By
Nantoo Banerjee
The
biggest attribute to the latest thumping election victory of Bangladesh Prime
Minister Sheikh Hasina Wazed’s Awami League and its alliance may be her
government’s contribution to the south Asian country’s most impressive economic
growth over the last 10 years. In 2018, the Bangladesh economy has grown
roughly at the rate eight percent. With the global oil prices down and average
inflation rate ruling below six percent, the country’s GDP may continue to grow
at eight percent during the current year, as well. The government’s bold
decision to temporarily shelter some 700,000 Rohingya refugees from
neighbouring Myanmar and its remarkable management of the social, economic and
diplomatic consequences of the act are receiving admiration across the world.
It
is to the credit of the Sheikh Hasina government that the refugees from
Rohingya province in Myanmar found the country more safe and acceptable. Thanks
to Bangladesh, forcibly uprooted Rohingyas did not have to take the recourse of
those millions of refugees from some of the war-torn west Asian and west
African countries who took big risks of traveling to distant EU countries for
safety instead of barging into rich unwilling Arab countries in the
neighbourhood. Democracy does not need to be always about the change, political
and government. The people will vote for stability if that meets their social
and economic expectations. The latest Bangladesh election result expounded the
people’s choice for economic and social stability.
Less
than 50-year-old democratic Bangladesh had witnessed many political upheavals.
It had as many as nine prime ministers before Sheikh Hasina was reinstalled as
the country’s head of the government since January 2009. The political career
of Sheikh Hasina, daughter of Bangladesh’s first President Sheikh Mujibur
Rahman, has spanned more than four decades. Highly populous Bangladesh had
wasted a lot of years on hopeless politics, giving little attention to the
development of its economic infrastructure. The government’s focus started to
shift rapidly since 2009. This has come under the lenses of such multi-lateral
organisations as the Asian Development Bank, International Monetary Fund and
the World Bank.
The
IMF stats put Bangladesh GDP at 42nd position (nominal) and 31st (under
purchasing power parity), per capita GDP at $1,751 (Nominal) and $4,561.66
(PPP). In its annual assessment of the Bangladesh economy, IMF said the country
will need to boost productive investment by addressing infrastructure
bottlenecks and strengthening the banking sector to keep the momentum going.
Growth in Bangladesh has averaged more than 6 percent over the last decade,
significantly lifting per capita income. Poverty has declined steadily and
other social indicators, like gender disparity in education and maternal
mortality, have also improved. The country has diversified away from being
principally agrarian to a more manufacturing-based economy. The ADB had
forecast that Developing Asia, including Bangladesh, would expand by 6.0
percent in 2018, and by 5.9 percent in 2019. Bangladesh is far ahead of ADB’s
‘Developing Asia’ average.
Clearly,
Bangladesh, under Sheikh Hasina, is undergoing a transformation from a
low-income to a middle-income economy. Driven by increasing consumer spending
and investment, the country continues to generate strong growth. Much of the
country’s future development will depend on the progress and success of its
infrastructure and manufacturing sectors, choice of technology and foreign
partners. The country should steer clear of the latest geopolitical buildups in
the region and heavy borrowing from any individual country to ensure that its
political, economic and diplomatic policies do not get mortgaged, in the
process, to any strong donor country in the neighbourhood. Banks are the main
source of funds for companies and their ability to extend credit at reasonable
terms is important to keep the growth trend going. However, this will require
strong bank balance sheets and efficient operations. There is significant room
for improvement, given that non-performing loans continue to increase,
particularly in the state-owned commercial banks as in next-door India.
The
IMF report recommends higher public investment to upgrade infrastructure such
as roads and electricity coverage, spur more private sector activity, and
ultimately create more jobs. Tax revenues in Bangladesh are currently low at 9
percent of GDP. The country needs more revenues to finance infrastructure
investment and social spending. The average tax revenue to GDP ratio for
non-resource rich, low-income countries is around 15 percent. Therefore, the
priority is to implement the delayed value-added tax, preferably with a single
rate, reaching a broad base to help raise much-needed revenue. Any tax policy
reform should also be supported by efforts to strengthen tax administration and
improve tax compliance. The Sheikh Hasina government should seriously try to
address these issues. There is no doubt that Bangladesh has revealed a
remarkable turnaround. The country’s per capita GDP is now higher than
Pakistan’s. It has been able to achieve well in the area of population control
as the economic successes of Bangladesh is gradually gaining momentum.
When
Bangladesh was first reported to have grown at a faster rate than Pakistan in
2006, it was considered by many as a temporary blip. Now, Bangladesh even has a
lower population growth rate than Pakistan’s. This explains why the per capita
income of an average Bangladeshi is growing at an even faster rate. The country
now regularly feature in the top 10 fastest-growing economies around the world.
Its per capita GDP is forecast to exceed India’s by 2022. Sheikh Hasina’s new team should take forward
the government’s well-trusted and executed socio-economic policies and expand
their reach to benefit more of the country’s grass-root population. The new
challenges before the government include better quality education, encouraging
innovation and improvement of healthcare facilities. In the social sector, the
government would do well to encourage learned criticism and debate within and
outside the party and strongly fight fundamentalist forces having strong
potential to divide the people and disrupt the momentum. (IPA
Service)
The post Bangladesh’s Economic Success Under Sheikh Hasina appeared first on Newspack by India Press Agency.
