The keynote paper noted that only raising taxes and cutting expenditure make for a slow recovery
Economists have emphasised the need for comprehensive reforms in the areas of revenue, health, education, banking and investment to revive the economy hit by the Covid-19 pandemic.
They said the situation needs to be addressed both internally and externally.
On Tuesday, experts shared their insights at a webinar titled "Macroeconomic adjustments to the Covid-19 pandemic: Considerations for Bangladesh". It was jointly organised by Oxford Policy Management (OPM) and Policy Exchange.
Policymakers, senior government officials, economists, researchers, representatives from the private sector and civil society, and development partners participated in the webinar.
OPM Country Manager Josh Chipman gave the welcome speech while the keynote paper was presented by its Principal Economist Stevan Lee. Policy Exchange Chairman Dr Masrur Reaz moderated the discussion.
The keynote paper was based on a dynamic macroeconomic model developed by a team of researchers from the University of Oxford and OPM. The model helps look forward through the pandemic to gauge its medium-term impacts and paths to recovery.
Stevan said coronavirus-induced lockdowns, although a potentially successful tool to slow the spread of Covid-19, have a dismal impact on people when they cannot sustain their livelihoods.
He said lockdowns broadly stop economic activities and reduce tax revenues, thus squeezing government resources when it seeks to increase spending on healthcare and social protection.
The legacy of lockdowns combined with the effects of a global recession is severe hardship, said Stevan.
Dr Ahsan Mansur, executive director of the Policy Research Institute, stressed that health concern needs to be addressed before the economy can fully restart.
He said the much-required reforms are missing in the current context, adding that reforms should be the government's highest priority at this moment.
"The state of revenue collection is not good, but that of reserve is. Reforms can improve revenue collection."
Mansur said, "We do not learn from our weaknesses."
He said massive reforms are needed in many sectors, including health, revenue and education.
The economy cannot return to the pre-pandemic state without reforms, he added.
Abul Kasem Khan, chairperson of Business Initiative Leading Development (BUILD), stressed the need for better management of public finance, including minimising less productive expenditure in state-owned enterprises.
But there is lack of data in social security sector, he said, adding that information can play a key role in economic recovery.
"The informal sector remains in a sorry state because of the pandemic. The majority of revenues comes from the private sector. There should be greater emphasis on increasing exports and investment opportunities both in the domestic market and abroad."
Dr Nazneen Ahmed, senior research fellow at Bangladesh Institute of Development Studies, stressed ensuring equality in recovery.
She said both domestic and global aid is needed for economic recovery.
"Quality growth should be emphasised so that jobs can be created," added Nazneen.
Azizul Alam, additional secretary and head of macroeconomic wing of the Ministry of Finance, said among the hardest hit are revenue mobilisation, and implementation of annual development programmes.
He stressed the need to revive small businesses to ensure employment protection.
Alam said there is problem in disbursement of the Tk20,000 crore package announced for the SME sector.
"The new poor have to be included in social safety programmes, but weakness is visible in implementation of these schemes. 50 lakh affected families were supposed to get Tk2,500 each in cash assistance announced by the prime minister, but only 17 lakh have so far received the money," he said.
"Implementation of bailout packages and social safety programmes should be freed from corruption. Reforms should be emphasised to remove institutional weaknesses in different sectors, including banking, revenue and health."
Chattogram Stock Exchange Chairman Asif Ibrahim said all sectors, including apparel, suffered losses because of the pandemic.
He said the government's incentive packages are assisting in improving the situation.
"But the time has come for the government to think about determining the value of taka against dollar."
Dr Shamsul Alam, member of the General Economics Division under the Planning Commission who was the chief guest at the programme, said the good news is that infection rate in July had fallen compared to the previous month.
He said, "The government is now imposing zone-based lockdowns instead of a comprehensive one. But infections may rise when people will travel to their hometowns during Eid-ul-Adha."
Alam said the government had already started implementing some reform programmes.
He said an automation system had been introduced to increase revenue collection.
Job creation has been emphasised in the upcoming five-year plan, he added.
Bangladesh Investment Development Authority (Bida) Executive Chairman Sirazul Islam said the pandemic had posed a great challenge for investment.
He said the government had taken some initiatives to improve the country's ranking on the ease of doing business index.
"Bida has digitised its activities. 20 ministries and agencies have connected with it, and the number will reach 50 this year," he added.
The keynote paper highlighted that recovery depends on how public finances are restored to sustainability.
It noted that only raising taxes and cutting expenditure make for a slow recovery. Tax systems are narrowly based and plagued by leakages and exemptions; they distort private investment and drag down growth.
Fragile systems for delivering public services mean that cuts in investment and productive recurrent spending make things worse, the paper said.
There are no easy policy options. If official development assistance (ODA) supports public finances, recovery accelerates. External finance widens fiscal space so that domestic policy choices are less awful.
It relieves the need to raise distorting taxes and cut productive spending, the paper noted.