Why is there an economic crisis before the election?

In Bangladesh, every five years, before the election, there is a crisis in the economy. These range from dollar smuggling to business losses due to hartals, blockades or agitational programmes and a decline in foreign investment. Apart from this, some important decisions for the economy are also stuck waiting for the elections to end.

But what’s the current situation?

And what are the implications for Bangladesh’s economy?
How’s the business situation?

Shankar Ghosh imported agricultural products from abroad. A variety of spices, including rice and pulses, are on its import list. But he is not able to import according to demand in the LC crisis.

The situation is worse than before the election.

মি. Ghosh said, “At one time the bank used to sit with us to open LCs, now we are not able to get LCs even after running behind the bank all the time. I need a million dollars. I’ve got twenty or twenty thousand dollars. “

“Besides, banks are often unable to make timely payments to overseas suppliers. Therefore, foreign suppliers are also reluctant to send products. “

He has been in the import business for about 25 years. Ghosh says that during the election year, his business often suffers due to the political situation.

“Whenever the political situation gets heated up, hartals and blockades happen, they face problems.

“I can’t send the goods to the importers. Because the transportation system is broken. That is, if there is a problem in the entire country, it falls on everyone. “

মি. When Ghosh paints a picture of his import business, there is no good news in exports either. The main export sector is textiles.

The export of readymade garments in the first few months of the current fiscal year was not promising, but it was on a positive trend. But before the election, exports in October and November did not increase compared to the same period of the last fiscal year.

According to the Export Promotion Bureau, the growth of readymade garment exports fell by about 14 percent in October. In November, it was down nearly 7 percent.

With such a situation of export, readymade garment owners have new concerns about labor rights, GSP or export ban. The main reason for this lies in the politics of the country.

Fazle Shamim Ehsan, managing director of Fatullah Apparels in Narayanganj, said the ban has caused concern among them.

“Not only elections, but we are also seeing a lot of pressure from foreigners around politics. It’s really bothering us a bit. Because these pressures are related to business.

But if the touts take any action, our sector will not be sustained. Because we are in a mess because of the war in Ukraine. ” He said Mr. Ehsan.

He said the readymade garment sector faces various challenges in the election year. Bureaucratic complexity increases, if there is a problem, there is no immediate solution.

“We have faced it before that elections actually make us feel like orphans for a while. At this point, our activity slows down a bit. If there is instability on the street, foreign buyers do not want to come to the country for a few months. “

Politics in Bangladesh has been hotting up ever since the election. Considering the situation of the last two decades, this situation was seen during the movement of Awami League before the annulled election of 2006. At that time, during successive political programs like the Awami League’s hartal, the communication system broke down, and the traders were affected.

Later, especially before the 2014 and this year’s election, BNP’s movement is also affecting the supply chain. This is affecting almost all sectors, wholesale and retail markets.

For example, Golam Kibria, a garment trader in Islampur, said his business is dying due to lack of buyers from outside Dhaka. On Wednesday afternoon, he said:

“By the afternoon of the next day, goods worth lakhs of rupees were sold, but today the situation is bad. I only paid $3,000. This has been going on for quite some time. Mofussil customers are not coming due to hartal-blockade. Also, people are less interested in buying clothes. “
What steps is the government taking?

That’s the business situation. Apart from this, elections and politics also have an impact on the overall economy. In many cases, important decisions related to the economy are stuck waiting for the elections to end. This has a negative impact on the economy.

Ahsan H Mansur, executive director of the Policy Research Institute, said the major steps needed to deal with the dollar crisis, inflation, interest rates and the government’s revenue decline are not visible before the election.

“Reforms are not very attractive for political reasons. Because it’s often messy. There are some beneficiary classes, who always think that they will lose the benefit and obstruct policy reforms. At the same time, due to policy reforms, the temporary difficulties of the common people can also increase. With this in mind, the governments do not want to make any major decisions in the election year. This will further aggravate the economic crisis. “

According to him, this time also some work is important in the economy. But the government is not doing it.

“Banks are raising interest rates. It needs to be increased at some point. But will we increase it now or after the election? The government will think about it after the elections. Why am I going to get in trouble now? “

“The dollar exchange rate should be left in the market. Do you want to give it now or later? Now what do I do if the dollar rate goes up to one hundred and fifty rupees? Let’s go to the election. Even if it goes up to one hundred and fifty rupees then it will be seen. I’m going to survive. Basically, the necessary decisions are postponed due to such thoughts. ” Ahsan Mansur.
What’s the government saying?

But is the government really focusing on electoral politics instead of economic reforms in the election year? There was no immediate comment from the government or the finance ministry.

Although many decisions of the government are pending due to the election situation, it can be understood from the recent statements of the government and the people in charge of the administration.

In October, Prime Minister’s Private Industry and Investment Adviser Salman F Rahman told reporters that the necessary reforms in the financial sector would be carried out by the new government.

“” “The government, businessmen and the people are all focused on the election.” So the main focus of the government is the election. “

Bangladesh Bank Governor Abdur Rouf Talukder recently said the economy will bounce back after the election.

“This happens in every election. We see uncertainty. When the new government will be formed after the elections, you will see that the economy will turn around very quickly. We believe that the economy will be fully recovered by June. “

“After the election, foreign debt and foreign investment will continue to increase, trade credit will also continue to come to Bangladesh,” he said. As a result, it will be positive again. The reserve will begin to build up again in June. “

But it’s not always the case after the election. There are no signs that Bangladesh’s politics, in particular, will calm down after the election. Many fear the opposite.

As a result, the economic crisis is likely to continue.