The economy of Bangladesh is under pressure, but not in a crisis, according to prominent economist and distinguished fellow of the Centre for Policy Dialogue (CPD), Dr Debapriya Bhattacharya.
“If effective plans are not adopted and implemented, it will turn into a structural problem and there is a possibility of the country falling into a crisis in the future,” he said.
He spoke to the media at a dialogue organized by the Economic Reporters Forum (ERF) in the capital on Tuesday.
Regarding the overall economy of the country, he said that the last decade was very promising for the economy of Bangladesh.
“During this time, we have achieved LDC graduation eligibility, achieved MDGs, progress in SDGs was satisfactory, and achievements in remittances, export earnings, agriculture were all mentionable,” he added.
He stated there are still disappointments saying that there are four major faultlines in the economy.
“These faultlines are, though public investment increased but private investment didn't increase in the expected rate, there are weaknesses in the financial sector as well as a lack of growth in education and health sectors compared to spending on physical infrastructure, and disparity in the allocation and distribution of social safety nets,” he added.
Regarding the private sector investment, the economist said that for the last 10 years, the private sector investment has been stuck at 24%-25%.
“Individuals have not invested their money in the country even though they are financially sound,” he added.
Moreover, there is also a lack in attracting FDI, which is 1% of the total GDP, not enough for a middle-income nation like Bangladesh.
He metaphorically defined private investment and public investment as an airplane running on one engine.
Regarding the weakness of the financial sector, he highlighted the failure of tax collection saying that the government expenditure increased but didn’t the income.
“Moreover, the government is lagging behind in collecting domestic revenue. Without increasing the scope of direct taxes, the income-expenditure balance is not met,” he added.
About education and health sectors, Debapriya said that the government has not increased investment there while paying special attention to development oriented plans.
He said that 2% of the GDP has been allocated for Bangladesh's 20 development projects while at the same time the total allocation for education and health is half of that (1%).
Regarding the fair distribution of money allocated to the social security sector, CPD fellow said that there is a lack of transparency in the distribution process of the amount of money that the government is allocating to the social security sector.
“Even though funds are earmarked for times of disaster, only a handful receive it, and most remain out of reach. So, monitoring activities should be increased,” he added.
The economist suggested emphasizing accountability in all activities of the state in the discussion.
Responding to a question regarding the fuel price issue, he said that the sudden fluctuation in the price of fuel is an instance of the economic disharmony of the country.
“Taxes have been imposed and again reduced without doing any overall calculation but no one knows who is taking these decisions and where the decisions are being taken,” he added.
He also said that he hasn’t heard these issues being discussed in the concerned committee of the Ministry of Finance. If the policy lacks credibility, the market does not accept it.
He said that the development of capitalism leads to looting in all countries but after the looting, the judicial system, institutions were developed though it is not seen in Bangladesh.
He also said that now the third stage of looting has started, through which various individuals, groups and institutions are benefiting through various government development projects.
“The second looting started in 2006 through the capital market and the first looting started in the 1980s through institutions like development financial institutions (DFI) such as Industrial Banks, Industrial Credit Institutions,” he added.
In Bangladesh, lobbying is given more importance than competition and as a result, accountability has weakened.
He said through visible development the government tries to bring civil legitimacy.
“Some countries in the world try to deal with the lack of political power with physical infrastructure; because investments in education, health take more than a decade to bear fruit,” he added.
Debapriya raised the question of whether the country's biggest project (may be referred to as the Rooppur nuclear power project) would be of any use, as well as its cost.
“When we spend $12 billion on this project, India makes $3 billion,” he added.
Responding to a question regarding whether the economic scenario can return to normalcy, he said that some are saying that commodity prices will decrease within the next two to three months.
“But I do not see any such signs in reality before 2023/24, on both global and national level. Rather, this kind of statement creates more distrust in the market, making it more complicated,” he added.
Responding to another question, he said that Bangladesh has achievements, also deviations.
“This deviation can undermine achievement and reduce sustainability. However, Bangladesh has come to this state after passing through many problems. It is hoped that the problem will be overcome in the future,” he added.
ERF President Sharmeen Rivny presided over the program, while General Secretary SM Rashidul Islam conducted the programme.
