Lack of accountability, inefficiency in strategic thinking, and institutionalisation of corruption have trapped Bangladesh's economy from three sides like an iron triangle, resulting in an ordinary national budget during an extraordinary time, experts have said.
The decline in the revenue sector, weak banking sector, high inflation, low foreign exchange reserves, high government expenditure, inefficiency in ADP implementation, etc. have intensified the overall macroeconomic instability and that has triggered the current economic headwind, they said.
Experts and speakers made these observations at a post-budget dialogue organised by the Centre for Policy Dialogue (CPD) in Dhaka’s Gulshan on Wednesday, as part of the think-tank’s flagship programme "Independent Review of Bangladesh’s Development (IRBD).
CPD Board of Trustees Treasurer and former caretaker government adviser Syed Manzur Elahi chaired and moderated the session while CPD Executive Director Fahmida Khatun made the welcome remarks.
Addressing the dialogue, Power and Participation Research Centre Executive Chairman Hossain Zillur Rahman said, “The solutions to various budget problems are not in the hands of the economy or the finance minister. It is in the political economy.”
He said, “Bangladesh's prospects are trapped within the iron triangle of political economy, which lacks accountability, is inefficient in strategic thinking, and has seen institutionalisation of corruption. Bangladesh has two golden ducks, hard-working entrepreneurs and hardworking economic workers.”
“Budgeting is very important in building the future. It is a window through which we can see whether the economy is being managed properly,” he added.
Pointing out that governance and development strategy are deficient, Zillur said, “Where is the talk of cooperation in the development strategy that has been going on for the last one to one and a half decades?
“Incomplete, inefficient and wasteful initiatives will not get the job done. Inefficiencies in various sectors, including education, health and infrastructure, project selection, allocation of costs are a reflection of that.”
In the budget for FY2024-25, a new provision has been proposed to legalise undisclosed money and assets. This type of provision undermines the rule of law and goes against the spirit of good governance. Rather, tax dodgers must face accountability and be made to pay for their misdeeds, says CPD.
Regarding the opportunity to whiten undisclosed wealth with a 15 per cent tax, Anisul Islam Mahmud, the deputy leader of the opposition in parliament, said, “Will the economy be strong if theft is allowed? This was repeated earlier but there was no result. This will discourage honest taxpayers from paying taxes on time, creating a moral hazard.”
About inflation, he said, “Syndicates are entirely responsible for inflation. Seriously, the government has to tackle them because they are becoming more powerful than the government. Otherwise, the proposal to whiten black money with a 15 per cent tax would not have come.”
“Increasing interest rates will not reduce inflation because almost 80 per cent of our loans are industrial loans. As a result, collecting them if they are defaulted is impossible. There is a mismatch between bank borrowing and landing. Instead of high borrowing and low landing, they do the opposite which hampers its activities.
“As a result, the number of defaulters is increasing because they cannot pay a 9 per cent interest rate while the current rate is 15 per cent,” Anisul said.
He continued, “In 2009, default loans were Tk 22,481 crore and it increased to Tk 1,82,295 crore in 2024. This should be addressed. In terms of the exchange rate, the crawling peg is not doing what we said earlier to make it flexible. It would have been better if it was made floating. It is not possible to hold [USD rate at] Tk 117.”
MA Mannan, the chairman of the Parliamentary Standing Committee on the Ministry of Planning, said, “Many projects that I did not agree with went to ECNEC through my hand.”
Evaluating Zillur’s remarks, he said, “People now want a better life, proper sanitation and clean water, not democracy in a new bottle. Time has come to improve livelihood at the rural level.”
Socialist Labour Front President Razequzzaman Ratan said, “Every time, the budget size increases, GDP increases, per capita income increases. But is the income of workers who work to increase them increasing? No.
“In our budget proposals, we talked about dormitories and sanatoriums for women workers in industrial areas and workers' rations. But none of this was addressed in the budget.”
“If Tk 45,000 crore were allocated in the budget, 25 million people would have come under ration. Besides, if Tk 12,000 crore was allocated, 1,20,000 workers would have come under housing. But nothing came through the budget. This is an unfair budget for us,” he said.
Stating that this budget has not met their expectations, Campaign for Popular Education Executive Director Rasheda K Choudhury said, “Investment in education is the best investment. But here, the allocation is not increasing.
“There are no allocations in educational research, teacher training, and other major areas. There is no investment in the budget for good ethics, good governance and good citizens.”
In an open discussion session, former NBR chairman Muhammad Abdul Majid said, “Why was the supplementary budget passed so soon? It should have been done over time. Besides, parliament should review the proposed budget and ensure that it is passed.”
Shasha Denims Ltd Managing Director Shams Mahmud said, “There is no mention of SME in the budget. Policymakers think everything is fine when nothing is fine. How will FDI come? Gas price has risen, electricity price will be hiked, and private sector credit growth will drop.”
