Poor governance, institutional shortcomings, political instability, lack of policy continuity, and a bureaucratic mindset that prioritises power over progress in Bangladesh, India and Pakistan are key problems to impede economic and social sustainability.
These challenges are impeding economic and social sustainability in these countries, leading to growing inequality and gender disparities, said Dr Ishrat Hussain, former governor of the State Bank of Pakistan and former adviser to Pakistan's prime minister on institutional reforms and austerity.
He came up with the remarks at the launching event of the book “Development Pathways – India, Pakistan and Bangladesh, 1947 – 2022” by Ishrat Hussain at the capital’s Policy Research Institute of Bangladesh (PRI) in Dhaka on Monday.
Addressing Ishrat’s concerns, prominent economists and former central bank governors in Bangladesh have suggested that the government should consider adopting a more flexible and unified exchange rate system to alleviate foreign exchange shortages amid the ongoing crisis.
“These three countries are suffering due to poor governance and lack of institutions. Bureaucrats are still thinking they are lords and do not work for pro-people,” said Ishrat, adding that such a mindset should be changed.
“High inflation and political situation all together are contributing to macroeconomic instability,” he added, saying “Power nexus is now operating at local level too.”
Economic managers should also be adaptable to new policy changes, with a focus on mobilizing domestic financial savings and improving the tax-to-GDP ratio to alleviate the burden of debt, he recommended.
Professor Rehman Sobhan, chairman of the Centre for Policy Dialogue (CPD), drew attention to the lack of discussion in parliament on critical banking reform in Bangladesh, a problem that has persisted for over 15 to 20 years. He raised questions about the potential conflicts of interest among parliament members and business elites, highlighting concerns about possible defaults within the banking system.
Rehman Sobhan also noted that India, while relatively better regulated, still faces issues of unequal treatment under the law, where large corporations like Adani might have different rules applying to them compared to smaller businesses.
As the countries navigate these complex challenges, Ahsan H Mansur, executive director of PRI, remarked, "We are at a crossroads, and many of these questions remain unanswered. We lack definitive solutions to the major issues we face today and will encounter in the future."
PRI chairman and event chair Zaidi Sattar and other economists recommended taking a policy on unified exchange policy for exporters, importers and remitters. Abrupt depreciation is fueling inflation and increasing macroeconomic instability, while flexibility in depreciation and uniformed exchange rate will reduce the forex crunch, they said.
Former Bangladesh Bank governors Mohammed Farashuddin and Salahuddin Ahmed and other former secretaries were present in the event.
