The imperative of annual economic scorecard

Raihan Amin | Published: January 31, 2019 21:00:24 | Updated: February 03, 2019 21:42:16

During childhood, school-going kids usually dread the day their parents are handed over the annual report card. Children would do anything to hide bad performance to be in the good books of their parents. Doesn't the government of Bangladesh owe its citizens timely information on the country's economic progress? An annual dashboard emblazoned with key indicators is the answer.

The benefits of economic development should reach the maximum number of citizens. For this reason, the report card should include social indicators. Headline numbers will come alive when drilled down. The most prominent of these is the gross domestic product (GDP). GDP can be looked at three ways - in terms of current Taka, calculated against a base year; and in terms of purchasing power parity (PPP). A detailed study of all three will unearth interesting trends. Interpretation, analysis and explanations, if included will make it richer. 

The economic scorecard will contain information about the country's pride and joy - the ready-made garment (RMG) sector. Export earnings react to the ups and downs in prices and volumes. The dashboard will highlight movements in dollars and Takas; a weakening Taka in the absence of a rise in volumes will give the mistaken impression that exports are rising. Similarly, a strengthening Taka along with improving volumes may show a stagnant picture. A bright spot is the growth in our non-merchandise exports riding on the back of ICT (Information and Communications Technology). Educational institutes should strengthen their IT (Information Technology) courses.

Terms of trade reveal whether import prices are going up in relation to export prices. Why imports have skyrocketed recently despite exchange controls is a legitimate question. This puts pressure on Taka, raising import prices fanning inflation. Bangladesh imports substantial quantities of fuel and food grains. Are we being bilked for not using the futures market? Are contemporary procurement practices being followed in the public sector? All these need to be looked into.

Workers' remittances and the current account balance are parts of the external sector. For judicious use of resources, the following recommendations can be made: 

  1. Duty-free imports should not be financed by foreign exchange earnings of Bangladesh (except back-to-back imports)
  2. Duty-free imports should only be allowed for selected diplomats, embassies, commissaries and multilateral organisations; a list is to be made public annually

iii. Duty-free imports should be shown separately from dutiable imports,

  1. If possible the balance of payments should be reconciled with movements in foreign exchange reserves, and
  2. Debt service cost should be split up between official and commercial borrowings.

An idea has been floated by some quarters seeking to use our foreign-exchange reserves for national development. Exporters and beneficiaries of inwards remittances are paid in Taka. The foreign exchange thus released may perhaps be used for such purposes. On the other hand, with dollars locked into projects, Bangladesh Bank might be left with less dollars to intervene in the foreign-exchange market. 

Next comes the internal sector consisting of monetary policy and public finances. Good money is being thrown after bad by re-capitalising Sonali and Basic Bank. Remedial steps taken to rein in bad loans should, therefore, be an important part of the dashboard.

Bangladesh must climb out of opacity in the budgeting process where the public has very little to say. Just because a citizen pay taxes does not mean a handful of mandarins can spend billions of Taka as they please. This unilateral and top-down approach is un-democratic. Moreover, government bodies still cling to quaint old rules that are an affront to modern accounting practices. A new trend -- namely 'citizens budget' --  is worth exploring for re-phrasing the budget in plain language.

According to newspaper reports, the spoils of economic development in Bangladesh are going to the rich. Access to low-cost food, education and health should be ensured as a matter of right so that opportunities are accessible to the less fortunate.

The dashboard should be made open for comments of mass people in a dedicated website. Opinions of the general people should be discussed in the parliament.

Raihan Amin is an educator and trainer.

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