Bangladesh plunging into the storm

Abu Hena

Nobel Laureate Amartya Sen, in his research paper, “Hunger in Political Economy” has used the case of 1974 famine in Bangladesh to illustrate how absence of democracy can cause a man-made human catastrophe. About half a million were starved to death. Rotten corpses were strewn all over causing epidemics. The regime which ruled the country displayed total disregard for the lives and properties of the people. At the same time they ruthlessly terrorized and mercilessly killed their political opponents. Arrests were arbitrary, trials were secret and imprisonments were fatal.

A youth force called the Red Force supported by the official storm troopers called the Rakkhi Bahini were committed to eliminating the opposition and force others to submission. The aim was to establish one-man, one-party rule, make the media and the judiciary subservient to the autocratic ruler. Free enterprises and democratic institutions were destroyed. Means of production were brought under one-party dominated bureaucratic control and the country was collectively owned by a ruling coterie.

History repeats itself
Twenty one years later Sheikh Hasina begged forgiveness for the injustices which were committed in 1970s. She promised never again there would be a repeat of the past. That assured the people who returned the resurrected party to power in 1996. It came to power once again in 2008 through a controversial election, only to prove that history never fails to repeat itself.
Over the years Awami League has neither changed on the surface nor under the skin. People at the helm of affairs are occupied with the past, obsessed with endless repeats. The gruesome ‘Seven Murder Case ’ in Narrayanganj and the burning of the Feni upazilla chairman after killing prove that the socio-political syndrome of the period between 1972-75 has been fully revived and the crimes and violence which were commonplace at that time have reappeared in full force. After five years of the AL rule Bangladesh is again a hopelessly sick, rudderless and forlorn country being governed by an autocratic police regime.
The same old delusion of imaginary ‘Sonar Bangla’ is dangled before the people and party hoodlums who have been set free to plunder the nation’s wealth have taken up the unfinished task of completing the so-called ‘Second Revolution’ which was planned by Sheikh Mujib. The people of the country, now, have only taxation to pay for the luxury of the ruling class, extortion by the goons and hollow promises like the Padma bridge which still remains to be a utopia. Even after forty three years after separation from Pakistan people are still vexed by the same North Korea style parades, self-proclaiming slogans, self- indulgent speeches, self-serving ‘crests’ to ‘dis’-honour foreign friends, election time trumped-up communal and secularist frenzies and self-promoting distortions of reality and history using state machinery.

Transformation of police state
For much of the past five years the people of Bangladesh grimly watched the political and financial hurricanes that swept the land with awe and fear. As chaos and massacres, financial scandals and state organized frauds continued to overwhelm them, the ruling party gangs, guns and goons terrorized the peaceful neighborhoods all throughout the country creating carnage. Reports of the grisly, shuddering, terrifying murders in Narrayanganj and the Noakhali regions spread the panic to the remote villages. They are in a state of great anguish and total confusion in which the only way to survive is either to submit or feign submission.
In a country where random killings h ave become an accepted fact of life and can only continue with the aid and blessings of some people at the helm, the crimes committed in Narrayanganj and Noakhali failed, for the first time, to keep a low profile and produced a backlash forcing the authorities to take some action at the instance of the court.
Immune as the Police and Rab had become to so many such killings, these particular incidents hit the law enforcers with the rudest shocks. Criminals are no longer social outcasts in this country; they have now collectively become a force in the society. The killings in Narrayanganj and Noakhali have brought home the realization that even for the “criminal brotherhood”, which comprise the law breaker, the law maker and the law enforcer alike, violence has to be used with discriminatory caution.

Stock market, banking scandals
As capital fled and domestic confidence evaporated the country’s stock market plunged losing more than half of its value and currency tumbled. The scandals in the NCBs led to seizure in the credit market causing havoc in private investment. The financial turmoil which has hit the country hard has been caused by the NCBs and SOEs which, again, are the “legacies” of the “Sonar Bangla” of early 1970s.
Political cost of maintaining the BKSAL legacies of the same period has cost the country $6.5 b (CPD). Private investment has dipped to 21.3 % this year. Private sector credit growth has slumped to 11.46% in April and remittances fell 3.54 % in July –May, due to shrinking of outflow of migrant workers.
Banking scams in NCBs cost more than Tk. 7000 crore eroding investor and financial sector’s overall confidence. The scams particularly involving Sonali Bank and the BASIC Bank have created hurdles for good borrowers and entrepreneurs and piled up bad loans contributing to higher interest loans. Government’s dependence on domestic resources has increased to 91.6% during July- March up from 72% in the previous year. “Financing public expenditure will be a challenge for the government if the current trends of revenue collection and foreign aid continue in future,” CPD maintains.
As confidential report of the finance ministry has revealed that state- owned banks have become safe havens for the ruling party based boards of directors who violate rules and illegally dictate the loan approval process, resorting to malpractices and tempering of facts and evidences, bypassing banking regulations. BASIC Bank’s default loans hit Tk 1700 crore end of June, up 13 percent from March 30, according to a finance ministry report placed in the parliament.

Tale of bank & its chairman
The minimum capital requirement as BB’s stipulation is 10 percent against the risk –weighted assets, but BASIC’s capital stood at only 4.5 percent at the end of March. One of the best run banks till 2009, BASIC Bank has been mired in financial irregularities after the prime minister appointed Sheikh Abdul Hye Bacchu the bank’s chairman.
He reportedly changed his name replacing ‘Syed’ with ‘Sheikh’ to establish a family link with the prime minister. The bank incurred a loss of Tk 43.2 crore for the first year. Central bank investigations unearthed irregularities involving loans worth around Tk 4,500 crore in last three years thanks to the change of name of the chairman who behaved like a petty dictator. On 29 May the BB advised the Finance Ministry to dissolve the bank’s board after it had removed the managing director on 24 May. It took quite some time to remove the board as it needed PM’s approval.
According to The Financial Express report, country’s economists are critical of government guarantees given against substantial amounts of loans negotiated by different state-owned enterprises (SoES). The total of government guarantees valid beyond June 30, 2014 is nearly Tk 66,900 crores, an amount equivalent to the country’s ADP. The economists said such a large volume of contingent liabilities might cause fiscal risks to the economy.
Citing examples, they said the government provided guarantee worth Tk 20,000 crores to US EXIM Bank for purchasing Boeing for the Bangladesh Biman Airlines. On failure to repay loan in time, the guarantees are invoked and the liabilities for payment are passed on the government. According to the economists, government has been paying to lenders every year for such failures in installment payment by the government agencies.

Govt. has no exit strategy
According to the latest data of Swiss National Bank deposits by Bangladeshi citizens at various Swiss banks rose by 62 percent year – on – year in 2013 when deposits from foreign clients from across the world declined. The deposit now stands at Tk 3,236 crore at the year end. The cumulative impact of all these will be enormous.
The Bangladesh government haunted by the legitimacy question is in a poor state of readiness to battle to limit the damage. These are long standing problems and to meet the crisis the weak government of Sheikh Hasina may be driven to desperate measures and in that the ultimate target remains to be the tax payer who will be exposed to massive immediate and potential liabilities.
This year’s deficit is projected to be 5 percent of the GDP. Add in all these liabilities to that and public could be on the hook for up to billions of taka. Unfortunately this government has no “exit strategies” and there lies the danger.
The writer is a retired top ranking Finance Service officer. He served as a Member of Parliament from 1996 to 2006.

Source: Weekly Holiday