Bangladesh's luck in loans and the international community

When it comes to matters pertaining to elections, democracy, press freedom or human rights, our ministers and ruling party leaders roar out, foreign quarters have no right to meddle in these matters. Even just a few days ago, foreign minister Abdul Momen said that the opinion of the foreign quarters about the election does not matter. He said that it makes no difference what they say about the election.

With eight months left for the national election, he raised the issue of the polls and expressed annoyance at the journalists, saying, "You all start saying things and make the foreigners say things too. Isn't there anything else to do in the country? There is so much going on, climate, the employment challenge. There is no end of challenges. Instead of discussing these matters, you all just harp on the election."

The foreign minister surely must be relieved now because the international institutions like the World Bank and IMF are not talking about democracy, the election or human rights. They are focused on various reforms, projects and the impact of climate change, and providing loans to finance these to keep Bangladesh's economy running and to increase the country's capacity to tackle the impact and adverse effects of climate change. It must be admitted the government has good luck when it comes to loans.

There is no doubt that it is most difficult to avail an IMF loan. The conditionalities they come up with before approving a loan, are difficult to agree upon even during normal political times. But to receive a loan from them is a seal of credit eligibility. It paves the way for loans from other sources. So it can be assumed that the way has opened for Bangladesh for an inflow of credit in the near future.

The downside of the IMF loan, however, can no longer be concealed. It will soon come out into the open. There will no longer be any scope for laxity in implementing the changes taken up on principle in financial management. If there are any shortcomings, the loan tranches will not be released. And so, unpopular stringent reforms are being taken up, leading to sufferings of the public. Distinguished fellow of the Centre for Policy Dialogue (CPD), Debapriya Bhattacharya, has given an easy explanation to the matter. He said the government has taken the loan from IMF at the cost of losing a degree of sovereignty in policy. He termed this as 'surrendering policy sovereignty'.

He said that tax must be increased for additional revenue because, according to the IMF conditionalities, every year the tax-GDP ratio must be increased by 0.5 per cent. Also, there are conditionalities to justify tax exemptions. He said these should have been done earlier anyway in the country's own interests. But no heed was paid to the same advice that was given by the country's own economists, business persons and professionals. However, now in times of crisis, IMF has been approached and these steps must be carried out.

The price of power and fertiliser has gone up. Who will take responsibility for this, he asked. He said that the government approved the decision to take loan from IMF, but the issue was not discussed at the relevant parliamentary standing committee, not even at the cabinet sub-committee for economic affairs. He questioned how such reforms would be carried out without the participation of the people's representatives.

The list of conditionalities is lengthy and not all of these come up in discussions. Devaluation of the taka, relinquishing control on interest rates, reforms in the banking sector to tackle the burden of default loans, tallying the export revenue records, accounting for foreign debts and fixing the inflation and foreign exchange reserve records and other such measures are all being carried out at the behest of IMF.

The pains of such conditionalities are no secret. The price of electricity for general consumers is being repeatedly increased with the excuse of cutting down subsidies. Yet there is no report on those making massive amounts of money and profits for nothing in this sector. The levels of mismanagement instigated by the law granting them indemnity, is tangible.

New projects are conjured up and even a month can't pass when production is halted due to inadequate supply of coal. Supply of fuel oil is disrupted by the dollar crisis and the privately owned plants have to be paid for nothing at all. But IMF conditionalities have no mention of lifting this indemnity or calling for accountability in this area.

The foreign minister's words quoted at the outset, were spoken exactly a day before the 10th anniversary of the Rana Plaza tragedy. On 24 April 2013, a 9-storey building on Savar collapsed, killing 1,138 workers and injuring 2,438. Many of the injured are disabled now, struggling to survive. Even after this tragic incident, there was no major change in the government management to ensure safety of the readymade garment workers, only until there was pressure from foreign quarters through the special arrangement Accord. The fact is that in face of protest and demands from the consumers in the West, the big buying houses took measures to ensure safety and certification of the factories.

The local labour organisations, rights activists and civic groups had come up with specific proposals for the safety of the factories, but these were not taken up. This was not possible due to the dominance of readymade garment factory owners in the ruling party and parliament.

It was under pressure from the foreign quarters and under their supervision that the reforms in the readymade garment sector were finally carried out. Now quite a few of the garment factories have won name and fame globally for being environment-friendly and safe. After investments in these factories for reforms, the price of garments fell in the global market. However, these factories have not faced any losses. In fact, the productivity of many has increased. There has been a dramatic drop in accidents and deaths. The global union of buying organisations, IndustriAll, and the trade unions has taken up the Bangladesh Accord model to replicate in other countries.

It may have been possible to relinquish policy sovereignty in order to tackle the economy, but the ruling coterie is apparently not willing to budge a bit when it comes to their sovereignty regarding democracy and human rights. It is not that there are no attempts to appease them behind the scenes. The recent launch of Asia-Pacific outlook is an indication in this direction. This outlook has much affinity to the US Indo-Pacific strategy, and is not too different from Japan and India's policy strategies either. And so speculations cannot be dismissed about whether the tensions with the US over democracy and human rights, will now actually be assuaged.

* Kamal Ahmed is a senior journalist

* This column appeared in the print an online edition of Prothom Alo and has been rewritten for the English edition by Ayesha Kabir