The economy was in recession for most of the 15 and a half years of the ousted Awami League government. The economy was slowing down due to looting and money laundering in the country’s banking sector. The real state of the economy was not understood from the outside due to artificially inflated indicators hiding the true state. The overall economic indicators have worsened during the government’s last tenure. After the corona, when the global recession started in 2022, the stagnation in the economy was evident. Although almost all the countries of the world have overcome its pressure, Bangladesh has not been able to in the last 2 years. On the contrary, the scars of recession were becoming more pronounced and visible. The previous government kept the real picture hidden through manipulation. The economic condition was showing strength in the stealth index. But the real picture is emerging now under the management of the interim government. At present money printing has stopped, money laundering and bank robbery have not stopped, but the economic stagnation has not ended. There is also stagnation in industry and investment. However, the agricultural sector is improving.
According to sources, the Awami League government followed a contractionary monetary policy in the last two fiscal years to control inflation. They announced a contractionary monetary policy for the current fiscal year as well. This government has also tightened the monetary policy by maintaining this continuity. But the Awami League government has announced a contractionary monetary policy on the one hand, and on the other hand has printed money from the central bank and given it to banks in crisis as well as government expenditure. On the one hand, the flow of money in the market has been desired through contractionary monetary policy, on the other hand, the flow of money has been increased more than twice by overprinting money from the central bank and releasing it to the market. However, the central bank has repeatedly said that since the last financial year, the printed money is no longer being released in the market. On the one hand, the false propaganda of the central bank; On the other hand, due to the release of printed money in the market, the flow of money did not decrease, but increased. This makes contractionary monetary policy ineffective. It was said by economists, why inflation is not decreasing even after two consecutive years of contractionary monetary policy? Almost all countries in the world have controlled the flow of money to reduce the rate of inflation. Even Sri Lanka, which has been bankrupted by the economic crisis, has brought the inflation rate down to under 2 percent. But in Bangladesh, this rate has not decreased, on the contrary, it has increased.
According to sources, the inflation rate did not come down due to contradictory policies in the absence of money printing in the hidden market and pursuing a contractionary monetary policy. On the contrary, it has increased. During the Awami League government, the inflation rate has remained above 9 percent for more than one and a half years. Many believe that the actual rate of inflation was even higher. After the fall of the Awami League government on August 5, the inflation data released by the new government in July shows that the inflation rate has increased to 11.66 percent on a point-by-point basis (compared to last year’s July in the current July). At that time, as the money printed in the market decreased, the prices of goods also decreased slightly, and the value of the dollar remained stable. Still inflation rose to 11.66 percent. Because of this, many people think that the rate of inflation was higher earlier. The outgoing government has hidden the real picture of the economy by hiding inflation data. After the interim government took over, monetary policy became more contractionary to control inflation. At the same time money printing stopped. As a result, inflation eased slightly in August. It further declined from double digits to single digits in September. Meanwhile, the data of the last quarter of the tenure of the outgoing government shows that the inflow of money increased by 4.95 percent at the end of the April-June quarter of the last financial year compared to the previous quarter. On an annual basis, the growth rate of money flow at the end of June stood at 7.74 percent. At that time the growth target was 9.70 percent. The growth till June last year was 10.48 percent. Growth has slowed due to year-on-year targets and increased cash flows compared to previous years. But the rate of inflation did not decrease due to the release of secretly printed money in the market.
And at that time the flow of money decreased due to the large decrease in the flow of dollars in the market. As a result, due to the shortage of dollars in the market, the price of imports increased. Import costs have increased and contributed to inflation.
Domestic credit growth stood at 9.80 percent on an annualized basis at the end of June. At that time its target was 13.90 percent. At the end of June last year, the actual growth was 15.25 percent. The growth in this sector is lower than the target and compared to last year.
Credit growth in the private sector was 9.84 percent till June. At that time the target was 10 percent. The previous year growth was 10.58 percent. Growth during this period was lower than the target and compared to the previous year.
According to sources, there was stagnation in average investment except for the first five years of the previous government’s 15-and-a-half years. Due to which the pace of employment has not increased. The slowdown in investment has become more pronounced since 2019.
On an annual basis, the government’s net borrowing position from the banking system increased by 9.69 percent at the end of June. There was an increase of 36.72 percent in June last year. The net lending to the public sector in the banking system has decreased significantly due to the suspension of government borrowing from Bangladesh Bank for the development sector and selective financing of priority projects as part of the government’s austerity policy.
During the outgoing government, bad debts were artificially reduced. Even loans that are eligible for cancellation have been regularly shown without cancellation. After the Awami League government left power, bad debt increased by Tk 29 thousand 391 crore in one quarter and now stands at Tk 2 lakh 11 thousand crore. The amount will increase in the current and next quarter. Bad loans are increasing now due to massive looting in the banking sector. This has revealed the liquidity crisis in the banks. Capital deficit increased. The bank has weakened. Due to which the economy is not able to provide loans as per the demand.
Export earnings were on the decline. The products that were exported, the income of those did not come to all countries. At the same time, the import LC was opened, but the goods did not come to the country even if the debt was paid. Through this the country’s foreign currency has been smuggled.
During the Awami League government, the price of the dollar increased at a reckless pace. In 2009, the price of the dollar was 69 taka. By early 2022, it increased to 85 taka. At that time it increased by 16 rupees. When the Russia-Ukraine war broke out in February 2022, a global recession broke out. Due to this, the global price of goods increases and the import cost of the country increases. Then the price of the dollar started increasing. At the same time, the flow of dollars decreased and the crisis became evident, which is still ongoing. From 2022 until the fall of the government on August 5, the dollar rose to 118 rupees. This was the official rate. But the banks have sold dollars for import at a maximum of 130 taka. Now, however, the inflow of dollars has increased and the prices have come down. Banks are now selling dollars at a maximum rate of 120 taka. According to the report of the central bank, the price of the dollar increased by 8.17 percent in one year from July to June 2023.
