For a country to descend into an economic crisis despite having a leader who has won a Nobel prize in economics at the helm is quite distressing. When Muhammad Yunus took over as the caretaker of the interim government in Bangladesh, one had expected that the economy would soar and there would be new beginnings in Bangladesh.
However, the reality is completely different, and Bangladesh is facing one of its worst economic crises. This explains the hard talk by Bangladesh Army Chief, General Waker-uz-Zaman during which he had said that the political mudslinging must stop and the country’s interest must be supreme.
There was a time when it was said that Bangladesh was one of the most promising economies in the world. Today the inflation has peaked to such levels that the Bangladesh Bank has raised the policy on repo rate to 10 per cent causing bank loan interests to go over the roof. Data would show that the interest rates have climbed to 15 per cent.
Further the reduced liquidity will push bank rates higher and this would in turn put a spoke on investments and job creation.
Further the industrial production has fallen from 40 per cent to 25 per cent. There are negative trends being observed when it comes to employment and trade has by and large remained stagnant.
The very fact that Yunus has surrendered to Jihadi elements also led to the manufacturing industry being hit badly. Incidentally this industry was the backbone of the Bangladesh economy.
The arson and vandalism have let to labour unrest. The labour who now fear for their lives owing to the violence are demanding high wages. Further the volatility of the Dollar has led to the food inflation going as high as 14 per cent.
More trouble
The Bangladesh Bank Governor has warned that non-performing loans would double in the next six months. The assessment done by the top bank suggests that non-performing loans could reach as high as 30 per cent in the coming months.
Adding to the misery is the negative growth that is being reported by the manufacturing industry. There has been a 50 per cent increase in production costs and this is also to do with the fact that the foreign buyers are doing very less business with Bangladesh.
Since Yunus took over 100 garment factories have shut down and this led to the unemployment of nearly 50,000 workers.
The collapse of the economy is directly linked to the violence. The investor confidence has eroded and a changed world order is not doing anything good for the country either. USAID has been frozen, while trade ties have collapsed. With Yunus sitting in office like a puppet to the radicals, violence has taken over which has led to Bangladesh becoming a dangerous place to do business in.
Situation could worsen
Currently for the political leadership, the economy seems to be the least of their concerns. The BNP is engaged in a battle with Yunus. The party is suspicious of his intentions and feels that he is trying to amend the Constitution so that he can cling on to power forever.
The Awami League on the other hand is the main enemy of the caretaker government. Its leader Sheikh Hasina since being ousted has taken refuge in India. Currently none are on the same page. The Awami League and BNP may be on the same page since they have a common enemy in Yunus. However when the battle lines are drawn they will fight it out both at the ballot and on the streets.
The new problem for the Yunus administration is that the cadres of the BNP and Jamaat-e-Islami are engaged in a street battle.
All these incidents led to the warning by the army chief about political mudslinging. General Zaman is in a hurry to end the violence so that he can send his men back to the barracks. Bangladesh watchers say that General Zaman’s warnings send mixed signals. Is he hinting at a military intervention? The answer could be both yes and no. A military intervention becomes necessary if violence does not end. However on the other hand the army chief also says that he does not have any personally agenda and wants to put an end to the violence so that he could go on a holiday.
Experts say that this is not the time for the army chief to play safe. Instead of handing out warnings or delivering tough talks, he must talk to Yunus and pressurise him to hold elections at the earliest.
In the current form, there is no solution in sight for Bangladesh. The only solution that would have a long lasting and positive effect would be the immediate conduct of elections and a democratically elected government to rule the country.
