Mainly due to high inflation and volatile exchange rates, there is a debate between experts and major stakeholders around the macroeconomics of Bangladesh. The effect of these is also felt by the people. Both stress and heat are increasing in their daily life. So it is true that the policymakers have to be more sensitive to face the overall economic challenges of the country.

But that was not to be. Bangladesh is still ahead in the race for growth. Apart from that, there is not much disagreement about the potential of a prosperous Bangladesh. However, the goals are tied with the challenges of contemporary macroeconomics.

But why this concern? Is this bad feeling very temporary? Or is there a real reason for the lingering? Have we not paid enough attention to the structural reforms of our economy? Or in the face of global economic pressure, we have taken a slightly messy step? Understanding the mood of the market, do we hesitate to show prudent policy activity?

The words are right; just the economic crisis outside will not be responsible for our way forward. We must also accept the responsibility that lies with us. Rabindranath Tagore felt this exactly in his letter to "Bataiyoniker Potro" in the "Kalantar" section when he realized that when the water is understood inside the ship's hull, it is only then that the external water becomes an enemy. The water inside is not visible like that, its movement is not so intense, it dies from the impact, not from the blow, and therefore it can be satisfied by blaming the surge and pressure outside, but to die, one day it will come to mind that the real death is in the water inside, it has to be thrown away as soon as possible... Remember that it is not easy to drain the sea, it is easier to drain the water inside the hull.

Undoubtedly, if there is any deficiency in our internal energy source, we should first look at it.

In our economy, external obstacles still persist. Fuel prices are rising, the dollar market is on fire, and the prices of imported goods are skyrocketing. So, should we sit back with folded hands? Have we really overcome our familiar struggle with inflation, especially in food prices? Have we made the right decisions in terms of coordinated monetary and fiscal policies? Have we adjusted the exchange rates adequately? If Sri Lanka and recently Turkey can muster the courage to walk the path of reducing the interest rate to control inflation, why can't we? Answering these straightforward questions is difficult. Along with this, many structural issues are certainly intertwined. This is also acknowledged, and in this election year, steps are being taken with a lot of thought and consideration. Nevertheless, we must confront the main problems like inflation and the dollar crisis head-on.

There is no denying that the foreign currency market is currently wreaking havoc on us. Moreover, there is a deep connection with the rupture in monetary policy. Specifically, the significant devaluation of the interest rate. Due to the impact of the COVID crisis and the war in Ukraine, our import costs have increased significantly. This price surge has not been offset solely by exports and remittances, leaving our foreign currency reserves to decrease. To stabilize the situation, the central bank and the government have taken various administrative initiatives. The effects are starting to be felt on our imports, especially industrial raw materials and luxury goods. Even though the devaluation of the currency has somewhat reduced the trade deficit, it doesn't seem to be enough. This has also impacted our official foreign exchange reserves. While the exchange rate has depreciated by nearly 30 percent, it has also led to an increase in the prices of imported goods. In some cases, the import duty rates have increased slightly, but the prices of imported goods have risen significantly overall. This, along with the reduction in the discounts on import loans and foreign aid, has disrupted our economic balance. The impact has been felt overall, not just on economic balance but also on the foreign exchange reserves. This is still not alarming, though. However, considering the magnitude of the economic growth, it is worth keeping in mind that this trend could lead to a further decline in reserves.

Why are our exporters earning less cash despite offering various incentives? Is the significant difference between the official and unofficial exchange rates responsible for this? Does it lead to the perception that the dollar's value will increase in the near future? So, if foreign banks are not interested in bringing the entire amount into the country, isn't it better for them to receive foreign exchange income from other sources rather than cash? Is the exchange rate surge also affecting remittances? Or do many expatriates lack the necessary documentation for their formal work? Could it be that regulatory authorities are subtly obtaining cooperation from banks to monitor all imports, including LCs? Hence, they are going to the shadow market to meet the demand for dollars. What can be done to reduce this demand? Could tightening monetary and fiscal policies be one of the answers to this crisis? Rather than avoiding these questions, it seems that there is no alternative but to engage in discussions with stakeholders about both the positive and negative aspects of these issues.

We have been reaping the benefits of import-dependent industries for a long time. If we stop importing raw materials, intermediate goods, and machinery, how can we keep import alternatives or the export-oriented industries thriving? Bangladesh Bank introduced special facilities for manufacturing industries to settle import payments. However, it is necessary to understand why foreign banks are reluctant to provide short-term import loans under this scheme. There is an immediate need for in-depth discussions with foreign banks and their representatives.

Furthermore, it is imperative to consider making commercial transactions, advertising expenses, healthcare costs, and card payments easy and "seamless" in a market-oriented manner. This will reduce the need for them to resort to the shadow economy. They must realize that, within a specified timeframe, they need to bring their income from exports back to the country. They need to report to various points such as banks, customs, and EPB. Providing tax benefits and other incentives is essential for them. Otherwise, their income may end up in the shadow economy.

A significant portion of foreign exchange is spent on transportation costs in foreign currency. We could have saved this if we had our own ships operational. In this regard, Bangladesh Bank has also issued advertisements. If the Ministry of Shipping, the Ministry of Commerce, and other relevant stakeholders actively engage in this area, it is undoubtedly possible to have a large-scale foreign currency shelter in this regard. Amidst the current turmoil, the recent agreement on the use of Bangladeshi Taka-Rupee cards and currency exchange signed in Delhi could significantly reduce the pressure on dollar expenses if implemented promptly. In addition, countries from which we import in large quantities could be approached to establish "swap" lines. Similarly, international organizations (such as IDB's ITFC) could be requested to establish special support lines for importing petroleum. This system is already in place, but there is an opportunity to make it even more robust in contemporary reality.

In light of this discussion we can make the following propositions:

1. Making general transactions of current account including imports seamless. 2. Giving more policy support to repatriation income and removing any impediments to its transactions. 3. Identifying and taking action against banks that have not paid the import price on time for short-term loans granted by foreign banks. At the same time talking to the representatives of those foreign banks and giving a positive message to remove all obstacles. Monitoring the foreign transaction payment system of our banks is more important than monitoring the exchange rate and import bills. 4. Banks need to be guided and helped instead of panicking in the name of price monitoring of imported products. Those who can afford less will be less likely to join the UPAS system—that message needs to be conveyed. 5. Allowing service sector income to be channeled through banks with tax exemptions and other incentives. 6. Initiatives can be taken to implement dollar-rupee 'swap' arrangements with the Central Bank of India under SAARC Finance. 7. Opening a special credit line of at least two billion dollars for importing fuel oil with multinational organizations like IDB. Saudi Arabia can be discussed for this. 8. Banks with large capital deficits should be stopped for the time being from all major lending activities including import loans. Bangladesh Bank has done so in some cases. This system should be applicable to all weak banks. 9. Every taka spent has some foreign exchange cost attached to it. Therefore, except for the projects that are going to be completed soon, the cost of other development projects should be suspended or slowed down for the time being. 10. Banks are said to be selling dollars at higher prices citing import costs in advance. Rather than looking at it from an administrative point of view, this issue should be seen in light of market-based imbalances of demand and supply and subsequent supportive policy support. 11. In times of crisis there is no substitute for dialogue with stakeholders. It would be wise to keep in constant conversation with those who are aware of this, those who are struggling to deal with this problem, and experienced experts.

I have just provided some advice. In times like these, it is undoubtedly possible to find a way to navigate economic uncertainty by engaging in robust discussions and dialogues with economists, businesspeople, representatives, and foreign bank delegates. I want to remind everyone that over the past decade, despite the continuous global crisis, we have ensured the security of our food supply. The mega infrastructure projects that have been completed recently and those that are almost finished have also enabled significant development in our internal economic activities, in addition to enhancing connectivity in international trade. We have the potential for immense economic success on a collective scale. However, before that, we need to effectively address the existing problems. Issues such as smuggling, lack of governance, and evasion of bad loans need to be acknowledged and collectively discussed for solutions. Remember that we have successfully navigated crises in the past, such as the 2008 economic downturn, by diligently implementing policies and budget coordination, which eventually led to significant inflation reduction within a few years. Why can't we do it now when the footprints of those policies are still present? To achieve this, everyone involved needs to have the mindset of facing the existing reality and working together to overcome it.

Writer: Emeritus Professor at Dhaka University and former Governor of the Bangladesh Bank.