A noted economist yesterday urged the government to take unpopular decisions to save the wobbly economy from a crash.
Former Finance Adviser Akbar Ali Khan said the government has only two years in hand in the current term. "Under the circumstances, they cannot take unpopular decision."
"But there is no alternative to taking unpopular decisions. Otherwise, the economy will crash.”
To take such decisions, the government has to acknowledge the political reality, as they will not be able to do it alone, Khan said.
He urged the ruling parties to organise a summit comprising the opposition parties and the business community. "The discussion will not be for some hours. It could run for days and will discuss every issue separately."
Comparing the economy with a flying airplane, he said: "Many parts of the economy have gone out of order. I doubt whether it will be able to land properly."
"The plane is moving, but going downward," he said.
He spoke at a seminar on "the present state of Bangladesh economy" organised by Centre for Sustainable Development (CFSD) at the Cirdap auditorium in the city.
Khan said many indicators of the economy are also going down. "I don't see any initiative that will give a light of hope for pulling them up."
He criticised those who said there is nothing to be worried about inflation.
"They say people's income has gone up. But I think income of most of the people has not increased. Most of the people are in troubles due to a rise in inflation."
The overall inflation went up by nearly 1 percentage point to 11.59 percent in January from a month ago. It has stubbornly been in the double digit for the last eleven months, which was last seen in the early 1980s.
"Investment rate will go down and there will be a negative impact on the rate of interest," the former bureaucrat said. "Instability has been created in the economy. A high structural inflation has also been created."
He said the reserves are also facing tough times. "If the rental power plants that have borrowed from the banking sector become bankrupt, it will create a problem for the lenders. The government has not taken the macro-economic stability into account while allowing permission for setting up such power plants."
Since coming into power, the government has allowed setting up of petroleum-based rental and quick rental power plants.
These plants are largely blamed for instability in foreign currency reserves as imports of oil doubled in the current fiscal year.
It is unfortunate as the government could not take any decision about coal extraction in the last three years, he said.
Khan also criticised the government for spoiling the country's relationship with development partners.
"You have to be realistic in economic management. Even China and India do not discard foreign assistance and aid. We do not have the capability to do that."
The government's decision to increase the prices of energy and water also drew flak from the analyst. "How much do subsidies contribute to the production of a commodity and how much does the inefficiency of the government play a part?"
"It will not be acceptable if the government punishes us for its inefficiency," he said.
Abul Hossain Chowdhury, former state minister for foreign affairs, echoed Khan and said: "There must be a consensus among all political parties. The opposition should also join parliament despite their all grievances."
Hossain Zillur Rahman, former caretaker government adviser, said most of the indicators of the economy are shaky. "But all the problems can be turned around with concerted efforts. There should be a shift in policies, as the government's assumptions on energy and transit proved wrong."
The economist said policy instability, a lack of coordination, corruption and priority of political decisions over economic policies are the major problems for the economy.
He also said the government's efforts to tame inflation could dent the country's desired economic growth. "It is very important for economies like Bangladesh to maintain a balance between inflation and GDP growth."
Moazzem Hossain, editor of The Financial Express, said the government's decision to increase interest rates for its savings tools could entice depositors from the banking system. "These depositors have opted for banks because of higher interest rates. It will create a volatile situation for the financial sector."
He, however, said the world economy should not be overlooked while analysing the domestic economy, as the global situation is also under pressure.
Aftab ul Islam, president of American Chamber of Commerce in Bangladesh, said the private sector sees a hole in the economy. "There is no positive investment, as the cost of capital has gone up."
"As a result, many are not getting loans. Many industries are becoming sick before they start commercial production. The existing industries are also under pressure. If the current situation continues, many businesses will fold."
Political analyst Prof Mahbub Ullah and CFSD President M Anwar Hashim and Secretary General Mahfuz Ullah also spoke.