Micro and macroeconomic sustainability

The outcome of the February 12 general election, according to the British-American Ratings agency Fitch Ratings, has assuaged to a large degree the growing political and policy uncertainties during the last leg of the interim government. A turnaround in the political arena marked by the Bangladesh Nationalist Party's (BNP's) landslide victory has offered an opportunity to pursue a sound policy based on healthy democratic norms leading to an economic recovery from its current sluggishness. Particularly, the macroeconomic dynamism can be restored if the advantage of political dividend can be wisely taken over to policy frameworks. The Fitch Ratings has emphasised the easing of near-term political uncertainties. Indeed, the new government will have to exploit the initial political bonhomie in order to plan for long-term economic stability and social benefits. 

It is highly important that the achievement of short-term objectives will set the tone of the course this government will follow over the next five years. Macroeconomic stability is not all. Social justice and equitable distribution of wealth in order to bridging the yawning gap between and among social classes come next. The July Charter espouses narrowing the existing social disparities. Right now the introduction of the Family Card and the Farmers' Smart Card may be a timely government intervention but such injection of small doses of blood into an emaciated and fragile social body is not a permanent solution. There is a need for employment and reviving the manufacturing and productive sectors as much as possible. If an enabling environment can be created for small and medium enterprises, circulation of money at the grassroots level will augment. So the main task is to create opportunities for employment. 

The Fitch Ratings rightly observes the political risks still in existence and warns of the danger if the economic crises and disparities are not carefully handled. Here comes the question of respecting the majority 'yes' verdict in the referendum held alongside the national election. It lists the negative aspects and challenges the new government is going to face shortly. Absence of prolonged investments, shrinkage of credits, weak governance, fragility in the banking sector, vulnerability in external liquidity and huge debt-servicing liability have to be addressed gradually in order to execute the government's macroeconomic and fiscal reform agenda. The reform agendas in various areas the interim government has collated courtesy of different reform commissions have to be carried on phase by phase in the interest of sustainable social and economic development.

Sure enough, not all recipes recommended by multilateral bodies for a nation's troubles are appropriate for countries like Bangladesh. For example, the graduation from least developed countries (LDCs) is a spicy subject but if it is not backed by commensurate domestic productivity and improvement in living standards, countries are sure to fall into the "middle-income trap". Let Bangladesh not fall into this trap. Blessed with a majority of working manpower resource, Bangladesh has failed to reap the demographic dividends. The potential awaits wise exploitation through well-planned systems. Experts in this area have long been raising their voice in favour of redesigning its education system up to class XII. Both micro- and macroeconomic sustainability will be achieved if radical reforms can be brought about on this human development front.