Overcoming economic malaises

The Centre for Policy Dialogue (CPD), a local think tank, has pinpointed the weaknesses of the country's economy and also recommended various measures to overcome those. In fact, the very title of the paper, "State of the Bangladesh Economy in FY2025-26" amply clarifies the objectives of the briefing organised by the CPD's Independent Review of Bangladesh's Development (IRBD) programme at its Dhaka office. It has spelt out the challenges the government to be formed following the next month's general election will face. Strong fiscal discipline, according to the paper presented by Dr Fahmida Khatun, will be the key to a turnaround for the economy. The contractionary monetary policy now being followed cannot continue eternally. There is a compelling need for investment from the country's private sector as well as foreign sources. Unrelenting inflation with no compatible rise in income compounded by no job creation leads to stagflation which now stares in the face of Bangladesh.

The list of economic malaises is long but at a time when economists are in favour of private and foreign investments, the lowest ever ADP (annual development programme) implementation is a stark aberration. These are highly contradictory. ADP programmes not only boost infrastructure in developing countries but also create jobs. Why not the bungling bureaucracy be held accountable for this miserable performance? The interim government has totally failed to breathe fresh air into ADP execution and yet it goes for rewarding the same bureaucracy by offering salary increases for the inefficient behemoth. In the first quarter of FY2025-26, the ADP implementation was only 8.33 per cent, which increased to 11.75 per cent in the July-November period, forcing budget cuts. In the first quarter of the previous fiscal, the rate was 7.90 per cent, ending the year at 41 per cent. So, the rate may increase in the second and third quarters but still it will lag far behind the targets. 

ADP programme implementation is fundamental for providing momentum to economic development through structural reforms and generation of employment. At the same time, mobilisation of tax by expanding the range and scope of taxable net prove vital for government's income. Now that debt servicing is eating away the country's income from taxes, export and remittance, the development fund is further squeezed. The heavy reliance on costly imported liquefied natural gas further reduces the accumulation of funds. To cope with the increasing demand for gas and power, there is no alternative to exploring local sources of gas and expanding the base of renewable energy. In this connection, climate change-induced compulsions may prove overriding within a few years. 

That the time for trickle-down benefits of development for the poor is over should be kept in perspective of all development programmes. Education and skill must be compatible with industrial requirements in order to address the rising unemployment. The hard reality is that even if the educated youths are provided with jobs, there will be a huge legion of uneducated or barely literate young people. To bring them out of the rut, at least functional literacy with prospective skill development is required. As for food security of the most vulnerable, bottle-feeding has to be brought to an end at some point. The poor and vulnerable groups should be detected for initial support for education and health but the main objective would be to pull their next generation out of the poverty cycle. This is how they can cope with the supply side economy.