Economy faces four deficits, GDP growth is like a Boeing with one engine: Debapriya

The country's GDP growth seems like a Boeing running with a single engine as Bangladesh's economy has been carrying on with four major deficits, Dr Debapriya Bhattacharya, distinguished fellow at the Centre for Policy Dialogue (CPD), said today.

"Growth [in the economy] comes from government investment. Private investment is not progressing," he said while delivering the Moazzem Hossain Commemorative Lecture organised by the Economic Reporters Forum (ERF) at its office in Nayapaltan, Dhaka.

Moazzem Hossain was the founder president of the ERF. He was the editor of the English daily The Financial Express from its inception until his death in 2018.

Debapriya Bhattachariya said the second shortfall is in revenue collection, as it is not increasing in proportion to the GDP.

"Investment in social sectors, including health and education, is not being increased. Besides, there are overly costly projects which are becoming like a 'thorn in the throat'," he added.

The economist also cited deficits in two other areas–- foreign currency and trust.

"The pressure is mounting to repay loans. It has not been possible to pay $5 billion on time in various areas, including fuel bills, profits of foreign companies, or dues of foreign airlines. As a result, Bangladesh is no longer able to proudly carry on claiming that the country has never defaulted on paying its debts," said Debapriya.

He further said, "Bangladesh is in the swing of expectations and mistrust. There seems to be a dilemma among the people of the country. They expect a lot but cannot trust that the government will fulfil those expectations," he said.

Debapriya said the National Board of Revenue (NBR) is the biggest victim of the government's inefficiency. "The NBR is given a miraculous target in front of it. However, despite the recession this year, tax collection has increased."

He said, "There is a gap in the GDP estimates. As a result, on the one hand, the ratio of debt to GDP has been shown to be low. This has had the opposite effect on revenue. Revenue has not increased in proportion to GDP. Those who are supposed to pay taxes are not paying. There is a lack of efficiency and corruption in tax administration.

"People have less incentive to pay taxes because they do not receive expected services in health, education, and public transport."

He also said the future of Bangladesh is brighter than that of many other countries despite facing numerous problems.

"To implement the conditions of the IMF, some tariffs have to be increased, some incentives have to be removed. However, they must be coordinated smoothly so that small enterprises, SMEs, rural industries, and those working in the domestic market do not face problems."

Debapriya suggested ensuring corporate transparency, raising the minimum tax rate, and emphasised ensuring food safety.

"This year, the crop has been good. The government should ensure food security by increasing the stock of crops. The list of those benefiting through the family card should be published so that local people can check whether those receiving this benefit are suitable or not. Open market sales should be increased, and this programme should be extended to rural areas."

Debapriya mentioned the 1990s as a unique decade after the independence of Bangladesh for the restoration of democracy, change of government in democratic continuity, and competitive politics. "At that time, critics also felt much more freedom than now."

He said there was a deep and trusting relationship between critics and journalists with policy leaders at that time.

Mentioning that currently, there has been an attack on the flow of information, he said, "The latest evidence of this is the Bangladesh Bank's restrictions on journalists' access.

"This means that the condition of the information and data held by the Bangladesh Bank is such that it could become a major disaster if it is disclosed to the public."

He said, "The central bank was a strong institution for information. A lot of information was available instantly. It also had credibility, especially regarding foreign transactions. It was more reliable than the Bangladesh Bureau of Statistics in many cases. There is no doubt that the central bank will lose its reputation if it controls itself in this way."

He said exports are ongoing, but according to the balance of payment information from the Bangladesh Bank, it is observed that the money is not coming in.

"Controlling such sensitive information is beneficial for the government. And the Bangladesh Bank has taken this initiative at a time when the International Monetary Fund (IMF) is analysing the results of the government's reform initiatives.

"These steps contradict the government's concept of Smart Bangladesh. It happens only when pluralism and democracy diminish. Uniformed and non-uniformed bureaucrats do it because they are afraid to be accountable in front of the people," he added.