It’s undeniable that after overcoming many obstacles and problems in last 52 years, Bangladesh has now come to a satisfactory state of economic development. The economic development, especially the growth is clearly evident. There’s question over the development in other fields. However, our economic development has been continuing gradually.

Its not like that the achievements were pursued in last one or two decades. We have been availed the achievements in last five decades— sometimes we did it little, sometimes we did it a lot. Now, our main challenge is to take the economic growth of the country ahead. Still we’re not on the foundation of permanent, sustainable development. Two goals ahead of us; one is to go to the list of middle-income countries; another is to become the developing country. Despite many problems exist in our economic activities, we’ve surpasses last five decades successfully as an economic force. The political condition is not negligible, too.

It is good to remember that politics or political leadership in any country play a key role there. Economic growth, social development—none of it can happen without a fair and positive political environment, whether we call democracy in particular or mixed democracy rather than a pure form of democracy depends on the politics. This is now the biggest challenge for Bangladesh.

We see that there are challenges and problems in maintaining the achievements we have made. In particular, many internal problems have now become apparent. There are external problems with it, e.g., Covid-19, Russia-Ukraine war. But these have made our internal problems more complicated. In this context, I have a big question, are we ready for this difficult test? Will we be able to pass the difficult test after the election and move forward? To answer this question we have to consider the current situation. In what position we’re in now? What’s are our weaknesses?

First, we know that we have many problems. Inflation, devaluation, foreign reserves, banking, various problems in the financial sector, hundi, money laundering, corruption—they are there. Then now our main problem is lack of employment. At the same time, people's income sources are shrinking. Then the biggest thing we are noticing is that financial inequality is increasing day by day. Financial inequality means income inequality and wealth inequality. So, financial inequality and wealth inequality has a social impact on the lives of ordinary people or any human being. It is having a negative effect, as if there is no source of income and there is inequality of income, then no matter how much overall social progress is made, the common people cannot enjoy the results. This is the reality of Bangladesh now.

Now, we’ve to know what the reasons are. I can say five reasons. One is the weakness of our policy. We have a weakness in formulating the right policies at the right time. There are various types of corruption. A result of the weakness of our policies is the current state of our economy.

Secondly, political and bureaucratic possess influence on the economic sphere. Economic activities will continue with economic considerations. For example, banks will operate within financial norms. They don't get fixed as there are various political and bureaucratic influences. Again we cannot implement the right decision properly.

Thirdly, institutions. For example, a bank is an institution. Market is an institution. Then the capital market is an institution. Whether in the public sector or in the private sector, institutions are now weak. Their skills are low. There’re corruption, various irregularities and mismanagement.

Fourthly, the regulatory body; such as—Bangladesh Bank, Securities Exchange Commission, BTRC—the regulatory agencies that exist do not seem to be able to function very efficiently, with robustness and independence. But they have various implications. And the officers who are here are not free from political and bureaucratic influence.

After all we can see everywhere the lack of good governance i.e. transparency and accountability. Be it in the government sector - various government activities, development activities, administration and other government affairs, there is a considerable lack of transparency and accountability. On the other hand, various organizations in the private sector are not doing very well in maintaining transparency and accountability. We see the reflection of that when our market is unregulated. Inflation is happening. People's income resources are decreasing day by day. The various problems of the people are not being solved. It is not that nobody knows the solution to the problems. There is a lack of goodwill, awareness and honesty.

The recent dengue outbreak is a prime example. Policymakers are talking over the issue. The officials of various organizations are all talking, there is not much work. Many times it is said, why people are not aware, only then will dengue be reduced. People will be aware, but it will take many things to make people aware. But, what is government for? They say, 'Be aware people, everything will be fine.' It's like childish talk. But this is an unprecedented thing - in Bangladesh, I have seen such incidents before. Five reasons mentioned earlier from which we’ve to get out.

We have seen a great political turmoil in Sri Lanka. The country became economically bankrupt. They could not repay the loan. Inflation rose to 60 percent. There was no employment. Within a year-and-a-half they have turned right around. Inflation has come down a lot and employment increased. Tourism is on the rise again. In other areas—financial management has changed. Not all problems are solved overnight. But many positives have come. Here the role of institutions is much greater. A strong point of Sri Lanka is that there the institutions are very sound and strong and the people are also aware. The literacy rate is also very high compared to other countries. By using their human resources, they have turned around by making good use of the institutions.

The biggest thing is that the work done by the central bank in the financial sector has not been interfered with. There is no political unrest. They have increased the loan interest rates and controlled lending in various places. The guidelines given to the banks for proper capital formation have been followed. That is why they have moved forward.

On the other hand, if we compare, we still have a considerable deficit. In terms of organization, human resources, there remains some difference. Not saying that Sri Lanka is better than Bangladesh. Bangladesh is still in a good position and I’m not asking to emulate Sri Lanka. But we can learn from them. I can appreciate how they got through the tough times and put themselves in a good position. Not that we do not know this in Bangladesh. I drew attention to the fact that what we need to do is what we need to know the most.

First, we need to bring good governance, transparency and accountability. Secondly, corruption, wastage of public resources, wastage of money should be prevented. Thirdly, the rules that are there, be it the rules of Bangladesh Bank or the rules of other organizations, they have to follow it very carefully. Fourthly, our financial management—interest rates are not yet market oriented. The exchange rate, which is the value of our money, haven’t been improved yet. Despite taking various actions we are not seeing much improvement.

Then another thing is that the banking sector also needs to be reformed. Bad debts should be prevented. Then we need the private sector, especially the big industries, but attention will also be given to small and medium cottage industries—to give them more encouragement. As much as we speak, the SME sector is very good, getting credit. But, in fact, credit is not going to them. The aid does not seem to be going very far. Our employment and productive sector is the small and medium industry and commerce sector. They produce products and services. If these could be increased, inflation would come down a lot. But, the authorities concerned are not paying much attention to that.

How will FDI come now? People know that the situation in Bangladesh is not stable, the political situation is somewhat turbulent. If this situation continues even after the election, it will be difficult to get FDI, investment from outside. If it does not come, our reserves will not increase. I don't think we can increase the value of our money then. Our policy-makers, even the implementing bureaucrats—do not want to take into account any of the opinions that people give. When people say something, when experts say something, you need to listen. Things like this does not happen in any other country. There are think tanks in different countries. Those who think of the free mind are listened to. But in Bangladesh it is very rare. Those who are in power, who have financial power, it seems like they know everything, can do everything. They seem to have little interest in engaging the public, especially policy makers and bureaucrats don’t do this, which is a big problem. If we cannot get out of this mindset, we cannot move towards permanent sustainable development.

(The writer is former Governor, Bangladesh Bank and Professor, BRAC University)