Bangladesh economy unable to move forward due to negligence of financial sector

By Hafizur Talukdar*
The Russia-Ukraine war has started amidst the economic losses of the Corona epidemic. Western countries have imposed various sanctions on Russia. This has had an adverse effect on the economy of Bangladesh. Transportation costs have increased due to increase in fuel oil prices in the international market. It has increased the price of all kinds of products. Food shortages and abnormally high prices have led to famine in many countries. Various international organizations are expressing fear that the situation may deteriorate further. This wave has also started to be felt in Bangladesh. The government has already adopted austerity policies in all sectors of the economy. In terms of imports, initiatives have been taken to narrow down areas such as luxury goods, foreign food and expensive cars. The implementation of all projects which are unnecessary or not necessary are being stopped.
The government has decided to set office hours from 8am to 3pm, for all government, semi-government, autonomous and semi-autonomous institutions from August 24 in a bid to cut down power consumption. The Cabinet directed the government offices to remove curtains from there to get natural lights as well as to use air coolers as little as possible in order to reduce the use of electricity.
Officials have been instructed to reduce the use of cars, electricity consumption and AC use in government offices. Routine load-shedding of electricity has been imposed by shutting down diesel-powered power plants to reduce fuel import costs. The traditional concept of development is now in dire straits. Until now, the progress of digital Bangladesh is seen as one of the priority projects of the government, but the 5G project of the state-owned telecom company Teletalk has been suspended to save dollars. This time, the government has given stricter instructions to save electricity and energy. It has been decided to reduce the working hours of government and autonomous offices. At the same time, schools have been ordered to be closed for two days. We can call this decision positive. However, even if it is possible to deal with the ongoing crisis temporarily, we urge us to take more long-term measures.
It may be possible to deal with the ongoing crisis as a result of the government's new decision. Because if the working days in schools and colleges are reduced, the traffic jams will be reduced. Reducing office hours will save some electricity. These are meager solutions to deal with emergency problems. But the crisis will be difficult to deal with.
The government's decision is positive. We have to try. It is possible. We think the government has taken the right decision. After a month, the result of such a decision of the government will be known. We can hope something good will happen.
With such a decision, some savings may be possible. But it may not be possible to eliminate the whole problems that have arisen in the basic structure of the economy. Besides, as a result of such decisions, the space for development in education and other fields should not be narrowed.
We are not able to move forward due to the financial sector's negligence. As a result, the economic situation is now more serious than ever. Inflation, pressure on money, investment situation, various social security schemes - the ongoing problems in these matters can gain stability till the end of 2024. This requires an interim economic policy consensus for two to three years to address the financial sector crisis. In this policy-consensus policy matters should be given priority. They are macroeconomic stability, production and employment, and protection of the poor. The formulation of this policy should be based on timely action.
Basically, the abnormal trade deficit in the country became noticeable from the middle of the last financial year. Exports and remittance flow also showed a downward trend. As a result, foreign exchange reserves began to fall. Last year, the central bank had 45 billion dollars in reserves, but due to trade imbalances, it has come down to 39 billion dollars. With this amount of reserve, it is possible to meet the import expenses of a maximum four-five months. The economy of a country like ours is considered safe if it has reserves equal to at least six months of import expenditure. This reserve would not have been a cause for much concern had there not been a negative trend in exports. The fact that garment purchases have declined has raised fears of an economic crisis. But the government has been trying to keep the reserve stable to meet the demand. Thus, the government takes various austerity measures.
But a piece of positive news is that the flow of remittances is positive now. Remittance flow to Bangladesh rose 11.76 percent year-on-year to $2.09 billion in July, a development that would bring some relief for the country that is struggling to keep its foreign currency reserves in a healthy shape. Migrant workers sent home $1.87 billion in July last year. With the foreign exchange reserves nearing the limit, there are fears about energy and food security in the country. The government is taking new decisions one after another to deal with the crisis. This new decision is positive. It is okay if the government takes such a decision temporarily. Because winter is coming. At that time the demand for electricity will decrease. The government will then reconsider the matter. However, reduction in working hours is good for the government officials also. We have to walk in the way other countries of the world are dealing with the crisis. Electricity demand should be reduced.

Besides, the government and we have to do more. That 8 hour is enough for the Bangladeshi people this time. Our ethnic history is quite rich. Everyone worked together in the country's disaster and crisis. We have a history of standing together in any crisis, regardless of party affiliation, at any time, in any situation. Therefore, everyone has to work together to overcome the crisis that is being observed in this situation.
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*Teacher at a local school in Dhaka, researcher

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