ARUN DEVNATH

It’s not the best of times. It’s not the season of light. The future will tell whether it’s the period of Dickensian despair on the economic front. But this is not the moment for business as usual, for sure.

The cycle of economic exhilaration that portrayed Bangladesh as a stellar performer in Asia for a decade is no more on the steady ground that it once was. A triad of crises is now seeping into every corner of the economy. Inflation is an index of chronic consumer pain. The exchange rate shock is hurting almost everyone. Foreign exchange reserves are still haemorrhaging -- half a billion dollars per month.

A sea of red ink appears on the horizon as almost all indicators depict a gloomy picture. GDP growth has come down from its exuberant peak. Stock prices continue to drift downward. Most banks, save for a dozen, are lurching in and out of fund shortages. The zombie banks kept alive for too long are dragging the sector down.

Is the economy becoming a chronic patient? Perhaps not. But it’s grievously bruised and needs to be healed and fast.

Years of stability lulled us into believing everything was perfect. People in almost every sphere became habituated to an equilibrium of low inflation, low interest rates and low exchange rate volatility. Under this apparent calmness was a layer of stress.

Then the global crisis came more as a trigger than a cause, exposing Bangladesh’s vulnerabilities. Now the tinted perception of the economy is wearing off, acceptance of which we are resisting.

The new fiscal year starting in July could be another perilous year amid a confluence of global economic headwinds and the lingering effects of the government’s past misguided steps.

As Abul Hassan Mahmood Ali unveils fiscal goals in his maiden budget as the finance minister today, he will come under sharper scrutiny than his predecessors who managed the economy in the past 15 years.

Sadly, Ali has inherited a wounded economy, but he doesn’t have to live with a controversial legacy left by AHM Mustafa Kamal, his immediate predecessor, whose 6/9 percent interest rate formula that afflicted the banking sector for three years will go down in history as the most perverse practice. Its toxic fallout, some say, still lingers as it created unnecessary aggregate demand for credit leading to inflationary pressure. Inflation, equivalent to a highly regressive tax on already stagnating wages and salaries, doesn’t seem to be coming down to a tolerance level so soon. It will be a long slog for the government to tame consumer prices.

Ali, 81, was well known for foreign service, but not so much for economic management. Still, the heavy lifting of budget planning fell on his frail shoulders right after he took the helm of the country’s finance ministry in January. And it’s playing out at a time when Bangladesh faces one of the worst economic crises in history. Now, he is diving into a territory that requires a coordinated policy approach to bring the economy back on track.

That’s an enormous task.

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