Economic ills were entrenched during AL regime

The long-term problems in the economic sector were exacerbated and entrenched during the tenure of the Awami League regime, pushing many issues to the point of no return, said Prof Rehman Sobhan yesterday.
Low revenue mobilisation, corruption, default loans, money laundering, project time and cost overruns, fall in Foreign Direct Investment, and over-estimation were among the long-term problems, he said.
He made the comments at the concluding session of a programme titled "White Paper and Thereafter: Economic Management, Reforms and National Budget", organised by the White Paper Committee 2024 in collaboration with the Citizen's Platform for SDGs Bangladesh at Bangabandhu International Conference Centre.
Prof Sobhan described the Hasina-led government as "malfunctioning and unaccountable".
"Obviously, all the problems which built up in the years before have been strengthened and consolidated … So, they now need deep, structural solutions."
Sobhan blamed the regulatory failures of the Bangladesh Bank for the mounting default loans. The non-functioning role of the central bank was in turn caused by the illusion of its autonomy, because of its dependence on the authority and patronage of the head of the government at that time, added Prof Sobhan, also chairman of the Centre for Policy Dialogue.
The regulatory system of banks, which was then politically managed, has now created a class of people called "crony capitalists", he said.
He said the problem is much deeper now as the crony capitalists have turned into oligarchs.
The real problem is that a very large portion of the borrowing community is now in a state of default.
"You will not repay your loan on time, and then you will seek to have it written off. And at the end of the day, you will get a cost of financing which is much lower than what would have happened if you were repaying it on time," he said.
He said the problems have been around for long enough to have become deeply embedded in the structures of society.
Fortunately for this interim government, and unfortunately for the prospective elected government, they are the ones who are going to have to deal with these problems, said Prof Sobhan, who is a former member of the interim government formed after the fall of autocrat HM Ershad.
Most of the problems are not going to be solved by so-called reforms, Prof Sobhan said, adding that a proper regulatory mechanism, discipline in the process of debt-free payment, and prevention of money laundering are needed.
He said the best use of time by the interim government would be to identify what they think to be a prospective solution.
Asked what should be the priorities for the interim government, Prof Sobhan said they could make some attempt to bring about more discipline in macroeconomic management.
"But even over here, I do not see them being able to effectively take care of the problem of inflation within the tenure ... "
He said the government could introduce some discipline into the regulatory system of the banking sector.
Regarding the problem of money laundering, Prof Sobhan thinks it will not be able to be taken care of anytime soon. After all, money laundering has been going on since the Pakistan period, according to him. About $30 to 40 billion of remittance money is floating around in the hundi market, or illegal channels of remittance.
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