Change from the bottom up

JOSEPH Stiglitz, winner of Nobel Prize in Economics said, "At whatever stage of political and economic development the country is in, a good government always makes a difference". The Awami League came to power partly because it persuaded the voters that it had given up the politics of revenge and resentment and also pledged to the people that they would not pursue the past, but set new policies to meet the demand of time.
With a mixture of hope and despair, ordinary people want this government to succeed and, rightly or wrongly, they perhaps believe that the Awami League is the best hope for them.
Despite all the strange happenings, Sheikh Hasina apparently retains a firm grip on political power. On the other side of the fence, the main opposition BNP is still licking its wounds. Most political analysts believe that it would be rather difficult for the BNP to repair the damage it has done to its image.
Political elites of this country are really surprised at the choice of cabinet members. The cabinet is packed with new faces. Those who worked hard for the party in difficult times have got virtually no reward for it. Is this gamble worth taking? It is a welcome change that Prime Minister Sheikh Hasina values honesty and integrity over ideology and personal loyalty. But the question is whether these new leaders have the combination of skill and political acumen to deliver the change Bangladesh so desperately needs today. Governing a country is much more difficult than wining a watershed victory in the polls. People are already tired of the meaningless rhetoric and empty promises.
In the midst of an economic downturn, the government should not re-ignite old rivalries and put the clock back to the past confrontational politics. Social cohesion is important if an economy is to function properly. Political instability, particularly in the developing countries, does not inspire business confidence and often drives capital out of the country.
Top-level players in the administration should coordinate and formulate specific economic policies to keep Bangladesh out of recession. Some analysts think that the sustained high interest rates are strangling our economy. The high interest rates pushed a number of firms into distress, and thereby increased the number of banks facing non-performing loans. If many firms fail to repay their loans, banks may eventually collapse.
In the USA, the Federal Reserve's interest rate is 1 percent, the bank of England's rate is half a percentage point, and the Bank of Japan's rate has been zero percent for quite some time. Even Thailand lowered its lending rates to 1.5 percent. In our country, most commercial banks were charging 16 to 18 percent interest on normal loans and advances, and have just lowered the rates to 13 percent. The Bangladesh Bank may be concerned about inflation, but inflation worries have eased with sharp declines in the prices of oil and other commodities. Bangladesh Bank may still have enough room to cut its key lending rates further to boost domestic demand, create jobs and reduce poverty.
Some East Asian economists reckon that it is better to co-habit with a mild dose of inflation and deficits than massive job and output losses. Deficit, in the current economic climate, is not too bad if it finances worthwhile projects. In industrialised countries, the pain of layoffs are acknowledged and ameliorated by a safety net of unemployment benefits and national health insurance scheme, but in Bangladesh such unemployed workers are left in the cold and forced into poverty.
Countries across the region has cut down interest rates and unveiled fiscal stimulus packages to spur economic recovery. Perhaps we should move from monetary tightening to monetary loosening to boost consumption. The domestic demand has been very weak in our country. Retailers are suffering from slowing sales and falling profits. Our government should introduce structural reforms to diversify the economy. Perhaps we have become too dependent on garment exports and remittances from abroad.
To revitalise the economy, the government should announce a second stimulus package to finance a comprehensive program to build infrastructure to control floods, free the plains from water-logging and develop labour intensive agro-industries and farming to take the advantage of limitless supply of peasant workers.
With proper planning and procurement policies, we can increase our agricultural output substantially and stimulate domestic consumption. Agricultural experts argue that it is possible to develop Bangladesh as an agricultural exporter if the government addresses the root causes of flood and water-logging, and employs modern methods of irrigation to bring more waste land under cultivation.
Bangladesh is one of the rainiest places on earth, but so far we have failed to develop proper infrastructure to conserve such a huge amount of rainwater although everybody knows that our underground water level is declining sharply every year. If the current government tries to address these crucial issues it will not only pull the country through this global economic downturn but also ensure social justice for all.
Anam A. Choudhury is a former investment banker.