Maroc - EURASIAREVIEW.COM - A la une - 14/Aug 12:08

Bangladesh Is In A Politico-Economic Quagmire – OpEd

Nobel Laureate Dr. Muhammad Yunus, the de facto Prime Minister of Bangladesh, enjoys popular acclaim. But he is also subjected to great expectations from Bangladesh's 172 million people who had suffered political and economic deprivation for a decade and a half under Sheikh Hasina's tutelage.  Restoration of law and order will of course be the most urgent task. Rules and regulations governing politics, administration and the running of the economy, will also have to formulated quickly and to the satisfaction of the powerful students' coordinating committee. Writing inThe Daily Star, the UN Special Rapporteur on freedom of opinion and expression Irene Khan warned that as the Arab Spring had shown, failure to meet the expectations of the protestors could pull back the Bangladeshi struggle for democracy by decades. "The selection, prioritisation and delivery of those reforms will determine whether this moment in our country's history is a new dawn or a false one," Khan, who is a Bangladeshi, said. "There continues to be reports of violence, arson and looting, targeting supporters of the previous regime and members of the Hindu community. The political nature of these attacks is evident. The interim government must make it clear that not only does it have zero tolerance for political vendettas or scapegoating of minorities, but that all political parties must proactively reign in their goons or face political and legal consequences." Khan said. The interim government should initiate a credible and transparent accountability process, in line with internationally recognised standards and with international assistance, into the massive human rights violations in recent weeks and past years, she stressed. "The international nature of the inquiry will be vital for the credibility of the process at home and abroad," Khan added. The government, she added, should "immediately" repeal the Cyber Security Act, the law on criminal libel and the Information and Communication Technology Act, which were used by the previous government to gag the media, prosecute and punish journalists and human rights defenders, and disrupt the internet. The government should undertake a fundamental reformof the highest echelons of the judiciary to ensure the independence, impartiality and competence of the judiciary and commitment from its highest echelons to its rank and file to upholding fairness, human rights, and the rule of law, Khan said. She strong1y urged the reinstatement of Caretaker Government arrangement for conducting future elections. Sheikh Hasina abolished the system by a constitutional amendment to bring the election process in her tight grip. Economic Reform On the economic front, there is the surging cost of living, a growing deficit in foreign reserves, a substantial external debt, and an unstable foreign exchange market to tackle. Interest rates are high, investment has declined, and banks face a liquidity issue. Political changes have necessitated leadership changes in the banks. Seeing thewriting on the wall, the Governor and Deputy Governors of the Bangladesh Bank (the Central Bank), have resigned. Irregularities and corruption in the banking sector that were routinely swept under the carpet, cannot be ignored anymore. Price hikes driven by market syndicates rather than by macroeconomic factors, cannot be controlled unless entrenched groups of manipulators are dispersed, pointed outThe Business Post. The COVID-19 pandemic had drained foreign reserves leading to a significant devaluation of the Bangladeshi currency the Taka (BDT). In Financial Year 2024, the BDT had depreciated by more than 25% against the US dollar. The devaluation resulted in a sharp increase in the prices of imported goods. Bangladesh's current inflation rate is9.7 %which makes it number two inSouth Asia after Pakistan. Food inflation is in double digits affecting the poor, who are the majority. The new administration must collect accurate import data and ensure sustained investment and improve tax collection. There is now a net reserve of U$ 16.57 billion but this is not sufficient for even three months of imports. The Hasina government had sought US$ 4.7 billion facility from the IMF, of which three instalments have already been received. As of March 2024, Non-Performing Loans (NPLs) in banks had exceeded BDT 1.82 lakh crore (BDT 1.82 trillion). There is severe cash crunch, affecting the daily operations of banks across the country. Some banks are struggling to secure funds even in the call money market, which typically provides short-term liquidity, The Business Today said. To manage the situation, Bangladesh Bank had stepped in to offer overnight loans to banks, similar to those in the call money market. There is now a run on the banks with the result, the Central Bank (Bangladesh Bank) on Wednesday limited cash withdrawals to BDT 1,00,000 per account per day. The ongoing liquidity crisis has led to increased demand in the call money market, driving up call money interest rates and, consequently, the cost of borrowing. The rising interest rate could pose a significant obstacle to investment and employment generation. The interim government needs to adopt a more investment-friendly approach. Even though the South Asian country's gross domestic product is currently growing at over 5% annually, it has struggled to create enough, decent-paying jobs for its youth. Unemployment among people aged 15 to 24 was a high 15.7% in 2023, according to the ILO. Nearly half of Bangladesh's 170 million people are aged under 30. Fahmida Khatun, head of research at the Centrefor Policy Dialogue think tank in Dhaka, toldwww.dw.comthat the banking system is stuck with policies which benefit only the crony capitalists. She called upon the new government to ensure the independence of the Central Bank. Bangladesh earns over US$ 46 billion annually by exporting garments mainly to Europe and US. As many as 4 million workers, mostly women, are employed across some 4,000 factories. These factories closed due to the agitation will have to be opened urgently. Rural Banking Chief Advisor Dr.Muhammad Yunus' Grameen Bank model might receive a shot in the arm as he is the de facto PM. A 2012 study of a sample of 100 Bangladeshi women, revealed that 81% of the Gameen Bank members were satisfied with their credit facilities. 74% said that their socio-economic condition had improved after taking micro credit which had made them more confident and reliant. A similar study published in September 2019 with a sample size of 100 in Bangladesh, said that 64% of Grameen Bank respondents found their family income increasing to some extent and 24% said their family income had improved to a great extent. The Grameen Bank provides scholarships to women for school and higher education. Micro credit programs empowered women by raising their social consciousness which was reflected in increased participation in local government elections and social mobilization activities. Experts in the Council The Council of Advisors, helping President Mohammed Shahabuddin has qualified experts in various fields. Dr.Yunus is a foreign qualified economist. Advisor Prof Salehuddin Ahmed is a former Governor of the Bangladesh Bank and is currently a professor at BRAC Business School. Salehuddin earned a PhD degree from McMaster's University and joined the Civil Service. He made significant contributions at the Centre on Integrated Rural Development for Asia and the Pacific. Advisor Hassan Ariff is a Member of the ICC International Court of Arbitration. He has previously served as an adviser to the Roads and Highways Department of the Government of Bangladesh, the Chittagong Port Authority, the Mongla Port Authority, the Security Exchange Commission, the Bangladesh Bank, the Capital Development Authority, the Chittagong Development Authority, the Chittagong Stock Exchange, the University Grants Commission (UGC), Robi Axiata Limited, and Grameen Phone Bangladesh. Besides economists and economic administrators, the Council of Advisors has leading human rights and civil society activists, lawyers and a Hindu, a Buddhist and an Islamic scholar to make it competent and representative.