Economist Qazi Kholiquzzaman Ahmad highlighted on Monday that Bangladesh’s economy was trapped in a ‘vicious circle,’ rendering inflation control policies ineffective, unlike the successes seen in Sri Lanka, India and Pakistan.
Speaking as chief guest at ‘Post-Budget Reaction on Water, Sanitation, and Climate Change’ event organised by Development Organisation of the Rural Poor at the Economic Reporters’ Forum, Kholiquzzaman pointed out that the rapid growth rate of wealthy individuals in Bangladesh amid economic crisis and the pandemic was due to assets being looted by this influential circle.
Kholiquzzaman emphasised, ‘The government’s policies are not working properly to combat inflation due to the influence of a vicious circle. This circle influences the government’s policymakers and policy implementation, preventing the economy from improving until their hold is cut off.’
He elaborated that this vicious circle operates at the policymaking, monitoring and implementation levels, resulting in ineffective government policies. Globally, economic policies are created and controlled by regulators from a neutral standpoint, but in Bangladesh, policies are often influenced by those who are affected by them, leading to policy failures.
Referring to inflation control, Kholiquzzaman noted that inflation has decreased to about 5 per cent in India, 1.5 per cent in Sri Lanka (down from 49.72 per cent in 2022), and 11.8 per cent in Pakistan (down from 28.34 per cent in January 2024). However, Bangladesh’s inflation rate has remained in double digits for the past 22 months. Despite using similar tools as India, Pakistan and Sri Lanka, Bangladesh’s policies have failed due to poor implementation.
‘In the proposed budget, expected inflation is set at 6.5 per cent, but considering it was targeted at 6 per cent for FY 2023-24 and wasn’t achieved, how can we expect it to fall to 6.5 per cent in FY 2024-25?’ he questioned.
Regarding the proposed budget, Kholiquzzaman criticised the lack of measures addressing major economic challenges, noting that it was prepared by bureaucrats without accountability, which means the economic situation is unlikely to improve soon. He acknowledged Bangladesh’s progress in social development but pointed out that income disparity has widened over the last decade and the employment situation remains frustrating.
Kholiquzzaman highlighted severe asset disparity in Bangladesh, with 76 per cent of assets owned by only 10 per cent of ultra-rich people, whose resources increased even during the Covid pandemic. In contrast, about 50 per cent of the population owns only 2 per cent of assets, lacking access to quality education and training needed to contribute to the economy.
‘The rich are not paying taxes and the government is unable to impose actual taxes on them, leading to a stagnant tax-to-GDP ratio,’ he said. He compared Bangladesh’s tax-to-GDP ratio of around 8 per cent with Nepal’s 19 per cent, Pakistan’s 10 per cent, and the USA’s 27 per cent.
The event also featured speeches by Alok Kumar Majumder, country coordinator (Bangladesh) WASH Alliance; Fayazuddin Ahmad, advocacy and campaign lead, Water Aid Bangladesh; Joseph Halder, convener of FANSA-BD; Md Alamgir Hossain, project director, Sample Vital Registration System (SVRS), BBS; Md Masud Rana, senior manager (corporate sales), RFL Plastic; Mahmodul Hasan, domain coordinator for water, food, and climate at HELVETAS Bangladesh; Digbijoy Dey, country consultant, IRC; and Rokeya Islam, vice-chairman (DORP), among others.
Mahfuz Kabir, research director of BIISS, gave a keynote presentation on ‘Water and Sanitation in Climate Change: Budget 2024-25 in perspective.’
