Dr Fahmida Khatun explains why a credible election is essential for the ailing economy

TBS: Exactly a month ago, the economic adviser commented that the country's economy had moved from the ICU to the HDU, but it would take more time to return to the general ward (hopefully within next January). Since the patient is still waiting in the HDU (not yet out of danger), which virus is most responsible for putting the economy there in the first place? 

Fahmida Khatun: Corruption—that is the biggest virus. The details of how corruption happens are, of course, vast. But over the years, corruption has penetrated almost every major sector of Bangladesh's economy, allowing some individuals to embezzle funds and accumulate resources and wealth. The strength of this virus was such that it pushed the economy into the ICU.

TBS: So now, the vaccine we have applied—how strong is it?

Fahmida Khatun: Fairly strong. Because when a body has so many problems across its organs, you cannot treat everything at once. That is why reforms have had to be carried out step by step. We have seen that particular groups, especially those with direct or indirect political connections or blessings, were the main beneficiaries of this corrupt system. Take the banking sector, for instance: the looting that took place essentially centred around plundering of public money—the deposits of ordinary people—carried out without any regard for rules and regulations.

TBS: Were those responsible for catching the robbers taking a deep slumber?

Fahmida Khatun: No—they too were involved.

TBS: We were talking about watchdogs, such as Bangladesh Bank. Beyond that, there are other watchdogs—the Anti-Corruption Commission, the parliament, and the judiciary. Why did none of these institutions act?

Fahmida Khatun: Because politics was the determining factor. The political system had become such that there was no scope for checks and balances. If politics does not function properly, neither can the economy. In any democratic system, you expect a government on one side and opposition members on the other. Parliament should be functional, with debates, discussions, and thorough scrutiny of proposals. But if all members are of the same opinion, that is never healthy.

TBS: At present we have no parliament, but other watchdogs still exist. Returning to our vaccine analogy—are vaccines being applied in these areas as well, and if so, how effective are they?

Fahmida Khatun: You are right. There is a nexus among three groups: politicians (MPs, ministers), the bureaucracy, and corrupt businessmen—not all, but a section of them. Together, they controlled the vital centres of political and economic power. As I said earlier, those elected by the people had pledged to serve them and ensure their welfare, and not to engage in corruption. Yet they broke their oath.

TBS: So, political criminalisation and economic criminalisation had merged into one?

Fahmida Khatun: Exactly. And because of that, what you are seeing now is only a limited response during this interim period. There are constraints on how much can be done. For instance, if a strict new rule or law is to be introduced, it has to be passed in the parliament, which currently does not exist. But aside from that, many smaller reforms are possible, and these can produce results. We are already seeing progress in the banking sector, where reforms are underway and showing positive outcomes.

TBS: Then, why is a good election necessary for the economy?

Fahmida Khatun: A fair and competitive election is essential. A government elected through such a process would truly represent the people's mandate and their expectations, and therefore must remain accountable to them. But look at what has been happening for the past year: most discussions have centred solely on political matters— various meetings, dialogues, commissions—yet the discourse has gone in circles without resolution. I have not seen serious debate on economic issues among the political parties. I hope that once the election schedule is announced and campaigning begins, the manifestos will contain economic commitments. Because let us not forget: the July Uprising was not only political, it was also fuelled by deep economic grievances— unemployment, inequality, frustrations over quotas, and limited job opportunities, especially in the public sector.

Instead, current debates are focused on proportional representation, the structure of parliament, and other procedural matters. These are important, but sidelining the economy creates uncertainty. And uncertainty has a direct impact on investment. We need investment to generate jobs. Public investment alone is not enough—we need private investment and foreign direct investment. And investors will not come amidst uncertainty, nor during a prolonged interim period. Interim governments are not meant to last long.

Furthermore, law and order has deteriorated. From the start we have seen frequent attacks in different places. These failures insinuate that the government has been unable to ensure security. Without proactive and firm measures, investors will not feel reassured.

Business leaders themselves say they are reluctant to expand their ventures. Private investment has remained stagnant at around 23–24 per cent of GDP for the past 10–15 years. Even when the government capped bank lending rates at 9 per cent to encourage borrowing, investment did not rise. Why? Because stability alone—or so-called stability—was not enough, nor were banking incentives. The real barriers are infrastructural weaknesses, high costs of doing business, corruption, bribery, and poor trade facilitation, such as inefficiencies at ports. Unless these are addressed, reducing interest rates will achieve little.

And of course, just holding an election will not magically fix everything. Whoever comes to power will have to guarantee improvements in law and order, infrastructure, smooth services, an end to extortion and bribery, and a reduction in harassment of businesses. Right now, businesses say extortion has not decreased—in fact, rates are even higher. People still have to pay bribes in offices to get basic work done, like obtaining a trade licence.

We spoke to two businessmen last week who said they pay extortion money simply to avoid bigger problems—they treat it as a form of "security". This shows how entrenched the problem is.

TBS: So after the election, when a political party comes to power, there will inevitably be allegations against its grassroots workers. What role should the party play? Shouldn't their role already be visible?

Fahmida Khatun: Absolutely. A party's biggest commitment should be to properly orient and discipline its activists and members. If a party cannot enforce discipline within its own ranks, how can it establish discipline across the country? This requires explicit commitments—and so far, we have not seen any such sign. In the past we have heard promises, but not the kind of direct pledges needed.

For instance, those who become MPs or ministers must decide whether they will renounce certain privileges. Look at Sri Lanka: after their uprising, the new government sold off luxury vehicles instead of keeping them, and introduced austerity measures. That kind of austerity measure sends a strong signal to the people.