Masum Billah, Dhaka
Bangladesh’s economy is grappling with severe challenges as it navigates through what many describe as an unprecedented crisis. The past two years have seen escalating difficulties, compounded recently by a period of intense civil unrest that has wreaked havoc on the nation’s infrastructure and business sector.
The chaos of recent weeks has resulted in an estimated Tk. 75,000 crore in damage, with the ready-made garment (RMG) sector alone bearing a staggering Tk. 20,000 crore in losses. This upheaval, tragically accompanied by the loss of numerous lives, has exacerbated an already dire economic situation.
Economic Strains Intensify
The economic strain is evident across various sectors. The dollar crisis has severely affected the ability of industries to import necessary raw materials, while high inflation and the rising cost of essential goods—including fuel and food—have made it increasingly difficult for low-income households to manage their daily needs. Families are now forced to cut back on basic necessities, medical care, and educational expenses.
Unemployment has reached record highs, with over 70% of educated youth reportedly jobless. The faltering job market underscores a broader issue: industrial stagnation and a decline in foreign direct investment (FDI). Industrial sectors outside of the RMG industry are struggling, primarily due to poor management and the ongoing dollar crisis, while foreign investors remain hesitant due to concerns over rule of law, political instability, and bureaucratic inefficiency.
Banking Sector and Financial Instability
The banking sector is under severe pressure, with classified loans reaching an alarming Tk. 187,000 crore. This growing debt, coupled with widespread corruption and mismanagement, has led to a liquidity crisis in many banks. Despite government efforts to address loan defaults and tax evasion, the situation is deteriorating, further hampering economic recovery.
The national budget reflects the gravity of the situation, with a deficit of Tk. 2.5 lakh crore. Persistent underperformance in revenue generation exacerbates this deficit, highlighting the systemic issues plaguing the country’s financial management.
Tax Evasion and Corruption
Tax evasion remains a significant problem. Despite a sizable portion of the population earning above the poverty threshold, only a fraction contributes to tax revenues. The government’s revenue collection falls short of expectations, partly due to widespread tax evasion and inadequate enforcement.
Recent media reports have uncovered massive corruption among high-ranking tax officials, raising urgent calls for systemic reform. The need for a comprehensive overhaul of the tax system, along with increased accountability and a transition to a more digital and transparent system, has never been more pressing.
The Shadow of Money Laundering
Money laundering, through methods such as over-invoicing and under-invoicing, is bleeding the economy. These illegal financial practices undermine economic stability and deplete the nation’s resources, making effective governance and economic management even more challenging.
A Call for Action
To stem the tide of economic decline, Bangladesh must undertake significant reforms. Addressing corruption, enhancing the efficiency of the tax system, and stabilizing the financial sector are critical steps. As the country grapples with these challenges, the focus must remain on restoring stability and fostering a conducive environment for sustainable economic growth. The current crisis presents both a profound challenge and an opportunity for transformative change.
