The economy of Bangladesh is teetering on the brink. This article delves into the root causes of the crisis, highlighting the urgent need for macro-management, policy reforms, and institutional overhaul to revive the nation’s economic fortunes.
Rescuing Economy of Bangladesh: A Cry for Macroeconomic Sanity
Although the student anti-discrimination movement’s outer form is anti-quota, its inner cause is derived from economics. The scriptures call these two economic sins: unemployment and inflation. If the Awami League government could have kept these two sins under control, then this unfortunate farewell would not have happened to them. A grassroots political party eventually became dependent on intelligence and business people.
If only intelligence and businessmen could confirm a ruler’s status, then no military rule would ever end. In Bangladesh’s history, the beginning and the end of power are in the hands of the students. Intelligence will fool the government that comes. And traders have already turned the vol.
The problem is with economists. They cannot change the government. Economists warn governments about the problems of the economy in the same way as good doctors address the issues of the body. Because they are often politically unpalatable, economists become enemies of the government. Sometimes, they are derided as ‘Susheel’ in a tone of scorn.
Macroeconomics guru Maynard Keynes said that politicians and economists determine the fate of most things in this society. Beyond that, very few people can be influential.
In the society in which Keynes grew up, he saw politicians come to listen to him. British Prime Minister Winston Churchill used to call and listen to economists.
Churchill once boasted, ‘British “commonsense” is better. Our Kins are the proof of that. It is our misfortune that in this society, the relationship between politicians and economists is like a pumpkin. In contrast, the condition of financial thinkers is like a pumpkin – only victims of contempt and injury. The big reason for this is why they don’t read the development list once a day.
Politicians need to learn that there is a separate scripture to tell the story of development, called development economics. But even more important is the doctrine of ongoing macro management, where the government can eliminate failures. Examples are Sri Lanka and Bangladesh.
Today, the repair of the economy must begin with macro-management. Inclusive measures to curb inflation in the short term, maintain safe reserves, ensure credit flow to the private sector, bring proportional stability in the balance of trade, and somewhat reduce unemployment in the medium term are urgently needed to save the economy. It would be wrong to say that the previous government had failed in these areas. There was great disdain; there was a contradiction.
Government research agency BIDS highlighted the multi-layered crisis of unemployment. An alarming number of educated youth—in fact, almost half—are unemployed. The statistics have been reduced to a chip. Politicians’ speech is only the angel of progress. The word ‘unemployment’ was as abandoned as Vashur’s name.
Government jobs only cover up to 5 percent of the total workforce. The private sector needs to develop healthier due to corruption in the banking sector. Still, the private sector provides the most employment. Many young people are employed in a form of slavery. The rest of the youth joined government politics. Government party student leaders go to the campus by car, with a motorcycle procession behind them. Leaders have no income but are kept from becoming wealthy.
Because they won’t pass when they go to the election, the election of the student council is stopped – age after age. The queue of motorbikes is getting longer and longer after each locality. I have never seen such a motorcade as a passerby behind the President of the United States in Washington.
When a car breaks down, it needs repair. Our economy is still in progress. Here, the vehicle is seen falling down the mountain slope in front of the eyes. This decline must be prevented earlier. The first responsibility of this interim government is to suppress inflation and provide security of reserves. Development budget allocations should be stopped for the time being.
“As much as the government politicians enthusiastically promoted the increase in per capita income or the improvement in the poverty index of Bangladesh, they ignored the plight of indicators of knowledge-based economy, innovation, media freedom, quality of education and institutional excellence at a greater rate than that. The Sheikh Hasina government had to be caught there.”
Our development projects are among the most expensive in the world. Because corruption and inefficiency consume 50 percent of the money. The Rooppur nuclear project, engineered by Putin and imported for the personal interests of some of our bureaucrats and politicians, is a prime example of this. While the world is abandoning them for the sake of civilizational security, we have brought this wild elephant, potentially Bengali-destroying, in exchange for the highest debt—13 billion dollars. That’s from Putin, a dictator who can renege on any deal at any time.
If the government has the legal advantage, then the provision passed in the budget to whiten black money should be scrapped. Bad provisions relating to directors in banks are also voidable. Duty-free car facility for MPs is grossly discriminatory. This is an example of immorality in a revenue-poor state. Simply put, the budget needs to be sat down and revised where appropriate. It is necessary to reduce the amount of borrowing from the bank. In this way, inflation cannot be reduced unless unnecessary inflationary decisions are canceled in society.
No economist has the intention of writing an essay on what the previous government did wrong. Today, they are not saying anything new. A collection of all the media documents of the last four years shows that the government has not listened to economists. Until the World Bank and the IMF forced the government to curb inflation, peg the value of the dollar, maintain proper reserves, and justify interest rates, none of it was self-motivated. There are two reasons for this.
1. To maintain the status quo of riches, one has to do what one has to do—this is the philosophy of the principle of Goartumi.
2. Placing incompetent but proven loyal people in top positions in almost all financial institutions. Positions that demanded intellectual leadership in global judgments were poured into loyal bureaucrats. A festival of academic ostracism everywhere. Because if they make informed decisions, they are not politically palatable most of the time. So, what bureaucrats do not make informed decisions? No, that is not being said. But as quickly as the head bureaucrats will overrule the interests of looter traders or any decision of the Nakhalpara merchant, the well-educated wise man cannot be bowed down so easily.
Those who believe in a market or competitive economy have argued that quotas or price controls increase inefficiency in the economy and do not ensure optimal resource use. It doesn’t matter if someone calls such an economist a ‘drug addict’ or a ‘descendant of Rajakar.” We have to teach them microeconomics or business economics in the classroom. A society will be in danger if its dependence on knowledge decreases.
As much as the government politicians enthusiastically promoted the increase in per capita income or the improvement in Bangladesh’s poverty index, they ignored the plight of indicators of a knowledge-based economy, innovation, media freedom, quality of education, and institutional excellence. The government of Sheikh Hasina had to be caught there.
When institutions are destroyed, economic recovery becomes difficult. It may not be unusual for some political parties to be anxious about when the interim government will hold elections. But they have to agree that the present government should give due time so that at least the financial institutions can be mobilized and some policies can be made for them, which is necessary for the long-term repair of the economy.
●Inspired by Dr. Virupaksha Pal, who is a Professor of Economics at the State University of New York at Cortland
