Dr. Forqan Uddin Ahmed :
The world today looks on with an admiration what Bangladesh has achieved in its first half century: the fastest-growing major economy in Asia before Covid-19; a leading contributor to peace and security, especially as a provider of troops to UN peacekeeping missions; and one of the most influential global voices on climate change, as we have just seen at the UN Climate Change Conference in Glasgow, Scotland. We will set out our aspirations for our ever-closer cooperation in future, including on trade, security and the democratic principles that the Father of the Nation Bangabandhu Sheikh Mujibur Rahman and so many others fought for in 1971. Bangladesh’s landmark graduation from the Least Developed Country (LDC) status, due in 2026, highlights our shared interests in each other’s prosperity.
For Bangladesh, the outgoing year 2021 was equally challenging. In fiscal year 2021, prior to the outbreak of the pandemic, the Bangladesh economy was somewhat under stress due to the weak performance of a few economic indicators such as exports, imports, private investment, foreign direct investment, and revenue mobilization. Besides, the banking sector was suffering from high non-performing loans.Bangladesh has undertaken several measures to overcome the negative effect of the pandemic. Due to government efforts combined with the hard work of the people, the Bangladesh economy has been less affected compared to other countries during the pandemic. Several international organizations including International Monetary Fund, World Bank, and Asian Development Bank have assessed the economic performance of countries during the pandemic. Bangladesh’s performance stands out amongst its peers. Despite the pandemic, agricultural production has been exceptionally good-that helped ensure food security. Remittances have soared in recent months, foreign exchange reserve has reached the highest level ever, exports picked up towards the end of the year and inflation remained low.
Among a number of initiatives that are required to achieve the unfulfilled goals, a few can be reiterated. First and foremost is the need for institutional strengthening and reform. For rebuilding the economy from the fallout of the pandemic, public expenditure is the key. Therefore, more fiscal room is to be created through domestic resource mobilization and its efficient utilization. Fiscal discipline through prudent fiscal management will be critical for economic recovery. In this regard, governance of the financial sector will also have to be ensured. In recent times, liquidity situation in the banking system has increased which led to low interest rates. This is due to weak investment demand and Bangladesh Bank’s measure to create liquidity space in commercial banks. The volume of the Non-Performing Loan (NPL) in 2020 and 2021 may not be a reflection of the real situation since Bangladesh Bank had frozen loan classification from January 1 to December 31, 2020 in view of the pandemic. The embedded weakness of the sector emphasizes the need for reforming the sector and establishing better governance in the system.
Second, the anti-corruption drive should be continued and strengthened. Corruption in public investment projects reduces fiscal space. Studies have indicated how corruption affects growth. A large part of resources is also sent out of the country illegally. By preventing corruption, resource efficiency and economic competitiveness can be enhanced.
Finally, the most important pillar of realizing our vision 2050 is capacity building at all levels. In fact, a whole of society approach is needed – from awareness to education and skill development of all types, to research and development, with delineation of specific needs of skills, expertise and policy research for tackling climate change. Also achieving climate resilience will dictate that all kinds of professionals, lower and higher, must undergo basic training on how to tackle climate change, from perspective of each profession and trade.
Bangladesh needs equitable development strategies to overcome social, economic and political deprivation and disadvantage of the common people. The country needs to increase the economic growth rates, but that growth cannot be allowed to increase inequalities of income and wealth. Inequality alleviation must be the central focus of Bangladesh’s development strategy. Market provision need not be shunned where efficiency is the prime need. Private sector should be encouraged in production of private goods like electricity, water and gas supply, industrialization, construction and transport. But for market will fail where distributive equity is the prime objective. Market will fail to provide good education and health to the lower income working people. Market will fail in providing adequate infrastructure development; environmental protection, social security and safety net programs. Market cannot satisfactorily resolve the problem of externalities, imperfect markets, imperfect property rights and imperfect or asymmetric information. On the other hand, corruption and rent-seeking must be strongly dealt with by the state. So, there must be judicious decisions regarding the assignment of proper roles to the market, the community and the state in achieving a prosperous socialist society of the 21st century through equitable growth.
(The writer is former Deputy Director General, Bangladesh Ansar & VDP)
