Politicisation of power breeds corruption and inequality: Economists
Pointing out several issues plaguing the economy and the budget, economist Dr Wahiduddin Mahmud said the proposed budget can be termed as a “sacrificial lamb with its feet tied and there is no scope for it to make a move"
The country's leading economists have expressed concerns that the nation is veering towards an unethical economic system, where political power fosters opportunities for corruption and irregularities. This leads to unequal wealth distribution, disruption of the economic chain, a deteriorating investment climate, and the marginalisation of honest entrepreneurs.
At a post-budget discussion organised by the Newspaper Owners' Association of Bangladesh (Noab) and Editors' Council today, they emphasised the need for reforms in the banking, revenue, and general administration sectors, and urged political leaders to implement measures that protect key sectors from corruption.
Editors of leading newspapers of the country were present at the event titled "The Economy Chart and Proposed Budget 2024-25", held at Pan Pacific Sonargaon Dhaka.
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While the expenditure in the budget has been narrowed, actual expenditure has not decreased. In the current economic climate, the budget lacks the necessary cost-saving measures
Pointing out several issues plaguing the economy and the budget, economist Dr Wahiduddin Mahmud said the proposed budget can be termed as a "sacrificial lamb with its feet tied and there is no scope for it to make a move."
"The proposed budget is stifled by issues of internal inflation, revenue shortfalls, stagnation in export and remittance flow, disorder in the capital market and banking sector, rampant corruption, irregularity in government expenditure, wastage and unaccountability, and pressure to pay interest on foreign and domestic debts," he said.
"There is a big deficit in the budget due to low revenue income. As a result, proper allocations could not be made to social security, education, health, and other development sectors. There is a huge burden of subsidies and capacity charges in the power sector," he continued.
"The country's banking sector is in an unregulated and vulnerable state. Instead of saving on government expenditure, there is more wastage. The economy is losing people's confidence," said the economist.
"The Bangladesh Financial Intelligence Unit (BFIU) was created to prevent illicit money from entering the economy but it is not functioning properly. Black money is circulating and being syphoned freely," he said.
"Crores of taka are being deposited and withdrawn from banks. I read in the news that the former IGP has made significant deposits and withdrawals. However, banks are required to report any transactions exceeding Tk10 lakh to the Bangladesh Bank. So, where is this money going?" Wahiduddin said.
Comparing the NBR's revenue collection strategy to that of a tiger hunting a deer, he said, "The small and powerless are being penalised. Supplementary duty on mobile internet usage has been increased and the top tier of income tax has been raised to 30%, with additional surcharges. In a country where the vast majority of the wealthy do not pay taxes, imposing higher taxes on a few taxpayers is likely to increase tax evasion."
Wahiduddin, an adviser to the former caretaker government, said it is now more crucial to discuss immorality than economics as the country is gradually moving towards an unethical economic system.
He said, "The biggest source of corruption and irregularities is the politicisation of power, which is based on the distribution of unfair privileges among various groups loyal to people in power. As a result, wealth inequality increases, the economic chain breaks down, the investment climate is damaged, and honest entrepreneurs are deprived."
"We need to see if at least some sectors can be kept free from these effects for the sake of transitioning from the current economic crisis," the economist added.
'Copious measures but not effective'
Hossain Zillur Rahman, executive chairman of the Power and Participation Research Center (PPRC), said, "The main characteristic of the budget for the fiscal year 2024-25 is that it exists largely on paper. While there is no shortage of initiatives, they remain incomplete and ineffective. Actual efforts to address the crisis are notably lacking."
He said the proposed budget reflects the demands of the International Monetary Fund (IMF), oligarchs, and bureaucrats.
"The budget was not ambitious as per IMF prescriptions. To favour the oligarchs, no reform in the banking or administrative sectors was initiated. Those who have benefited unethically have used their ties with the power," Zillur Rahman said.
"Black money holders have been allowed to legalise it without question by paying a 15% tax. There are measures in place to ensure that the privileges of bureaucrats are maintained. However, nothing has been done for public welfare," he continued.
The economist added that the finance minister did not heed the concerns of hardworking entrepreneurs and economic workers. The budget proposal lacks initiatives to reform tax administration and offers nothing to improve the business climate. The needs of the common people were not even considered.
Zillur Rahman said the incompetency in management is steering the country towards a debt-dependent economy. Corruption has now become institutionalised. In this situation, a moral revival is needed.
'Budget contractionary, not the deficit'
Former Bangladesh Bank governor Salehuddin Ahmed said, "The proposed budget is said to be contractionary, but the deficit is not. Bank borrowing has been increased to meet the deficit. If the government borrows more, how can the private sector borrow? Without private sector credit growth, there will be no new employment. The SME sector will be the most affected."
"Right now, the Annual Development Programme [ADP] allocation should not exceed Tk1 lakh crore to Tk1.5 lakh crore. This would alleviate debt dependence and reduce the deficit. There seems to be a lack of robust action in the policy strategy and philosophy of the budget, which is essential now," he said.
"The banking sector is in dire straits. Good governance is severely lacking. Defaulting on loans became common and a business model," the former central bank governor added.
'No economic growth without a robust banking sector'
Ahsan H Mansur, executive director of the Policy Research Institute, said without the development of the country's banking sector, there will be no economic growth.
"While the expenditure in the budget has been narrowed, actual expenditure has not decreased. In the current economic climate, the budget lacks the necessary cost-saving measures," said the former IMF official, proposing reducing the number of ministries to curtail government expenditure.
Regarding the power sector, he said, "Expenditures cannot be reduced by maintaining the existing capacity charges and subsidies. Whether it is the Adani Group from India or our own Summit Group, renegotiation on power prices seems necessary."
Mansur pointed out that the government's debt burden has escalated due to the revenue sector's shortcomings. He stressed the need for extensive reforms in this area.
'Inflation, fragile banking sector behind economic instability'
Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), said, "The macroeconomic stability has deteriorated due to inflationary pressure, banking sector fragility, and foreign exchange volatility. These issues stem from misguided policies and their ineffectiveness."
"There is a pervasive tendency to safeguard group interests across various sectors, including banking, without moral or economic justification. This fosters a society plagued by discrimination, while the economy's capacity to generate employment diminishes," she added.
'Defaulters get concessions while farmers pay more'
Noab President and Managing Director of Ha-meem Group, AK Azad, said, "Farmers across the country pay land taxes. Despite this, they face additional sums [to local influentials] during transportation and while selling their products in markets. These farmers receive no exemptions from the government; instead, concessions are extended to loan defaulters."
Azad, a member of parliament, expressed concern that the banking sector's defaulted loans exceed reported figures by several folds.
"Importation of capital machinery and raw materials is declining, indicative of reduced investment. The budget lacks directives addressing these issues," he said.
The Noab president said without ensuring transparency and accountability by eliminating political influence, no budgetary allocation can alleviate the common people's suffering.
Salma Islam, publisher of Daily Jugantor, said, "To ensure the sustainability of newspapers, this sector should be acknowledged as an industry. Reduction of import duties on paper is imperative. Government policy support is essential to strengthen the media."
Former comptroller and auditor general of Bangladesh Muslim Chowdhury pointed out that a significant portion of the budget is allocated to operational expenses, yet the anticipated savings from automation are absent.
Mahfuz Anam, editor of The Daily Star and president of the Editors' Council, delivered the concluding speech at the event moderated by Dewan Hanif Mahmud, the Council's general secretary and editor of The Bonik Barta.
