Bangladesh Banks On Prof Yunus To Bail Out The Country

Sheikh Hasina fled the country while economy in tatters, Prof Yunus heads the government as budget deficit matters.

Having been without any government for more than 72 hours, Bangladesh finally got one. It is headed by Professor Yunus, poster boy of Bangladesh's success story. The dramatic fall of Sheikh Hasina regime and the ensuing lawlessness troubled the people a lot. Widespread looting,vandalism and attacks on police stations and property,vendetta are signs that vandals are pretty much in charge and the Army loosened its grip though lifted the curfew. While the police abandoned the stations, it could easily fill the void with the assistance of Ansars and magistrates. So the Army administration cannot avoid the responsibility of the mayhem caused between August 05 and August 08,which witnessed murder of police personnel and destroying police stations with arson attack. The police stations stored valuable documents. Weapons were looted and destroyed in fire. Most of these retributive incidents occurred while the Army was in charge of the country.

The violence even compelled the interim govt chief to call for calm and put an end to violence in his first public appearance at home. Despite the perception of Professor Yunus as head of interim govt to steer the next election, I think it is a desperate measure to pop up the economy which is in dire straits. Sheikh Hasina's failed China trip did not manage adequate budget support commitment. A Bengali daily reported that Awami regime borrowed Taka 15 trillion and laundered $149.20 billion in 15 years. Meanwhile, budget deficits keep growing and our foreign debt becomes $79 billion this year(Source:"Awami Govt Borrowed More Than Taka 1.5 Million Crore In 15 Years",Daily Bonik Barta,August 07,2024). The so called clerical mistake of $10 billion in export earnings and serious corruption charges of civil and military bureaucrats facilitated the departure of Awami regime. The calculated and cold blooded killing of students and innocents during the student movement worked as triggering event to dethrone Sheikh Hasina. Students genuinely involved in this movement spontaneously,seeing so many fellow students' death,torture and finding a platform to finally express themselves. So the current state of the country is the result of their hard work,no offence to that. But without knowingly, they are being used in an engineered crisis. UN probe on the triggering event, mass killing of the students, will reveal many unanswered questions, I hope and believe. They have paid a heavy price and they deserve their own platforms so that people have more choices/options in politics. It will also be a blunt reply to those who used them as cannon fodder to oust Sheikh Hasina.

Now the economy is in tatters. This ongoing crisis shuts down the economy and saves public money. Shut down of rail network and metro systems saves subsidy money. This is true for many other sectors. Schools and colleges are also closed. If this crisis is not engineered, then the establishment has to reveal the ugly truth: it does not have enough resources to run the country. Having admitted that it doctored economic data, the Awami regime lost the moral high ground to run the country. I still believe Sheikh Hasina is in Bangladesh,maybe at the hands of the Army, because no visual of her in India is presented before the media. So the whole Sri Lanka like drama is staged to save the economy. Bring a fresh new govt , send a positive signal to the economy and investors. And an internationally known figure like Professor Yunus will help fetching foreign budget support. But I think it will not be that easy. Currency is in free fall. Bangladesh Bank restricts withdrawal of money from individual account to Taka 100,000. In addition, it tightens rules on reporting by banks on financial transactions of politicians. Despite the inflationary ease, liquidity crisis persists in banks. People prefer to hold more cash in hands sensing no sign of improvement in political impasse and inflation. Luckily, interim govt will have some funds at their disposal: funds released from unnecessary subsidies( cash transfer,export assistance etc) and social security programs. Moreover, development spending of a political government is also saved in this circumstances. So this saved money will improve the budget deficits to some extent. Investors' confidence will be back when the government will unveil its reform programs if there is any. Such programs will give them an idea of future policy changes in Bangladesh. First task of the interim govt is to restore law and order. A demoralized police force may not be handy in this time. Widespread use of paramilitary forces like Ansar in aid to police officers and magistrates to maintain law and order may give a sigh of relief. At the same time, setting up open detention centers like El Salvador across the country to detain the rioters,plunderers who live freely in the society will render them useless during electoral campaign, paving the path for a peaceful election. In addition, it will help reigning in inflation by incapacitating few sources of extortion. Ensuring safety of all including the ones of former ruling party will create conducive atmosphere of participatory election where all major political stakeholders will participate. When objectives of the interim govt are clear to everyone, confidence of all including the investors will be restored. The sheer scale of laundered money says how some quarters at home and abroad use Bangladesh as "treatment plant" to launder money abroad. These quarters have penetrated deep into the establishment. So it is not a political problem, rather a structural one. To address structural issues, we need accountability, commitment and policy formulation. Given the transnational nature of money laundering, interim govt could facilitate deal with other countries to disclose information about stolen money and repatriation of the culprit.

Non performing loans may not increase, but recovery of NPL may stall as many borrowers go for hiding in the wake of new change in power. Boasting image of Professor Yunus to get budget support from abroad and regaining investor's confidence may not work well if interim govt cannot operate freely. Fall of Awami regime has sent a positive signal to the economy, but any attempt of resting gun on Prof Yunus' shoulder to aim at another goal will jeopardize the optimistic mood.