AFP, Dhaka
The global economic crisis will present the biggest immediate challenge for whoever wins Monday’s Bangladesh elections after two years of rule by an army-backed government, say analysts.
The December 29 poll is the first in the country for seven years and will restore a democratically elected government following a military takeover that ended months of violence triggered by allegations of vote-rigging.
But as well as pushing through reform to clean up the graft-ridden political system, the new government will be under intense pressure to address economic problems facing the grindingly poor nation of 144 million people.
Although not directly affected by bank collapses and share market crashes seen in more developed countries, Bangladesh faces a series of knock-on effects from the global recession that could be crippling.
“Whoever comes to power will face some of the toughest economic challenges we have seen in a decade,” said Mustafizur Rahman, head of Dhaka-based think tank the Centre for Policy Dialogue (CPD).
“The world is heading towards a deep and prolonged economic recession. And already it has slowly started to affect our exports and remittances — our main levers of growth,” he added.
Exports have nosedived into negative territory after growing 42 percent in the July-September quarter amid falling orders from Europe and the US — the two markets accounting for 90 percent of the country’s overseas sales.
Remittances, which last year made up 12 percent of the economy, have slowed sharply due to job cuts in the Gulf countries as well as in Malaysia and Singapore.
The World Bank said growth in Bangladesh in the 2008-2009 fiscal year would fall to 5.7 percent, the lowest in five years, and warned it might even dip below five percent if the government does not act fast.
Already four million people have been pushed back below the poverty line due to massive food price hikes since the middle of last year, according to the World Bank.
Bangladesh’s two major political parties say inflation — over 10 percent for much of the last year — is the biggest threat to the country and have pledged to ease prices at any cost in a bid to win votes.
Rahman said the new government must unveil a stimulus package to boost growth as soon as it comes to power.
“The package must include measures to boost agriculture production, contain spiralling food prices, fix up power and energy problems and benefits for the affected exporters,” he said.
Officials have said power shortages have shot up to 40 percent of total demand, while a severe gas crisis has halted production in at least 300 factories.
Both parties have also unveiled lofty goals to nearly double power generation, build roads and bridges and subsidise fertiliser and energy for millions of poor farmers to boost food productions.
But there have been few indications how such massive spending would be financed in a country where — according to the International Monetary Fund — the tax-gross domestic product ratio is the lowest in Asia.
“They have rightly identified the problems, but haven’t said where the money would come from,” said economist Zaid Bakht, the research head of Bangladesh Institute of Development Studies.
Bakht said the next government also needed to restore investors’ confidence after two years of emergency rule saw “foreign investment falling below negative territory.”
“The election will obviously send a positive signal to the foreign investors. But the next government has to go an extra mile to welcome them back to the country,” he said.
In recent years, an array of big foreign investors have pulled out of investment plans in Bangladesh including Indian conglomerate Tata, which had vowed to invest three billion dollars in power, steel, fertiliser and mining.
Courtesy: thebangladeshtoday.com
