the prime minister asked to increase the number and quality of researches.
To stabilise the economy, he recommended removing limits on interest rates, leaving currency exchange rates upon the market system.
However, the special guest of the programme, State Minister for Planning Dr Shamsul Alam commented that the GDP growth rate will exceed 7% this time.
He said that the country is doing well in all indicators including private sector loans, investment Foreign direct investment (FDI).
However, in the context of current inflation, he recommended increasing the interest rate to 9-12% instead of 6-9% to protect the interest of the depositors.
Abdur Rouf Talukder, governor of Bangladesh Bank, said at the event that, Bangladesh is among the few countries which provided stimulus to prevent loss resulting from the pandemic. Bangladesh was one of the top 5 countries in terms of combatting Covid-19.
The inflation increased due to dependence on imports and an increase in the cost of production. The government is currently trying to reduce imports and increase production, said the central bank governor.
He said that the government is not preventing imports. Only imports of unnecessary and luxury goods were banned. The Bangladesh Bank blocked some LCs due to over-invoicing and under-invoicing.
He also said, "We have huge potential of earning more remittance and the potential remains under-explored due to hundi. Policing is not the proper way to reduce hundi but reducing cost is."
He presented some initiatives of the central bank in this regard.
Dr Sadiq Ahmed presented the keynote titled "Macroeconomic management in a post-Covid uncertain global environment" at the event.
He said that the economy of Bangladesh achieved significant development in many socio-economic indicators since Independence.
The economy achieved remarkable growth in the last decade. But the Covid crisis reverted the momentum, he added.
The war Between Russia and Ukraine pushed the economy to further challenges and delayed recovery from Covid 19.
He said that about 6% economic growth for the upcoming fiscal would be remarkable for Bangladesh considering global and local perspectives.
He proposed compromising some level of economic growth to ensure macroeconomic stability.