Politicians seek obedience from economists: Farashuddin

Mohammed Farashuddin, a former governor of Bangladesh Bank, has expressed concerns over the prevailing unequal relationship between politicians and economists in Bangladesh.

“Politicians want to see the economists as obedient to their instructions, though not as their domestic servant,” he said while addressing a book launching programme hosted by the Bangladesh Institute of Development Studies (BIDS) on Thursday.  

The former central bank governor underscored the need for leaders to listen to economists, saying, “Economists are wise; they speak in the mass media, or on television. Those who run the country should listen to them by invitation. It would have been great had it been possible."

Farashuddin laid emphasis on industrialisation as a more effective means of poverty alleviation compared to traditional methods. “I am not a prominent economist. Still, I think it is necessary to take steps for poverty alleviation through industrialisation, instead of the conventional methods.” 

He proposed to constitutionalise the governor post of the central bank and extend its appointment tenure to at least six years, in addition to a separate salary structure for the bank.  

Mashiur Rahman, economic affairs advisor to Prime Minister Sheikh Hasina, attended the programme as the chief guest, where former caretaker government advisor Wahiduddin Mahmud and East West University vice chancellor Shams Rahman were special guests. BIDS director general Binayak Sen moderated the programme. 

The book – Bangladesher Ograjatray Agamir Karoniyo – is authored by Farashuddin. He expressed hope that the book would guide policymakers on the dos and don'ts for future economic strategies.

Acknowledging the economic development, the former governor said, “If the GDP size swells from $60 billion to $460 billion, the per capita income rises, why shouldn’t the revenue collection rise? It seems like a big problem to me.” 

Farashuddin also discussed the budget deficit, explaining that it is often financed through foreign borrowing, which can increase liabilities when the currency depreciates. He warned that government borrowing from the banking system could either cause inflation or hinder the private sector.

Regarding the tax collection, he said many professionals may not pay taxes properly. Drawing attention to commercialisation of agriculture, he suggested bringing it under the tax net following a two-year notice. 

Besides, he stressed the importance of conducting surveys before making investments in government sectors.

It requires an extended period to heal the damages caused by the 9-6 per cent interest rate cap and the use of multiple exchange rates over the past few years, he said.

He, however, expressed his trust in the prime minister, saying she would take corrective initiatives if the problems are reported to her.