Bangladesh’s economy has not found the right path even after six months of the interim government. Most of the macroeconomic indicators except the export sector show a negative impact on the economy. Inflation is still in double digits. Factories are being closed one after another due to problems with the bank loans and Letter of Credits (LCs). Employed people are losing their jobs. On the other hand, the country is not getting promised foreign aid. Works of small and big projects remain closed. New projects are not coming. Local and foreign investment is also decreasing. Businessmen, industrialists and entrepreneurs are facing a multifaceted crisis. According to the experts, the country's economy is now going in the opposite direction.
Former Bangladesh Bank Chief Economist and former Director General of Bangladesh Institute of Development Studies (BIDS) Dr Mustafa Kamal Mujeri told Bangladesh Pratidin that there is no qualitative change in the economy during the interim government compared to the previous government. Rather, a lot of weakness has been seen in the adoption of policies after August 5. The lack of coordination in the government is also becoming visible. As a result, economic indicators, which were slow, have now stagnated.
According to sources, officials of the Finance Division are struggling to match the calculations of the next budget in the current state of the macroeconomy. Concerns are growing in the government, especially over the shortfall in revenue collection and the lack of expected foreign aid. To overcome this situation, the interim government has been forced to take an unpopular decision like increasing VAT by issuing a notification in the middle of the current financial year. But that decision had to be revised due to public pressure. As a result, there is a risk of increasing financial chaos in the upcoming days. High inflation is increasing this apprehension of the government.
According to the Bangladesh Bureau of Statistics (BBS), the inflation in December last year decreased slightly compared to the previous month of November. But, it remained in double digits. The inflation stood at 10.89 percent in the last month. Government policymakers are choosing to increase the policy interest rate to deal with the increased inflation. However, Dr Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), said if the interest rate of the loan increases, it will deepen the crisis in the country’s private sector.
Data from the Economic Relations Division (ERD) said that during the July-December period of the 2024-25 fiscal year, Bangladesh received $3.53 billion in foreign aid, which is about $53 million less than the same period of the previous fiscal year. Bangladesh received $4.06 billion in foreign assistance during the July-December period of the last fiscal.
Government revenue collection is also falling besides decreasing foreign aid. According to the National Board of Revenue (NBR), the revenue collected during the July-December period was Tk 1 lakh 56 thousand 419 crore which is Tk 57 thousand 724 crore less than the target.
Along with government income, domestic and foreign investment has also decreased. Investment is decreasing even in export-oriented economic zones. Bangladesh Export Processing Zones Authority (BEPZA) Executive Chairman Maj Gen Abul Kalam Mohammad Ziaur Rahman yesterday at a press conference said Foreign Direct Investment (FDI) in EPZs has declined by about 22 percent in the last six months due to various global and domestic factors. The country’s exports increased at almost the same rate.
Bangladesh missed foreign investment of $13.5 crore at the Mirasharai Economic Zone due to water shortage. Apart from this, BEPZA sees the energy crisis as the biggest obstacle to investment. Local investment is also decreasing alongside foreign investment.
The opening of LCs for the import of capital equipment fell by 26 percent in the first five months of the current fiscal year compared to the same period of the last fiscal. Similarly, the settlement of capital equipment import LCs also decreased by about 22 percent. Besides, the credit growth in the private sector is negative. The credit growth in the private sector was 7.66 per cent in November last year compared to the previous fiscal. This credit growth is the lowest in the last 3.5 years. The meaning of negative credit growth in the private sector and less capital equipment import is investment is declining in the industrial factories.
bd-pratidin/GR
