There is no symptom in sight that the economic crisis Bangladesh will die down soon as the price of dollar is still very high, forex reserve is also shrinking and at the same time, the inflation rate has lessened a very little.
But the economic crisis in other countries of the globe has decreased significantly. Many countries are being successful in keeping the inflation rate under control.
But Bangladesh is not being able to get out of the crisis mainly due to procrastination in taking decisions, lack of coordination in policies and monitoring, lack of inter-ministerial coordination, excessive dependence on bureaucracy and lack of accountability.
As a result, the country is heading towards another parliament election with its people are under serious pressure due to inflation rate and a weak economic base.
At such a period of crisis, the top economic policymakers around the globe are leading from the front. But that is absent in Bangladesh. But here the people in dire need are not getting chance to meet the concerned economic policymakers.
The finance minister does not come to office regularly, the finance secretary does not talk to anyone, it is extremely tough to meet the governor of Bangladesh Bank and the chairman of National Board of Revenue does not attend any programme.
Economy is going through a difficult time, yet there is no coordinated step to bring the finance sector under a discipline. As a result, there is a huge gap between what the government says and what the government does.
As a result, almost none of private entrepreneurs, researchers and economists has any communication with the top four economic policymakers in Bangladesh. They do not even ask for any advice from anyone. This has resulted in lack of different types of coordination and ultimately, the people are suffering.
Finance minister hardly attends office
Finance minister AHM Mustafa Kamal stopped coming to his secretariat office when Covid-19 broke out in the country in March 2020. He has only virtually been attending the cabinet meetings on government purchases. For example, on 24 May, the purchase committee led by him gave an approval to a proposal to procure 12,000 tonnes of sugar at a cost of Tk 1.31 billion to a company that only exists on papers and has not the capacity to supply the sugar.
On 8 August this year, the finance minister came to his secretariat office after three weeks. When Prothom Alo approached him for comments on some issues, he was taking preparations to leave office. He said, “I can’t talk anymore today.” Again on 9 August, Prothom Alo sent a SMS to the finance minister. Two days later, he called on 11 August and said, “Of course, the businesspersons have opportunity to talk (to me). And, this allegation is not true. Anyone has to come through a process to talk. And, it is a matter of the governor (of central bank), why he doesn’t talk. The Bangladesh Bank is operating independently. We do not interfere from our side in the affairs of the central bank.”
However, the immediate past president of Federation of Bangladesh Chambers of Commerce & Industries (FBCCI), the apex body of traders in the country, Md Jashim told Prothom Alo, “Once the finance minister was a dynamic person. But we don’t know what has all of a sudden happened for the last few years. Holding meetings with him is tough for any businessperson these days. But almost the whole economy is now dependent on private sector. So many crises persist in the economy, but the finance minister is absent. That is why others are taking chance of abuse of power.”
They are out of reach
Abdur Rouf Talukder has been serving as the governor of Bangladesh for more than a year. Earlier, he was the finance secretary. He is considered as one of the most powerful people in making policies. Though after getting appointed as BB governor he had taken a few steps to curb irregularirites in the banking sector, he appears lenient towards some banks. For example, he remains inactive in curbing irregularities in Shariah-based banks. At the same time, he did not respond when managing directors of the banks that are doing relatively better approached him to discuss some critical issues. There are a few examples of backtracking from some decisions as well.
Wishing not to be named, managing director of a bank told Prothom Alo, “Once we 10-12 MDs met the governor. He did not even give chance to sit. We had to talk while standing. At the same time, he has been favouring MDs of some banks that have increased crisis in the finance sector.”
On the other hand, the governor of European Central Bank (ECB) holds a media conference once in every six weeks to inform people about monetary policy decisions and implementation situation. Federal Open Market Committee of the US works under the Federal Reserve System (Fed). Fed chairman Jeremy Powell is its head. In 2022, he addressed eight media conferences on several issues of monetary policy. And in 2023, he talked in five such press conferences so far.
The US Congress fixes specific duties for Fed chairman alongside his duties to control inflation rate and creating sustainable jobs. He has to appear before the Congress regularly to inform it his advancements. Besides, former governor of Reserve Bank of India (RBI), Raghuram Rajan, has written elaborately in his book how he was benefitted from meeting journalists regularly.
Bangladesh Bank governor Abdur Rouf Talukder faced journalists twice since announcing the monetary policy. And, for once at a seminar of Bangladesh Institute of Development Studies (BIDS), he explained various policies the government has taken back on 1 December 2022.
The businesspersons, however, have more complaints against NBR chairman Abu Hena Md. Rahmatul Muneem. Currently, pre-budget discussion is the only platform where businesspersons can talk to him. Though there is a joint taskforce of FBCCI and NBR to discuss various crisis, complaints and other issues regarding doing business, no meeting of the taskforce is being held. The reason is the NBR chairman does not attend the meeting.
At the same time, several businesspersons have faced antagonism while speaking about problems at the pre-budget discussions. For example, he did not want to listen to the businesspersons even after inviting them at his office on 5 March this year. When the businesspersons started talking about harassment and irregularity at the field level, the NBR chairman stopped them midway. On the same day, when a vice-president of Bangladesh Agro Feed Ingrdients Importers and Traders Association alleged about harassment, NBR chairman Abu Hena Md. Rahmatul Muneem admonished him. A noted entrepreneur of the country had also faced embarrassment when he went to meet the NBR chairman to talk about some problems.
Another incident took place on 5 March. Though the court ordered NBR to provide some documents on E-Orange, an e-commerce site, over alleged scams, the National Board of Revenue did not submit the documents. On that day, the court said, “Why is he (NBR chairman) not following the court orders? Does he think him an emperor?”
Speaking about this, immediate past president of FBCCI, Md Jashim Uddin, told Prothom Alo, “The scope of discussion with NBR is gradually shrinking because the NBR chairman does not show up. A vacuum has been created in discussion though private sector has become larger in the country.”
The finance secretary is another important policymaker. In general the communication of finance secretary with business leaders and general people remains small. But past finance secretaries used to communicate with economists and experts. Even in previous times of incumbent Awami League government, a special committee made up of economists used to hold regular meetings to discuss macroeconomy. The finance minister and the finance secretary would discuss with business leaders and economists. Besides, the finance secretaries would provide explanations for any emerging economic situations.
Though incumbent finance secretary Fatima Yasmin has been in the post for more than a year, she talked to media only once, that too in one sentence. Responding to a question on share market at a post-budget press conference on 2 June, the finance secretary said, “The governor can say better the steps taken about share market."
Prohtom Alo tried to reach three policymakers for comments. This correspondent sought the appointment of the Bangladesh Bank governor, the finance secretary and the NRB chairman to the personal secretaries of the respective offices, but to no avail. Written queries, questions through emails and SMS were also sent to them, but none agreed to meet this correspondent.
Regarding this, Dhaka Chamber of Commerce and Industry (DCCI) Abul Kasem Khan told Prothom Alo, “Forget about the finance minister, none can even talk to the NRB chairman and Bangladesh Bank governor. Incoordination and unprofessionalism are at their final stage among the top leadership of the finance sector. More connection between the private sector and the economic leadership is necessary to overcome this situation.”
Myriad of problems
There have been lengthy discussions on how a country will be run during the economic crisis in the past. When a global economic crisis hit in 2008, International Monetary Fund (IMF) and Switzerland-based Financial Stability Board, which work on the global financial system, released “The Financial Crisis and Information Gaps Report to the G-20 Finance Ministers and Central Bank Governors” on 29 October 2009.
According to this report, the collection of accurate data, the monitoring of financial risks in light of the data gathered, the existence of a coordinated data exchange system, and the accurate economic review are the most important means to overcome an economic crisis.
When Prothom Alo spoke to several experts about the impact of the existing economic crisis, they also mentioned several problems. Monitoring is the most important tool during an economic crisis, yet this system remains weak and ineffective. As per section 15 (4) of the Public Finance and Budget Management Act 2009, the finance minister is responsible for placing the quarterly progress report of the budget implementation at the parliament. Yet the finance minister submitted the October-December report of the 2022-23 fiscal to parliament in May this year. Since then, two more quarters have passed, yet no report has been submitted to parliament.
An acute lack of coordination persists in economic policy. Monetary policy does not match fiscal policy. The budget has a high ambition of raising private investment by 4 per cent of the GDP to 27.4 per cent. Yet the Bangladesh Bank governor spoke about the reduction of currency supply bringing a sweeping change in the monetary policy in light of the IMF’s conditions. Even, fiscal and monetary policies contradict with GDP (gross domestic product), inflation and revenue targets.
The government has been failing to control the prices of essentials. Shortage of goods including rice, onions, green chillies, chickens, sugar and eggs hits the country one after another. Sometimes goods are imported or a reduction of duty is imposed to tackle the crises, but nothing happens on time. A lack of coordination arose among commerce ministry, agriculture ministry, livestock ministry and National Board of Revenue from time to time. As a result, the initiative to control price hikes didn’t work properly.
Bangladesh enjoys privileges under the IMF’s USD 4.7 billion loan schemes, but the country must maintain many conditions to get it. These loans include a 1.4 billion fund for Resilience and Sustainability Facility (RSF), which is mainly for climate-related crises, as well as tackling such crises. Not only Bangladesh Bank, finance ministry, NBR, power, energy and mineral resources ministry and environment ministry are also involved in fulfilling the IFM’s criteria. Yet, there is no discussion on it.
On overall issues, Policy Research Institute (PRI) executive director and eminent economist Ahsan H Mansur told Prothom Alo, “Economy is going through a difficult time, yet there is no coordinated step to bring the finance sector under a discipline. As a result, there is a huge gap between what the government says and what the government does. Everything runs in old and traditional ways."
"The high level of the government knows that the finance minister does not come to office regularly. Had he come to the office regularly, there would have been many opportunities for exchanging views. More discussions on undertaking policy measures bring more correct decisions. Considering all things, I would say our finance sector has no good discipline. The sector runs on its own. There are lack of sincere and responsible leaders here. It is necessary to hold more meetings and discussions, as well as take everyone’s onions into consideration, but who would take the responsibility of this coordination? At least, I see none," the economist lamented.
*This report appeared in the online edition of Prothom Alo and has been rewritten in English by Shameem Reza and Hasanul Banna