Originally posted in The Business Standard on 6 August 2024
Getting Bangladesh back on track: How to restore normalcy to the economy
While the country bled and burned over the past weeks, its economic challenges have been ramping for much longer — some structural problems stretching as far back as the first tenure of the recently ousted Awami League government. These challenges will have to be dealt with by the interim government set to take charge soon. TBS reached out to some experts and economists to analyse these challenges and the probable solutions the new government will have to consider in the coming months.
Dr Fahmida Khatun
Executive Director
Centre for Policy Dialogue (CPD)
The economy has been in a shattered state for the last few years; particularly our macroeconomic stability in the last two years has been totally broken because all the major economic indicators are down.
This is not something that happened all of a sudden; this is a culmination of wrong policies and also a lack of institutional reform and lack of good governance. This is why all the economic strengths gradually weakened.
High inflation, low tax-GDP ratio, low export-import, low remittances, low foreign exchange reserve, and alongside them, the so-called growth that could not generate employment, which meant youth unemployment became particularly high.
So, all the benefits derived from economic growth were not shared by the common people. During the last 15 years, a strong group of beneficiaries evolved, who were connected to political parties and powerful people.
The corrupt politicians, bureaucrats and businessmen — these three groups swindled, or extracted from the economy. Due to the huge wastage and corruption caused by them, the cost of implementing all these big projects — Padma Bridge, Expressway etc. — were multiplied by several times.
On the other hand, the financial sector was totally ruined. The banking sector is grappling with high default loans and the banking policies were not made by the regulatory bodies; rather they were made by external forces.
Overall, in the last 15-16 years, the economy came to this point because of a complete lack of good governance and institutional reform.
Turning around this economy is the major challenge. Almost all the other countries have managed to reduce their high inflation rate, but not us, because the central bank governor could not decide on a good policy because he thought about the businessmen first — the ones getting the benefits.
What needs to be done at this moment is to provide some relief to the people, create employment for them, generate income for them, fix all the corruption that was done over the years, and bring to justice all those who were responsible for it.