The following is what M M Akash, Professor, Department of Economics, Dhaka University, has to say.

There are several indicators of macro economic performance of a country. Generally the mainstream economists concentrate on two types of macro economic indicators. The first is the "Growth Indicators" like the rate of growth of GDP, Savings, Investment, etc. The other is the set of "Stability Indicators" like budget deficit, the rate of inflation, balance of trade, etc. In the past often we found that these performance indicators did not move in the same direction. Thus during the regime of Khaleda Zia (1990-95 and 2001-05) the economy could maintain stability but only at the cost of a relatively higher instability. During the regime of Sk. Hasina (1995-2000) the economy was able to pick up at a higher growth rate but only at the cost of a relatively lower stability. Both the government had been following the prescribed policies of the so-called donors. However Sk. Hasina regime was a little less eager to execute all the reforms prescribed by the donors e.g., curtailing subsidies, closure of jute mills, increasing energy price, decreasing tariff rate, etc. I think the current government will unfortunately be failing in both the fronts of "Growth" and "Stability". This year the growth rate is going to fall certainly and some economists think that it may even come down to 4 percent! If this seems to be too pessimistic then I shall suggest that it will be still a great job for Mirza Azizul Islam if the economy could maintain a growth rate above five percent, which would be still below what has been set as the target growth rate in his last budget speech!

The performance regarding stability is also very miserable. The jump in the international price of petroleum and extra pressure to import huge amount of food grain at a very high price have together jeopardized all the income-expenditure plans of the budget. In spite of some improvement in raising the export, remittance and revenue the extra pressure of expenditure already has forced the government to spend more than what it has, thus causing an increase in its bank loans and budget deficits as well as in a slow depletion of its foreign currency. Whatever may be the official figures and sweet words, the government is certainly in a great danger when the inflation rate of the economy is for the first time in the last ten years crossing the double digit figure! Thus whatever may be the reasons or logical explanations, the speculation remains that the economic performance in the year 2008 will be most probably worse than that of the previous years in terms of the standard macro economic criteria of economic performance.

Since my hunch is that there will be a lower growth rate in the year 2008 obviously investment is also going to fall. The sectors that will probably be facing shortage of investible fund will be "State Owned Enterprises", "The subsidiaries of big business houses who were involved in plundering and corruption", 'The Agricultural Sector" and the "SMEs". The foreign investment is also likely to come down because of political uncertainty.

The single-most urgent sector that would require a huge subsidy in 2008 will be the "Food" sector. Given the international price shock and the national disaster shock, the extreme poor numbering almost three crores of the population of Bangladesh have become completely penniless and currently are not at all able to buy their required food from the market at the cost-price.

Here the greatest challenge will be to institute a system of reaching food to them at a subsidized rate of price. At the same time a huge credit and input distribution programme will have to be started in the rural areas to rehabilitate the agricultural sector and provide employment to these destitute people either in the crop sector or/and non crop sector of the rural economy. Here also a huge amount of agricultural input subsidy and credit subsidy will be needed urgently. Arrangement of the fund is not the only challenge; the more important challenge is to prevent leakages and diversion of that fund to non targeted people.

Today's inflation is largely a "Cost-Push" one. Natural calamity has also created a huge supply gap in the food grain market. Measures to curtail money supply, and increasing interest rate or direct tax will not be much effective. Thus monetary policy will be least effective here-except that of increasing credit to the farmers to buy inputs at a subsidized rate.

The Government should take all measures to increase the supply of necessary food items in the market. Necessary special arrangements should me made for supplying them to the vulnerable groups of the society. Public distribution of at least the staple food item rice should be instituted in the rural and remote pockets of poverty and also for the vulnerable extreme urban poor.

At the same time efforts for easy and cheap transportation of the food items, reducing their marketing cost by containing the middle man's share, encouraging incentive for free and competitive import of scarce commodities, reducing indirect tax upon them and restoring the confidence of the productive investors will be necessary to fight inflation.

The present Government is likely to face huge pressure in near future from the IMF to further increase the utility prices e.g. gas, electricity, water, etc. But it will be very unwise to yield to those pressures. One should not forget the several past episodes of "IMF Riots" (As quoted by Joseph Stiglitze, a veteran of W.B.) in the wake of such wrong policies induced by wrong advice.

World Bank/IMF had introduced the so-called "Structural Adjustment Loans" (SAL) to impose a neo liberal strategy of development on many aid recipient countries along with Bangladesh since the mid 1980's. But by 1990 it was clear that SAL had failed to boost up economic growth and investment in most of the countries.

The critique of SAL even from the mainstream economists had at that time also recommended going slow with the SAL in a more pragmatic style, which was not at all heeded by the WB. Some of their criticisms have relevance for Bangladesh even today:

1. Particularly in poorer countries the structural adjustment policies on which programme lending is contingent should embrace, where appropriate, expanding the economic role of the state in addition to measures to remove harmful state interventions.

2. The policy changes on which programme finance is contingent should be introduced where possible on an experimental basis.

3. The models which the Bank uses for forecasting the macro economic impact of its recommended policy changes should be lodged with the recipient in the form of a micro-computer disc in order that the recipient can simulate the effect of his own preferred policies.