Prominent economist Dr. Qazi Kholiquzzaman Ahmad highlighted on Monday that Bangladesh's economy is trapped in a “vicious circle,” rendering inflation control policies ineffective, unlike the successes seen in Sri Lanka, India, and Pakistan.
Speaking as the chief guest at the "Post-Budget Reaction on Water, Sanitation, and Climate Change" event organized by the Development Organisation of the Rural Poor (DORP) at the Economic Reporters' Forum, Dr. Kholiquzzaman pointed out that the rapid growth rate of wealthy individuals in Bangladesh amid economic crisis and the pandemic is due to assets being looted by this influential circle.
Dr. Kholiquzzaman emphasized, "The government’s policies are not working properly to combat inflation due to the influence of a vicious circle. This circle influences the government's policymakers and policy implementation, preventing the economy from improving until their hold is cut off."
He elaborated that this vicious circle operates at the policymaking, monitoring, and implementation levels, resulting in ineffective government policies. Globally, economic policies are created and controlled by regulators from a neutral standpoint, but in Bangladesh, policies are often influenced by those who are affected by them, leading to policy failures.
Referring to inflation control, Dr. Kholiquzzaman noted that inflation has decreased to around 5% in India, 1.5% in Sri Lanka (down from 49.72% in 2022), and 11.8% in Pakistan (down from 28.34% in January 2024). However, Bangladesh’s inflation rate has remained in double digits for the past 22 months. Despite using similar tools as India, Pakistan, and Sri Lanka, Bangladesh's policies have failed due to poor implementation.
"In the proposed budget, expected inflation is set at 6.5%, but considering it was targeted at 6% for FY 2023-24 and wasn’t achieved, how can we expect it to fall to 6.5% in FY 2024-25?" he questioned.
Regarding the proposed budget, Dr. Kholiquzzaman criticized the lack of measures addressing major economic challenges, noting that it was prepared by bureaucrats without accountability, which means the economic situation is unlikely to improve soon. He acknowledged Bangladesh’s progress in social development but pointed out that income disparity has widened over the last decade, and the employment situation remains frustrating.
Dr. Kholiquzzaman highlighted severe asset disparity in Bangladesh, with 76% of assets owned by only 10% of ultra-rich people, whose resources increased even during the Covid-19 pandemic. In contrast, about 50% of the population owns only 2% of assets, lacking access to quality education and training needed to contribute to the economy.
"The rich are not paying taxes, and the government is unable to impose actual taxes on them, leading to a stagnant tax-to-GDP ratio," he said. He compared Bangladesh’s tax-to-GDP ratio of around 8% with Nepal’s 19%, Pakistan’s 10%, and the USA’s 27%.
The event also featured speeches by Alok Kumar Majumder, country coordinator (Bangladesh) WASH Alliance; Fayazuddin Ahmad, Advocacy and Campaign Lead, Water Aid Bangladesh; Joseph Halder, convener of FANSA-BD; Md. Alamgir Hossain, project director, Sample Vital Registration System (SVRS), BBS; Md. Masud Rana, senior manager (Corporate Sales), RFL Plastic; Mahmodul Hasan, domain coordinator for water, food, and climate at HELVETAS Bangladesh; Digbijoy Dey, country consultant, IRC; and Rokeya Islam, vice chairman (DORP), among others.
Mahfuz Kabir Phd, research director of BIISS, gave a keynote presentation on ‘Water and Sanitation in Climate Change: Budget 2024-25 in perspective.’