Political crisis casts shadows over the economy

A peaceful environment is necessary for economic progress of a country and wellbeing of the people. But in our country, the long continuing political crisis over the election-time government is pushing the economy from bad to worse. Sustainable economic growth cannot be ensured in a state of strife. If the economy is safe, the country will be safe. If the country is safe, we, the common people, along with political leaders and workers, will be safe. But the destructive politics that is going on in the country will not allow anybody to escape its ruinous effects.
The continued political uncertainties and the resulting intermittent and continuous shutdowns have led the economy to the high level of instability. The impact of strikes on transport of commodities on one hand and the resulting stagnancy in trade and commerce have negatively influenced production in mills and factories. Consequently, the economy is turning stagnant.
It is not that if the political crisis is not solved the wheels of the industry will grind to a halt. But there is widespread apprehension in the business circles as to whether it will be possible to save the industries at all under the existing troubled circumstances. If the intermittent destructive general strikes continue, the burden of default in payment of debt installments to the banks will increase. There are also businessmen having good track record of regularly paying debt installments. The on-going political crisis may also turn these entrepreneurs defaulter. The commercial banks have nothing to do. Even though the 'bank-client' relationships are of importance to the banks, the commercial banks are tied by the rules and regulations of the central bank. But because of the on-going present political troubles spilled over to the streets, the helpless entrepreneurs face serious uncertainties.
The Bangladesh Bank sources say defaulted debt has increased alarmingly by now. According to the latest statistics, 11.91 per cent of the total loans disbursed by the banks have turned defaulted debt. By the end of June 2013, the total amount of debt default stood at Tk. 523.1 billion, which is Tk.233.1 billion more than what it was at the end of June 2012 and Tk. 12.9 billion more than what was at the end of March 2013.
Under these circumstances, experts opine that some sort of short-term incentive is necessary for the affected industrial sector. The industries have already been badly affected by gas and electricity shortage in the country. Still there exists no normal or regular supply of energy in the industrial units. Added to this is the on-going present political crisis. In these circumstances, the central bank may consider some special privileges to the affected industries though this will cause some costs to the common depositors. Especially where the banks are getting entangled in bad debt, the central bank may give concessions in terms of low interest rates. This will help the clients.
The business community maintains that such a nationwide crisis-torn political situation like shutdowns has created suffocating environment for them. They, like all other conscious and common people of the country, want an end to this. At the present critical situation, it is not only difficult to repay debt to the banks, but regular payment to workers has become uncertain in this stagnant economic condition. As a result, mills and factory owners are alarmed over impending workers' unrest.
The most important apparel manufacturing and export sector of the country has become stagnant. Some of the apparel factory owners say the foreign buyers are canceling their orders as they cannot supply the goods in the specified time limit. The continued political shutdown programmes cause jams of export/import containers in the Chittagong port which requires much time to be normalised after intermittent shutdowns. The business community fears that the economic crisis of the country will deepen since they guess that there will be more political shutdown programmes in the days to come.
According to an estimate of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA), a day of shutdown causes a production loss of Tk. 2.5 billion. In the January-March three-month period of the current year, the air freight cost alone has increased by Tk.3.9 billion in comparison to the normal situation. Moreover, during this period, apparel export orders of 35 factories amounting to $2.654 million have been cancelled. All other industries are also suffering losses because of the on-going political crisis.
A BGMEA source says, even though the apparel sector is exempted from shutdown programmes, almost all other sectors related to this are seriously affected. As a result, the apparels cannot be shipped abroad in time. Consequently, it becomes difficult and a matter of risk to pay wages to the apparel workers.
The Dhaka Chamber of Commerce and Industry laments, the prey and losers are the business communities. They intend to pressurise the concerned political parties to compromise. "If they don't come to reconciliation and take initiatives to solve the crisis, we will choose our own course of action".
As for the national political parties, it is worth reminding them the Qur'anic verse: "Dispute not one with another lest ye falter and your strength departs from you" (Qur'ân, 8:46). So it is urgent for the concerned feuding political parties to quickly resolve the crisis to save the economy from ruination.  
The writer is a retired Professor               of Economics, BCS General Education Cadre                                      [email protected]