Economic troubles rooted in political crisis: Fahmida Khatun

Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), has raised alarms about the deterioration of Bangladesh's economic indicators – ranging from inflation and low resource mobilisation to depleting foreign reserves and a fragile banking sector. However, she stressed that addressing these economic woes is unlikely without first resolving the underlying political crises.

"Economic problems have emerged from political crises, and without fixing politics, none can resolve economic problems," Fahmida said in an interview with The Business Standard.

The student movement demanding Sheikh Hasina's resignation underscores a deeper desire for reform across the country, she said. These students are now calling for systemic change before they hand over power to political parties through elections.

"Students have realised that their country is steeped in corruption and mismanagement. They've witnessed the ruling party's hooliganism, the erosion of voting rights, and the suppression of freedom of expression and press," she remarked. "This is not a country serving its people, and the students understand that well."

Fahmida also critiqued the development model pursued by autocratic governments, which often focus on visible, large-scale projects rather than vital sectors like education and health. "They take on mega projects like the metro rail or the Padma Bridge to showcase development, but these also provide opportunities for larger-scale corruption," she observed.

According to her, a corrupt circle around the government emerged, extending project timelines and inflating costs to pocket a bigger share of the funds. This group includes politicians, civil and military bureaucrats, law enforcers, and corrupt businesses.

"They've profited from corruption and laundered money abroad," she said, pointing to the hundreds of thousands of crores syphoned from banks. "Even the DGFI helped this vested group to capture banks, with state patronage supporting them."

Fahmida accused Sheikh Hasina of fostering an oligarch class to sustain her power without credible elections. "It's as if she said, 'I'm turning a blind eye to whatever you are doing,' to corrupt officials, politicians, and businesses," she suggested.

However, she argued that political settlements cannot continue in the manner seen over the past decade. "A true political settlement must be between the state and the people, and between the parties and the public," she emphasised.

The interim government, according to Fahmida, faces a daunting task in addressing these entrenched issues. The political and bureaucratic systems that have developed over the last 15 years have primarily benefited rent-seekers and corrupt individuals.

She cited the resignations of university vice-chancellors, the central bank governor, and top bureaucrats after Hasina's fall as evidence of how these figures were turned into protectors of the government in exchange for financial benefits and promotions, regardless of their capabilities. "Even the central bank governor resigned in hiding—a scenario we've never witnessed before," she noted, highlighting the fear among those involved in corruption.

The executive director of CPD also criticised the business community for its excessive politicisation under the Awami League government, pointing to their overt praise of the prime minister.

As for the interim government's priorities, she believes that politics, the economy, and education sectors must be reformed first. She acknowledged that the current government is on the right track, having focused on identifying problems within the fragile banking sector and taking steps to control inflation. Also, controversial entities like the S Alam Group are being removed from banks.

Yet, much remains to be done. She called for more than just a white paper on the state of the economy, suggesting the formation of a separate commission for the power sector, where corruption has been rampant.

"Good governance must be ensured, and deeply rooted corruption needs to be eradicated," she urged. Regulatory bodies such as the Election Commission, judiciary, Bangladesh Bank, National Board of Revenue, and Anti-Corruption Commission must be empowered to operate independently. She also stressed the need for a system of rewards and punishments to distinguish between good and bad actors.

Fahmida concluded by emphasising the importance of ethics, particularly among the wealthy, who she said have grown increasingly greedy. She called on the student movement to challenge their parents when they notice discrepancies between their income and spending, noting that societal change must start within families.