Violent Electroal Transition
CPD worried about economy
The Centre for Policy Dialogue (CPD) yesterday asked politicians to protect the economy from the negative impacts of an electoral transition.
“No economic activities and livelihood concerns, however large or small, should be held hostage to our unique democratic practices,” the civil society think tank said in a media briefing while releasing its independent review report on the economic updates at its Dhaka office.
The report is titled “Bangladesh economy in FY 2014: Three months after the budget, three months before the elections”, a subject on which Dr Debapriya Bhattacharya, a distinguished CPD fellow who led the team that prepared the report, made a presentation.
The report was based on three broad issues – year closing figures of the economy and the starting benchmarks of the new fiscal year, movements of key economic indicators of the first quarter of 2013-14 and analysis of the political business cycle to understand its impact on macroeconomic prospects.
Bangladesh generally goes through a tumultuous time during every election year. Ruling and opposition parties take an antagonistic stand to realise their demands, causing sufferings to the masses and hurting the economy. The upcoming election is no exception and the country has already witnessed a lot of strikes and acts of vandalism, which have forced the business community to take a wait-and-see approach before making any new investments.
“Working out this package of economic safeguards is, in our view, no less important than generating a consensus on electoral modalities,” said the CPD in its report.
Bhattacharya said with apparent regret that the chiefs of the two top political parties love to proclaim that they keep apparel sector out of political strikes, but they do not do the same for other sectors.
“What is wrong with a day labourer or a small retailer who suffers the most during a strike?” he questioned.
On the political business cycle (PBC), the report said the governments in low-income countries like Bangladesh tend to increase consumption expenditures during election years, while investments remain unchanged. The overall fiscal deficit ratio increases by about 1 percentage point of GDP during an election year. Revenue collection falls but rises after the election.
CPD’s analysis, which found the impacts of PBC in the Bangladesh economy, said the country’s real GDP growth slowed down by 0.67 percentage point in this election year. Public investment and tax revenue also went down by 0.21 and 0.16 percentage point respectively, while revenue expenditure increased by 0.17 percentage point in this election year.
Responding to a query on the recent rise in import of capital machinery, Prof Mustafizur Rahman, executive director of CPD, said more capital moves out of Bangladesh during an election year.
“But it needs to be examined whether importers of capital machineries are taking capital out by over-invoicing or not,” he said.
-With The Daily Star input
