Challenges ahead for our economy

To bring relief to the people of the country, it is urgently necessary at this moment to revitalize the weak economy, control the prices of essential commodities, increase investment and employment, and prioritize resolving instability in the export-oriented ready-made garment industry, including reopening closed factories. Above all, maintaining law and order to reduce political and social unrest and ensuring a peaceful environment for the highly anticipated national parliamentary elections is crucial.

Economic analysts blame foreign money laundering, corruption, misgovernance, and plunder for the country's weak economy. Likewise, political parties, government officials, economic analysts, and business leaders have similarly highlighted strengthening and energizing the weak economy as a key challenge. Meeting this challenge is difficult for the current interim government and will be even more challenging for the next government. Thus, the newly elected government in the coming year will begin its journey facing the challenge of reviving the wheels of a weak economy.

Political unrest has led to stagnation in trade and commerce, labor unrest in industries, negative trends in investment and employment, massive defaulted loans, high inflation, and instability in the dollar market. Economists and analysts predict that these old crises will continue to plague the economy in the new year

During budget preparations, the Ministry of Finance identified seven major economic challenges. In the context of political uncertainty and slow economic activities, addressing these challenges is crucial for the new government. The current government will have to tackle 12 economic challenges in the new year:Controlling inflation, Increasing revenue collection,Ensuring domestic and foreign investment, Securing foreign aid, Ensuring food and energy security, Developing skilled manpower and increasing employment, Ensuring socio-economic safety nets, Increasing industrial production capacity, Improving the business and investment environment and restoring discipline in government administration, Recovering laundered money and Preparing for graduation from the Least Developed Country (LDC) status.

Economists note that investment remains stagnant, unemployment is rising, economic growth is slowing, foreign trade faces challenges, and defaulted loans are increasing. Political uncertainty has worsened this situation. To address these issues, a coordinated policy and political stability are essential. This year's budget prioritizes expenditure on controlling inflation, creating employment, improving living standards, health, education, and social security.

As in previous governments, more than half of the budget deficit will be financed from foreign sources, with the remainder from banks and savings certificates. The Election Commission requested BDT 59.22 billion for the national parliament and local government elections in the coming fiscal year. Economists stress that disciplined administration is crucial for implementing the budget and managing regular government operations.

However, nationwide strikes and protests by nearly fifty organizations-including government employees, teachers, engineers, Ansar and village defense forces, doctors, and nurses-posed significant challenges to fulfilling demands and running government operations. Rising inflation has further strained people's daily lives. Controlling essential commodity prices and maintaining purchasing power remain critical challenges for the government.

To attract domestic and foreign investment, a favorable business environment is essential. Reducing political uncertainty, ensuring stability, and simplifying bureaucratic procedures can help in this regard. Moreover, food and energy security are fundamental needs, given global market volatility and the impact of climate change. Each year, a large youth population enters the workforce; transforming them into skilled labor and creating adequate employment is essential not only for economic growth but also for social stability. Strengthening socio-economic safety nets for the poor and marginalized is the government's responsibility, particularly during economic shocks and natural disasters.

Reforming tax structures, preventing tax evasion, and improving revenue collection are critical to addressing these challenges. The country's transition from LDC to a developing nation requires adopting necessary policies, strategies, and capacity building. Increasing industrial production capacity is a key driver of economic growth, and strengthening the energy, infrastructure, and industrial sectors is part of this challenge.

Reviving a fragile economy plagued by poverty and inequality is a major challenge for the incoming government. Recent import growth indicates that the economy has started regaining momentum. Controlling inflation requires the central bank's independence. Despite partial control, inflation remains above 8%, reducing citizens' purchasing power. One major reason is that commodity prices have increased faster than wages.

Investment depends on the overall economic ecosystem and cannot be revived overnight. Encouraging investment requires moderately relaxed monetary policy, while maintaining central bank independence is essential. It is important to note that economic elites do not permanently belong to any political party. Yet, they are highly skilled at entering political organizations and state institutions, gradually gaining influence over policy and power. If unchecked, their influence can distort both society and the economy, harming those who benefit from them. History in the subcontinent shows that all major parties have experienced this. Political parties aiming to represent new forms of governance and social welfare must protect the financial sector from such corrupting influences.
This is why central bank independence is crucial. Protecting financial resources from future plunder is a key agenda, which both the interim and the next elected government will determine. Moreover, reducing poverty and inequality requires more than growth alone. Job creation, equitable resource distribution, expanding social security, and curbing corruption, waste, and money laundering are all essential.