Bangladesh faces a complex type of political, economic situation

Staff Reporter :
Bangladesh is facing a complex type of political-economic situation, which has not happened before, thinks Dr Ahsan H Mansur, Executive Director of Policy Research Institute (PRI).

“Political uncertainty is adding to economic uncertainty. If the politics is not right, the economy will not remain on the right track,” he said while speaking at a press conference on “IMF and Bangladesh” at the PRI office in the city on Tuesday.

He also said, “Foreign involvement was not so much during the last two national elections. But, now there is. There will be no elections like the other two this year.

There is uncertainty about the elections. It is not possible to say that the situation will cool down even after the elections.”

“This situation has deteriorated further due to the involvement of a different country with the election-centric politics and the global political situation. This is the first time that there is uncertainty in both politics and economy,” he added.

“Issues like high inflation, shortfall in revenue collection, dwindling reserves and exchange rate are stressing the economy. The International Monetary Fund (IMF) has asked for reforms in these issues.

But it will be difficult to ensure the necessary fiscal reforms even after the parliamentary elections as the main beneficiaries of the mismanagement in the financial sector will remain regardless of the polls’ outcome. So inflation will remain around 10 per cent,” Mansur said.

He also said, “It is also not possible to say where the exchange rate will stop and the direction of the reforms is yet to be made from the political leadership. However, to face the challenges of the economy, major reforms must be made.”

“Along with the reforms in financial sectors, some new issues have come forward this time. The labour issue has become bigger and it is yet to be resolved. The labour environment must be brought under the right track. Human rights have also come up for discussion.

Accountability should be increased in these matters as the past record is not good,” Mansur added.

However, in the series of meetings held with the IMF delegation last month with Bangladesh Bank, NBR and related institutions, we hope that the IMF delegation was satisfied with the progress made, even though Bangladesh is a little behind in fulfilling the loan conditions, he said.

“The IMF may disburse the second tranche of $681 million in favour of Bangladesh by the middle of next month, if there is no major intervention,” said Mansur, also a former official of the IMF.

Regarding the revenue collection growth, he said “Increase in revenue collection is not possible without complete automation.

The face-to-face meeting or phone communication between the taxpayer and the collector creates obstacles in the way of revenue growth. In order to increase revenue collection, attention should be paid to these issues.”

“Import restriction has also had a negative impact on the overall economy as well as revenue collection.

So, the tax net must be increased to upend the internal resource mobilization,” Mansur said.