THE picture of the economy that the Centre for Policy Dialogue portrays in its report is alarming. While high and unchecked inflation, especially food inflation, has pushed millions of low- and fixed-income people into a difficult position, macro-economic mismanagement has put the economy in a tight spot. The organisation鈥檚 report, 鈥楽tate of the Bangladesh economy in FY2023鈥�24: Third Reading鈥�, says that the headline inflation has significantly eroded people鈥檚 purchasing power. The overall inflation, even keeping to the conservative Bureau of Statistics figures, has consistently been 9鈥�10 per cent in the past two years. The report shows that prices of most essential goods have increased by 50鈥�300 per cent in the past five years. It also finds that prices of the items that the poor mostly consume have increased more than prices of the goods that the rich mostly consume. The price of coarse rice, mostly consumed by the poor, has increased by 30 per cent in three years while prices of miniket and other fine varieties have increased by 15鈥�18 per cent. The report says, as all economists largely agree, weak market management, poor policies, insufficient and ill-timed import, the high cost of fuel oils and gas and errant businesses continue to push food inflation up.
The report also refutes the government鈥檚 explanation that market volatility is caused by the volatility on the international market. The report shows that prices of many food items on the local market are higher than their prices on the world market. For an example, the average price of a kilogram of rice in Dhaka is Tk 55鈥�75 while the price of the item in most Asian countries is Tk 35鈥�45. A litre of edible oil sells on the international market for Tk 95鈥�125 but the domestic market price is Tk 170. The average beef prices in Dhaka are Tk 750鈥�800 while the world market prices are Tk 380鈥�500. The report also highlights the government鈥檚 failure in macro-economic management. The government has, as the report says, not been able to stop revenue leakage as well as hundi, hawla and capital flight, which continue to bleed the economy. The development model pursued by the government has also been questionable, leading to a record surge in foreign loans. The power sector has been crippled by poor policies, misleading projections and poor expenditure. The report validly questions the government projection that the country would require 98,000MW of power by 2041 and calculates that the requirement would not be more than 27,000MW. The sorry state of the banking sector can hardly be exaggerated.
The authorities must, therefore, rethink its development model and make a course correction to save the economy from the downturn it is faced with. The authorities must show the dynamism needed to contain food inflation. They must establish an effective market monitoring mechanism. The authorities must also restore macro-economic stability through effective fiscal measures.
