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Top economists of the country have criticised the targets in the proposed Tk 7,97,000 crore national budget for FY2024-25 and its implementation, saying the budget process has now gone to the hands of the oligarchs.
Saying the budget is now in the hands of vicious circles, they also criticised that the opportunity to whiten undisclosed wealth will only encourage corruption.
Eminent economist and former caretaker government adviser Wahiduddin Mahmud on Monday commented that the country's overall economy is fragile and unstable due to the rising inflation, volatility in remittance inflows, irregularities in the banking sector, a culture of irregularity-wastage-lack of accountability in government spending, money laundering, and rising foreign debt servicing costs.
“In this situation, the budget is like a sacrificial animal with limbs tied. It is unable to do anything,” he added.
Wahiduddin made the remarks at an event, titled "Economic Overview and Proposed Budget 2024-25", organised by the Newspaper Owners Association of Bangladesh (NOAB) and the Editors’ Council at a hotel in Dhaka.
He said that the government's foreign borrowing is continuing and the amount of interest expenses has significantly increased. Under the circumstances, the budget may fall into the trap of foreign debt.
Regarding the chaotic situation in the country's economy, he said the banking sector is out of control, there is corruption in the administration, there is no atmosphere of trust in the economy and there is free circulation of black money. A lot of money is also being laundered.
”The economy was already in trouble. But the economy had the strength to digest that problem for so long. Now these problems are coming out because that strength is not there. This reality requires strong guidance. It is not possible to reach the desired goal unless the current path of the economy is changed,” he added.
Former caretaker government adviser Hossain Zillur Rahman said that the finance minister has listened to the oligarchs or looters while preparing the budget.
He said that money whitening opportunity has been proposed keeping this class in mind. Moreover, keeping this group in mind, reforms in the economy and the banking sector were not discussed in the budget.
Policy Research Institute Bangladesh Executive Director Ahsan H Mansur said, “We ourselves have created the weakness in financial management, especially in the banking sector, with the restrictive policy of 9/6 per cent interest rate [loan interest 9 per cent and deposit interest 6 per cent]. The problem was not created in a day, so the solution won’t come in a day.”
He also said that reducing inflation is a matter of monetary policy and the Bangladesh Bank. Reducing inflation is not a matter of the budget, although the budget can play a supporting role there. If contractionary monetary policy is implemented now, inflation will decrease.
Former central bank governor Salehuddin Ahmed said that the banking sector’s condition is not good at present. There is a liquidity shortage in the banks and they are unable to give loans to businessmen.
Regarding foreign debt, he said that it seems that the day is approaching when the debt will have to be paid with debt. Cutting unnecessary projects and cutting costs in ADP will reduce the deficit significantly. This will reduce the burden of foreign debt as well, he added.
Former finance secretary Mohammad Muslim Chowdhury expressed concern about the massive issue of defaulted loans. He said that while the reported figure is Tk 1.82 lakh crore, the actual amount is estimated to be much higher, around Tk 5 lakh crore. This staggering amount represents nearly 80-90 per cent of the national budget.
He criticised the lack of attention to this critical problem and highlighted the absence of interventions or specific measures outlined in the budget to address it.
Centre for Policy Dialogue (CPD) Executive Director Fahmida Khatun said the banking sector is becoming weaker, with many depositors complaining that they cannot withdraw their money.
NOAB President and MP AK Azad said that inflation is now at about 10 per cent. In this budget, the inflation target has been fixed at 6.5 per cent. “But how will it happen? I have not seen any positive proposal to reduce inflation in the budget.”
Economy infected: Debopirya
Debapriya Bhattacharya, a distinguished fellow of CPD and convener of the Citizen's Platform for SDGs, on Monday also termed the banking and energy sectors as two infected lungs of Bangladesh’s economy.
“Just as it becomes difficult to breathe when a person’s lungs are infected, the economy cannot breathe when there is a crisis in these two sectors,” Debapriya said at a post-budget media briefing in the city.
“The proposed budget does not have proper guidelines on inflation, internal investment, foreign investment, trade balance, growth and employment. There is nothing special about the fragile banking sector in the budget,” he said.
He continued, “Major political commitments were needed on urgent issues such as energy, banking, capital market, and port management. But we did not get it in the budget. This is because there was a lack of professionalism. As a result, the policy leadership and coordination needed to improve the ongoing situation is lacking.”
Debapriya then pointed out, “Power and politics are the root of all problems. Power is exerted through politics, which results in the disadvantage of already disadvantaged people. But despite all this, transparency, accountability and political will are necessary to implement targets in the budget.”
Economy trapped in ‘vicious circle’
Addressing another post-budget programme in Dhaka on Monday, prominent economist Dr Qazi Kholiquzzaman Ahmad highlighted that Bangladesh's economy is trapped in a “vicious circle,” rendering inflation control policies ineffective, unlike the successes seen in Sri Lanka, India and Pakistan.
Speaking as the chief guest at the event organised by the Development Organisation of the Rural Poor at the Economic Reporters' Forum, he pointed out that the rapid growth rate of wealthy individuals in Bangladesh amid the economic crisis and the pandemic has happened due to assets being looted by this influential circle.
He emphasised, "The government’s policies are not working properly to combat inflation due to the influence of this vicious circle. This circle influences the government's policymakers and policy implementation, preventing the economy from improving until their hold is cut off."
‘Corruption will increase’
South Asian Network on Economic Modeling (SANEM) Executive Director Selim Raihan on Monday also said that the opportunity to legalise the black money of the country’s citizens will help increase corruption.
"It is not consistent for a right society to legalise black money by paying a 15 per cent tax for immovable properties. It is corruption which will cheer up black money,” he said at a post-budget reaction event at Dhaka University.
"Bangladesh’s economy is under pressure and the pressure can increase more. This time, the aim of growth in the budget could be more realistic. In this regard, default loans need to be monitored and banking commissions have to be formed," Selim added.
