Why citizens must demand fiscal transparency | The Daily Star
12:00 AM, August 18, 2017 / LAST MODIFIED: 01:30 PM, August 18, 2017

Why citizens must demand fiscal transparency

As 2021 approaches closer, economists and business-forecasters continue to cast doubt on whether Bangladesh could become a middle-income country by then, as the government predicts. Their doubts, however, rather than being based on Bangladesh's potential, focus more on the fact that under the current conditions and particularly in the absence of some much-needed reforms, it is highly unlikely for our GDP to grow at the rate necessary for Bangladesh to reach that milestone, within the remaining timeframe—four years only.

For Bangladesh to reach middle-income level by 2021, real gross domestic product (GDP) would have to reach an average annual rate of 7.4 percent during the 7th Five Year Plan. And although Bangladesh has the potential to register close to 8 percent GDP growth annually, experts suggest that the country, at present, is performing well below its potential. Consequently, such growth will require a considerable increase in both public and private investment from around 29 percent of GDP to 34.4 percent by 2020, with the latter in particular proving to be quite the challenge for the government as evident from the fact that it has, over the years, not increased by any significant margin.

While infrastructure bottlenecks have detracted growth for years, lack of policy reforms too remains an issue. Biru Paksha Paul, a former chief economist at the Bangladesh Bank, says that “Policy gaps should be addressed to fill out the growth gap,” adding that “fiscal and monetary policies along with other long-term ones should consider potential growth before formulating strategies and policy stances.”

To estimate correctly the level of potential output, what is needed first, however, is data on fiscal and monetary policies. But as analysts have pointed out, “the government does not make public enough information related to fiscal policies and measures taken in budget every year” ("Ensure transparency in public spending," The Daily Star, August 11, 2017)—resulting in a lack of government transparency. Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI), citing the fact that Bangladesh is classified under category C3 in the “Open Budget Index” prepared by the International Budget Partnership, said that “the government publishes some budget information but not enough to ensure an informed public debate.”

“Information on earnings from state-owned enterprises is included in the supplementary budget documents. However, information on allocation to the state-owned enterprises is not clearly presented and discussed in the budget,” he said—despite the fact that more and more resources have been diverted by the government to state-owned banks that have performed woefully and, yet, show almost no signs of improvements.

The government also does not publish many of the statements on budgetary measures, nor does it hold mid-term evaluation of budgetary measures or prepare adequate audit reports. Moreover, many quasi-fiscal activities that adversely affect the budget also exist, creating financial distortions that experts believe affect profitability of the central bank and other regulators. These activities, according to Dr Mansur, should be included in the government's financial statements.

And the same criticism can again be seen in the US State Department's 2015 Fiscal Transparency Report (USTR), which states that Bangladesh does not meet the minimum requirements of fiscal transparency and has failed even to make much progress towards ensuring the transparency needed to improve its rating (internationally).

These “low ratings of the country in different international rankings,” according to Dr Mirza Azizul Islam, former adviser to the caretaker government, were “an outcome of poor institutions” and are raising the cost of doing business. As Bangladesh remains one of the lowest-ranked countries in various global business rankings, investors, both foreign and domestic, are often discouraged from investing here. And the USTR report, in a similar vein, concludes that the “Overlapping administrative procedures and lack of transparency in regulatory and administrative systems can frustrate investors seeking to undertake projects in the country.”

Meanwhile, even the Supreme Court regretted in a recent verdict, that after 46 years of independence, we still “have not been able to institutionalise any public institutions,” which, as economists and entrepreneurs often argue, is the best way to ensure good governance in society—a prerequisite for economic growth.

While failure to strengthen government institutions has remained an issue for decades, what has often been overlooked is the fact that one of the best ways of doing so is through greater transparency. Thus, through increased transparency, not only could the government instigate further public debate, review whether its policies are on the right track in regards to the targets being aimed at, but also improve the functionalities of its institutions, resulting, perhaps, in reduced corruption and more efficient use of available resources through greater accountability.

Lastly, what needs to be understood is that in a properly functioning democracy, even the regulators need to be regulated by those they are there to represent; that is, the citizens. And for that to happen, necessary information in regards to government policies should be made public so that the public, not only can, but does, incorporate the habit of being the final regulator of the functioning of the country, including its economic activities.

Moreover, in order to properly regulate our system of democracy through the concept of “checks and balances,” citizens also have the complete right, and responsibility even, to demand from the government, transparency and accountability to the fullest. It is about time that the citizens of this country exercised that right, and took responsibility, for establishing the practice of good governance.


Eresh Omar Jamal is a member of the editorial team at The Daily Star.


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