White Paper on our economy: Will political parties heed suggestions?

Prof. Dr. Yunus led the interim government, which was formed just four months after the previous Awami League-led administration left behind a range of burdens for the people of Bangladesh. It became evident that corruption was rampant across nearly all public and private sectors during the Awami League regime, with their allies and associates benefiting significantly from corrupt transactions.

Ironically, billions were laundered out of the country annually during this period. In response to the prevailing corruption, the interim government rightly established a 12-member committee tasked with preparing a comprehensive "white paper" to assess the current economic situation and identify remedies for improvement. This committee produced an in-depth report on the state of the Bangladeshi economy, focusing on microeconomic issues, structural challenges, social dimensions, institutional aspects, and necessary policy reforms. In this short essay, I will focus on the methodology used by the committee, its strengths, and the future role of the government in ensuring better governance.

Facts or Fabrication? The Debate Over Data Reliability: The white paper raises significant concerns about the reliability of macroeconomic and social data, including GDP growth, inflation, public investments, and social indicators. There is a widespread lack of trust in these key indicators, with allegations of political influence and manipulation undermining data integrity. The report criticizes the previous government for exaggerating GDP growth and using inflated statistics to construct a misleading development narrative.

Despite claiming to adopt an evidence-based approach, the analysis seems influenced by political critiques and pre-existing narratives regarding governance failures, which may bias the interpretation of economic performance. Additionally, discrepancies between survey data and secondary sources call into question the methodological rigor employed in reconciling conflicting figures. These criticisms suggest that the report's findings should be interpreted cautiously due to potential methodological shortcomings and external influences.

Although many people criticized the validity of the data and research methods soon after the report's release, it is essential to remember that the committee produced this extensive report in just three months. The committee acknowledges that the analyses presented in the white paper are limited in depth and scope, citing time and resource constraints as key factors.

Illusions of Progress: Corruption, State Capture and Manipulated Development Narratives: The "State of the Bangladesh Economy" report, while acknowledging its shortcomings, highlights several critical issues in various areas. It reveals how the Awami League (AL) government has publicized inflated statistics through data manipulation, thereby creating a misleading narrative of development and an 'illusion of progress' for the public. The report also identifies the reasons behind the decline in foreign exchange reserves and points to import restrictions as indicators of external sector fragility. Consequently, public debt levels are rising, raising concerns about fiscal sustainability, inefficient spending, and corruption in public projects.

From a structural perspective, the white paper illustrates how systemic corruption undermines public institutions and leads to a deficit in private investment. It also highlights how crony capitalism and poor governance create barriers to private sector investment. Notably, the paper reveals that the AL government systematically caused liquidity shortages through non-performing loans by manipulating the boards of various banks and enabling regulatory failures, resulting in a banking sector crisis.

From an institutional viewpoint, the report identifies several flaws. Governance failures, the growth of crony capitalism, and the rise of an authoritarian government have significantly eroded accountability and transparency, raising questions about democratic performance and electoral integrity. The public does not need extensive data to recall their experiences during this regime, where all elections were marred by rigging.

Regarding mega projects, instances of overpriced and overly lengthy projects have been reported, alongside rampant illicit financial outflows that have drained national resources. For example, the daily expenditure for the Karnaphuli River Tunnel in Chittagong is nearly 3.7 million BDT, a cost that could have been avoided. Similarly, it is evident that the previous government could have mitigated extra expenditures on projects such as the Padma Bridge, elevated expressway, and Ruppur power plant. In several cases, ministers and their associates have engaged in unplanned spending to serve their political and financial interests.

A recent example involves ICT incubation centers, where an underutilized center in Natore Town coincides with plans for another IT park in Singra upazila, the home district of Zunaid Ahmed Palak, the former ICT state minister of the ousted Awami League government. The white paper ultimately demonstrates that the alliance between political elites, bureaucrats, and businessmen has fostered deep-rooted corruption and created syndicates. However, this trio occasionally makes conflicting and short-term policy decisions, particularly in monetary, fiscal, and trade domains, further exacerbating economic fragility. Overall, these corrupt practices have led to a capture of the state by power elites.

The Cost of State Capture: A Country on the Brink: The consequences of such capture are critically severe. Even after four months of governance, the interim government struggles to stabilize the economy. Some banks are on the verge of default, inflation is rising, and many people are finding it difficult to cope. Large-scale corruption and mismanagement have led to increased inequality and vulnerability. The widening gap in income and wealth has raised concerns about social cohesion. Corruption even extends to funds meant for the poor, such as social safety net programs, which has fueled discontent among the masses.

Additionally, expenditures on education and healthcare have risen significantly, creating disparities among different segments of the population. Challenges in agricultural value chains, declining profitability, and corruption involving subsidies and mechanization threaten food security for those in need. Similarly, corruption in the climate trust fund has heightened the risk of climate vulnerability and undermined long-term environmental sustainability.

Moreover, unplanned development, fiscal burdens, and state capture have fostered a culture of discrimination, leading to brain drain and frustration among a significant portion of the youth. These consequences exacerbate job opportunities for young people, resulting in an inefficient labor market.

Government Reforms and Initiatives for Recovery: There is a prevalent culture of mistrust and a blame game among politicians in Bangladesh. Historically, civil society organizations such as Transparency International Bangladesh (TIB) have consistently highlighted corruption within the BNP and AL governments. However, neither party acknowledged the seriousness of these corruption concerns during their time in power. Instead, both accused TIB of being politically motivated and attempted to undermine the credibility of their data and claims. Despite the gravity of the issues raised by TIB, they were not addressed as key concerns at the time.

The white paper has identified serious issues that need attention for the future of Bangladesh. I propose that the interim government take significant steps to ensure accountability and transparency and prevent corruption by implementing the reform initiatives suggested by various reform committees. Strengthening institutions such as the Election Commission, the Anti-Corruption Commission, the Public Service Commission, and local governments is essential. Additionally, a social movement united against corruption is necessary. To set a strong precedent, the government must prioritize gaining public trust and acceptance to implement these reform initiatives effectively and impose punishments on corrupt individuals.

Given the current economic crisis and inflation, the government should focus on developing social safety net programs and initiating a universal basic income (UBI) project to support the poor. This initiative would help foster harmony and build trust within impoverished communities. Furthermore, the government must combat rumors, misinformation, and disinformation, especially since many former AL members are still active and obstructing the successful implementation of reform initiatives. Moreover, it is crucial for the government to create employment opportunities for the large youth population and to consider their voices in building a prosperous future for Bangladesh. All these initiatives can be facilitated by establishing a national digital database for its citizens.