Abul Mal Abdul Muhith, the longest-serving finance minister of Bangladesh who placed 12 national budgets, passed on April 30 at the age of 88. With his passing, a vibrant chapter of the country's economic and development policymaking comes to an end. Having a diverse career as a bureaucrat, diplomat, and politician, late Muhith was also an active member of civil society.
Like his two democratically elected predecessors, Saifur Rahman and Shah AMS Kibria, he also hailed from Sylhet. Unfortunately, both of their lives ended in unwanted ways. Late Kibria was murdered in a bomb blast in 2005 while Saifur Rahman was killed in a road accident in 2009. Muhith, however, breathed his last due to health complications. He became the finance minister of the Awami League government in 2009 and his immediate predecessor was Dr Mirza Azizul Islam, who served as the finance adviser to the army-backed caretaker government.
Earlier, Muhith also served as finance minister of the Ershad government for one and half years. At that time he placed the national budget for FY1982-83 and FY1983-84. The sizes of the budgets were Tk 47.38 billion and Tk 58.96 billion respectively.
From 2009 to 2018, Muhith designed and placed 10 national budgets at a stretch on behalf of the Awami League government. The original size of his maiden budget in this period was Tk 1,138.19 billion which was later revised down to Tk 1,105.23 billion. The actual spending, however, stood at Tk 1,016.08 billion in FY09. Nine years later in FY18, the former finance minister enhanced the country's national budget to Tk 4,002.66 billion, although the actual spending finally came down to Tk 3,218.62 billion. He ended his tenure as the longest-serving finance minister after placing the budget of Tk 4,645.73 billion in FY19. Ultimately the total final spending stood at Tk 3,916.90 billion in the fiscal year. The gradual increase in the size of the national budget shows how the economy of Bangladesh generates demand continuously for higher public spending to meet the need for development activities.
If the size of the budget is not enough to gauze the efforts of late Muhith in running the economy, it is the rate of economic growth that reflects his performance. The economy registered a growth rate of 6.12 per cent on average during the first half or first five years of his tenure. In the last half, the annual average growth rate of the country's Gross Domestic Product (GDP) was 7.10 per cent. Thus during his tenure Bangladesh's economy for the first time touched and overshot a growth rate of 7.0 per cent, reflecting vibrancy in the economy. His growth-centric approach helped reduce the rate of poverty from 31 per cent to 20 per cent.
The focus on persistent economic growth, however, took the sight off the balanced distribution of growth. So, the issue of income disparity was not addressed adequately. Late Muhith was eager much for resource accumulation and physical infrastructure to provide a strong base for the economy in near future.
Being the finance minister, he was supposed to mobilise the necessary resources for construction of the Padma Bridge, the country's largest infrastructure project. He took a bold stance and extended his all-out support to Prime Minister Sheikh Hasina in building the dream bridge which is a reality now. The World Bank's withdrawal from the project due to allegations of corruption came as a big shock for the government. Muhith, however, knew that the country had already attained some capacity to mobilise resources from different sources and it would be possible to move ahead. His calculation helped Prime Minister Sheikh Hasina to declare in 2012 that Bangladesh would construct the bridge with its resources. Being the finance minister, he knew that keeping the deficit financing at a tolerable level would be a big challenge during construction of such a giant bridge. He, however, successfully did it and over the years there was almost no problem with the deficit financing as well as foreign debt servicing.
Muhith also managed to handle the shock wave of the global financial crisis and consequent global recession in 2008-2009. At that time, the country's exposure to the global economy was less compared to the current period and he did not need to go for much maneuvering. Nevertheless, it was a challenging task as the size of the economy was also not very big.
Late Muhith's success in macroeconomic management was, however, overshadowed by tensions in the financial sector. The boom and bust in the country's capital market in 2010-2011 made thousands of small investors and traders penniless. As the finance minister, he was not able to check the abnormal and artificial boom in the market which led to an unavoidable bust later. The episode also reflected the lack of good governance in the financial market. A series of scams in the banking sector followed and there was no effective step to stem the damage. On several occasions, late Muhith also acknowledged his failure to improve governance in the financial sector. The heist of foreign exchange reserve from Bangladesh Bank was another dark side of his regime, although it was mainly the responsibility of the then central bank governor who had been forced to resign.
It is not easy to evaluate late Muhith and his performance as a finance minister within a short space. Trying to do so may be an injustice to him, too. Nevertheless, a glance at his tenure makes it clear that he was a partially tested finance minister. He did not face any major macroeconomic crisis and so there was little need to overcome it. He used to manage regular affairs most of the time and successfully banked on the foundations laid by his predecessors in early '90s.
He, however, could not fully pass the test regarding the trouble in the financial sector. If there was another finance minister instead of him, he also might have faced the same fate in that politico-economic reality.