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Bangladesh may face a "debt crisis" within three to five years if necessary discipline is not brought in debt financing.
Such fear was aired by former finance adviser Dr Akbar Ali Khan at a post-budget discussion where he also described the unemployment situation in the country as "mega-depression".
"I am afraid that Bangladesh may face a foreign-exchange crisis in next three to five years," Dr Khan said at a post-budget dialogue organised by the Centre for Policy Dialogue in the capital on Saturday.
"The reason is that in recent years, we are signing a lot of agreements based on suppliers' credit, signing a lot of Public-Private Partnership agreements, buying a lot of big things from outside and also taking up a lot of foreign-funded projects," he added.
"However, I have not seen any calculation which says how much are our foreign-exchange earnings and how much foreign debt we can finance," Dr Khan pointed out.
Reflecting on the latest budget of the government, Dr Khan, the finance adviser of a past caretaker government, observed unusual emphasis on mega infrastructure projects while noting a lack of priority.
"The budget allocation shows a lot of emphasis on mega-infrastructures. However, the way these large infrastructure projects are being taken up, I have not seen any priority," Dr Khan told the meet.
"For example, the allocation for health sector and railway sector is the same in the upcoming budget. But it should be noted that while there can be alternatives to railways, there can be no alternatives to health," he added.
"I would like to remind everyone of the debt crisis of the 1980s, and I would not be astonished if we faced a similar debt crisis unless there is a restoration of discipline in this sector."
Dr Khan was also concerned about the decline in the flow of remittance and the fall in the growth of export in recent times.
"Remittance has started to fall and the crisis in Qatar should make us concerned," said the former finance adviser.
"At the same time, we are entering a new phase of globalisation under the new US Presidential regime and we may not experience continued expansion of our garment export in the near future," he further said about the causes of concern he aired.
Dr Khan also warned about the country's growing overdependence on imported fuels in recent years.
"Growingly, we are not able to supply gas from our own resources and we are becoming absolutely dependent on outside in this regard," he said, adding: "In the next three to five years time, depending on the global situation, that may also pose a serious problem."
Dr Khan also struck a note of concern over a gloomy employment situation in the country.
"Although official statistics say that our unemployment rate is 4.0 per cent, if we look at the rate of underemployment or those who have jobs in very poor category, unemployment rate in Bangladesh is actually anywhere between 35 and 40 per cent," the economist said.
"Back in the 1930s, when unemployment rate crossed 20 per cent in the USA, they called it great depression.
In Bangladesh, if we have 35 per cent unemployment, we should call it mega-depression," he added.
Dr Khan, who was also Finance Secretary of the government, also called for privatisation of state-owned banks for accelerating private investment in the country.
"Instead of continuous recapitalisation, most of the government banks should have been privatised long ago," Khan said.
"But, because of a peculiar political configuration in Bangladesh, they are still continuing."
Speaking on the occasion, former Commerce Minister Amir Khasru Mahmud Chowdhury said the country is failing to reap its demographic dividend due to inadequate investment in health and education.
"We have already wasted 10 years of demographic-dividend period, which is getting reflected in our stagnant growth and private investment," Chowdhury said.
"This is because we have not prioritised health and education as much as we did the mega infrastructure projects."
Citing various statistics, he said while the per-kilometre cost of building a four-lane highway in Bangladesh is Tk 540 million, it is Tk 280 million in Europe and Tk 120 million in China.
"Therefore, such overemphasis on mega infrastructure projects is not only a deviation from priority but also a cause of rampant corruption," the former Commerce Minister told the meet.
Focusing on the real-income scenario, Chowdhury said when the issues of inflation are taken into account, the real income has actually dropped 8.0 per cent in last decade.
Responding to such observations, Planning Minister AHM Mustafa Kamal furnished statistics to claim that the country has achieved tremendous progress in various economic indicators in recent years.
"While the amount of budget utilisation was Tk 2.38 trillion back in 2015-16, it had risen to Tk 3.17 trillion a year later which showed that not only budget size is increasing but also is increasing budget utilisation," Mr Kamal said.
"At the same time, the size of the country's GDP has tripled from US$ 71 billion in 2005/06 to US$ 249 billion now," he said, adding: "The per-capita income has also increased four times during the same time from US$ 543 to more than US$ 1600."
He also noted that Bangladesh's debt-to-GDP ratio is still higher than countries like Malaysia and Vietnam.
He also blamed the high price of land, among other things, as the major cause for the higher cost of mega-projects in Bangladesh.
State Minister for Finance M A Mannan in his speech justified the undertaking of mega-projects, saying that these are essential for ensuring better connectivity in all parts of the country.
Eminent economist Prof Dr. Rehman Sobhan, Distinguished Fellow of CPD Dr Debapriya Bhattacharya and Executive Director Dr Fahmida Khatun also spoke on the occasion.
http://www.thefinancialexpress-bd.com/2017/06/17/74160/BD-may-slip-into-'debt-crisis'-shortly
