Financial crisis is not so critical

During a workshop titled "Inequality, Financial Crimes, and the Healing of Bangladesh's Economy," organized by Bonik Barta on November 11, 2024, at the Pan Pacific Sonargaon Hotel in the capital, Bangladesh Bank Governor Dr Ahsan H Mansur stated that the financial situation in Bangladesh is worse than that of Pakistan. He pointed out the presence of corruption, bribery, money laundering, theft, robbery, rape, and loan defaults in Bangladesh. Due to the abundance of negative factors, the development of the metro rail goes unnoticed, while the construction of skyscrapers built with corruption money catches attention. The success of generating 16,000 MW of electricity is overshadowed by reports of ministers, MPs, and bureaucrats using illicit wealth to build "second homes" in Malaysia and "Begumpara" in Canada. Despite these numerous negative factors, I have never come across any data or information stating that Bangladesh’s financial situation is worse than that of Pakistan.

The Governor spoke in a manner similar to a spokesperson for the ruling party. In Bangladesh, whenever the government changes, the first and main task of the new government is to issue a white paper detailing the failures of the previous government. The main reason for this is that if the past government’s inefficiencies can be proven, it becomes easier to highlight one’s own achievements. In third-world countries, military rulers also try to legitimize their illegal power by exposing the wrongdoings of the previous government to the public. However, I have never heard of a central bank governor in any country assuming such a responsibility. The Governor said many other valuable things at the workshop, which can be discussed later. However, today’s article will focus only on the country's 'financial situation.'

The Governor spoke like a spokesperson for the ruling party. In Bangladesh, whenever there is a change in government, the first and main task of the new party is to publish a white paper detailing the failures of the previous government. The main reason for this is that if the previous government's incompetence can be proven, it becomes easier to highlight the new government's achievements. In third-world countries, even military rulers try to make their illegal power grab acceptable to the public by exposing the wrongdoings of the ousted government; however, I have never heard of a central bank governor in any country taking on such a responsibility.

The Governor did not mention in what context Bangladesh’s financial situation is worse than Pakistan’s. His statement would have been more credible if he had said that immediately after the country’s independence in 1971, Bangladesh’s economic situation was worse than Pakistan’s. The country’s infrastructure was devastated in the nine-month war—offices, shops, airports, seaports, bridges, culverts, rail lines, and power plants were all destroyed. Pakistani soldiers burned down thousands of houses. There were no trains, buses, trucks, or lorries to transport people and food. There was no foreign currency. After the war, the government had to rebuild hundreds of houses, thousands of kilometers of roads, and construct hundreds of culverts, bridges, and other infrastructure. There were no homes, no clothes, no food, and no money to buy food—only despair all around.

Although Bangladesh Bank was established in an independent Bangladesh, it had no own currency, no foreign exchange, and no gold or silver. Because Bangladesh did not have its own currency, transactions had to be carried out using Pakistani rupees, stamped with ‘Bangladesh’ for many years. There wasn’t much of the Pakistani currency either; in fact, before their defeat, Pakistani soldiers had emptied the vault of the Motijheel central bank and set the money on fire. The financial destitution of the newly independent country's banking system was so severe that the banks were unable to pay off their foreign debts. The only asset the government had was the one billion dollars in aid received from various countries. Even then, the first Governor of Bangladesh Bank, ANM Hamidullah, did not express such despair or make political statements. However, the current Governor, with his negative remarks, has pushed many banks to the brink of collapse. If the country is now labeled as bankrupt, foreign investment will stop, and foreign banks will lose all confidence in the country’s banking system.

Bangladesh's journey in 1971 began from scratch. Without the help of India and Russia, it would have been hard to preserve the country's existence. On the other hand, Pakistan was in a prosperous state, with abundant resources; they did not pay Bangladesh what it owed, and had numerous ally countries, including China, the United States, and Saudi Arabia. Despite this, through the continuous development programs of successive governments, today’s Bangladesh has emerged as a role model for economic development, surpassing Pakistan in many indicators. Not only has Bangladesh become a model for Pakistan, but it has also been recognized as a model for development on the global stage. This recognition is not mere government exaggerated swagger; it has been acknowledged by the World Bank, the IMF, and various international organizations, as well as by renowned international publications like The Economist.

Bangladesh's first budget was 786 crore taka, which has now grown to 7 lakh 97 thousand crore taka. While large budgets can be a cause of inflation, the country’s economic activity has also increased. Over the past many years, Bangladesh has consistently achieved a growth rate of over 6.5 percent, while Pakistan’s growth rate has been 3-4 percent. Even during the COVID-19 crisis, when many countries faced negative growth, Bangladesh’s growth remained positive.

In Bangladesh, poverty rates, child mortality rates, and maternal mortality had decreased, while literacy rates, life expectancy, per capita income, exports, imports, investments, and GDP had all increased. Bangladesh’s export earnings were 60 per cent higher than that of Pakistan, its foreign exchange reserves were almost four times higher, and its inflation rate was three times lower than Pakistan’s. Bangladesh’s GDP size was $460 billion, while Pakistan’s GDP size was $348 billion.

Despite acknowledging corruption, it must be noted that Bangladesh made remarkable progress in electricity and infrastructure development. While Bangladesh is not self-sufficient in food production, the food shortage that once affected 7 crore people during Pakistan’s era is now not greater than the 18 crore population of Bangladesh. In terms of production, Bangladesh ranked third in freshwater fish and fifth in vegetable production. In terms of human development index, ease of doing business, economic freedom index, life expectancy, and women’s participation in the workforce, Bangladesh was ahead not only of Pakistan but also many South Asian countries, including India.

The progress of Bangladesh is often praised in Pakistan's media. After Imran Khan became the Prime Minister of Pakistan in 2018, he expressed his intention to elevate Pakistan to the level of Sweden within the next five years. In a talk show on Pakistani television, renowned journalist and columnist Zaigham Khan, commenting on Imran Khan's ambitious statement, said that rather than aspiring to Sweden, if Imran Khan could bring Pakistan to the level of Bangladesh’s development in the next 10 years, the people of Pakistan would be overjoyed. Recently, Pakistan's Prime Minister Shahbaz Sharif also praised Bangladesh's economic achievements, saying, "Looking at Bangladesh's enviable economic growth, we feel ashamed."

Before becoming the Governor, Dr. Ahsan H. Mansur had commented on Bangladesh's progress, saying, "In many indicators, Bangladesh is ahead of Pakistan, the country from which we gained independence." But suddenly, in the past three months, what has changed that the same expert now claims that Bangladesh’s economic condition is worse than Pakistan’s? Not only the Governor but also the Finance Advisor Dr. Salehuddin Ahmed, upon taking office, made a statement during a conversation with journalists, saying, "The country’s condition is not as bad as you think." Leaders of the country must maintain a positive outlook for the nation's welfare, or else their imprudent remarks will continue to cause problems for the interim government.

Zeauddin Ahmed: Former Executive Director of Bangladesh Bank