The impressive international ranking of Bangladesh’s positioning as an enviable economy suddenly seems irrelevant. Partly due to an embarrassing fudging of figures and an economy that did perform, but remains wobbly in the face of natural calamity and international disturbances, the basis of an emerging economy is no longer sustainable.
Think tanks doubled over faced with talking of ground realities of governance thereby losing sight of the buoying factors. Over dependence on the two key drivers, remittances and an all-eggs-in-one-basket export regime, has come back to bite.
A loan debt of $100 billion is scary; the prospect of not defaulting on loan repayment is more immediate of a fright. That should not have been the remit of the recently installed interim government except that it is. The World Bank hadn’t finished negotiating and monitoring the $4.7bn in support to the previous government before the current one raised new requests for another $6.4bn.
The total $11.1bn is all put down to budgetary support -- some of which will go towards bolstering reserves, some towards plugging revenue collection shortfalls, with the rest used for implementing reform agendas and crucially paying bills and loan installments from the past.
For a nation impatient for change, the crying need of reduced prices of essentials and demands for reparations for being deprived the big picture pales before the immediate. In so far as communicating the direness this government is as foot dragging as the previous one.
The same business community that had been promised sops in support of diversifying exports by the past government is approaching the current one with a bowl of lists for stimulus just to survive. With the big fish either in custody or on the run and with increasing freezes on bank accounts, their second tiers would have us believe they can’t pay salaries or run their organizations, thereby putting the creaking economy under further pressure.
That includes the famous syndication operations of a handful that allowed them to grow, prosper and become all engulfing. During the past government the beginning of a crack down on them was thrown off-track by dubious political and corruption trading.
Politics and business can be complementary; they can also be adrift on the other
Governor of Bangladesh Bank, while a civic think tank had argued against liquidity flushing of troubled banks, Dr Ahsan H Mansur has gone back on that resolve by allowing conditional liquidity flows albeit through loans from other banks. Reality is a strange leveller between aspiration and ability. Nonetheless it is difficult to make out how a man of his acuity missed out on that.
With reserves stabilizing on the back of a growing stream of remittance through banking channels, a staunch refusal to merely print money and a decline in capital flight some order is returning to the financial system, but only just. Bangladesh has always hobnobbed with foreign investors to encourage investment flows including expensive, but not expansive, road shows that had little to show for it in terms of results.
Two of Sheikh Hasina’s farsighted directives-one to explore contract farming in other countries ; the other to find new markets haven’t been truly followed through by, frankly, government administration and businessmen. A few companies were, on the contrary, allowed to invest foreign currency in other countries. One of these went some way in Africa before mired in the political tumult there.
When it comes to exports of Ready Made Garments the targets remain largely unchanged alongside a lot of whining to get the government to negotiate while whittling away at tax and tariff barriers. With Dr Yunus at the helm the wish list grows, especially in further cracking the profitable United States market.
Bangladesh did not venture into import substitution in the way that India did for decades before opening up their markets. For the Indian it was about being content with product quality improvement , building of management and workforce capabilities to the point when imports could be competitively faced. Whether the interim government can force through such an agenda remains to be seen. Politics and business can be complementary; they can also be adrift on the other.
Mahmudur Rahman is a writer, columnist, broadcaster, and communications specialist.
