Dhaka: Dr Zahid Hussain, a former lead economist of the World Bank’s Dhaka Office, has expressed optimism about a potential economic revival if the interim government can fulfill even a quarter of their economic commitments this year. “We’ll be able to ascertain after the next budget (FY26) what are on the cards to get the economy grow faster. If the initiatives on the table are implemented in the short-term, then hopefully the economy will make a turnaround,” he stated.
According to Bangladesh Sangbad Sangstha, Dr. Zahid emphasized the need for significant reforms to streamline the economy, including simplifying business regulations, ensuring a stable energy supply, and addressing issues in the banking sector. He referenced the promise of a “Bangladesh 2.0” and highlighted the importance of initiatives like the National Single Window (NSW), which aims to reduce regulatory complexities in import and export processes, thereby saving time and costs for businesses.
Dr. Zahid also pointed out the challenges facing the financial and energy sectors, as well as investment barriers due to complex business regulations. He noted that the NSW initiative had faced resistance from the National Board of Revenue, hindering its progress. He stressed the importance of transitioning to a fully digital and reliable system to improve efficiency.
Regarding revenue collection, Dr. Zahid mentioned that there were limited opportunities in the first quarter of the current fiscal year due to a mostly dysfunctional economy. He advocated for reforms in the National Board of Revenue’s tax policy and administration to enhance revenue collection. Provisional data from the NBR showed a decline in revenue collection, with the country seeing an 8.95 percent drop in November compared to the previous year.
Dr. Zahid criticized recent moves to raise VAT and SD on over 100 products, noting that the decision appeared to backfire, causing dissatisfaction among the populace and potentially disappointing the IMF. He attributed this decision to a lack of a consultative and inclusive process in revising the FY25 budget.
He also discussed the slow pace of the Annual Development Programme (ADP) implementation, attributing it to various disasters and politically motivated projects that waste public funds. He urged for necessary reforms and the reprioritization of expenditures in light of the post-August 5, 2024 realities.
Dr. Zahid emphasized the importance of reducing misallocation and waste when considering potential cuts to the ADP. He observed that development spending in the first half of FY25 was down 19 percent year-on-year, primarily due to political unrest and delays in project approval scrutiny.
On the topic of foreign aid utilization, Dr. Zahid warned against borrowing for projects that are not fit for purpose, citing past instances of waste and corruption. He suggested repurposing the pipeline of project aid for structural reforms and investment in worthy projects, as discussed in his recent meeting with the outgoing World Bank country director.