Mounting public discontent over high food prices does not undermine the legitimacy or effectiveness of Bangladesh’s military-backed caretaker government, the country’s senior finance official has said.
Mirza Azizul Islam, an adviser to the government who is constitutionally the de facto finance minister, told Emerging Markets in an interview that the resurgent investment climate is the key to overcoming discontent.
The administration, led by Fakhruddin Ahmed, has helped to nurture a resurgent investment climate that boosts its legitimacy and counters domestic unpopularity over price rises.
“If you look at the strong performance of businesses, the import of raw materials for intermediate goods, the growth of credit to the private sector and export performance, you can see no sign of any decline in business confidence,” Islam said.
The International Crisis Group (ICG), a Brussels-based think tank, last week questioned the administration’s democratic credentials, citing its aggressive anti-corruption drive.
This has resulted in the arrests of leading politicians with an estimated 400,000 people detained, the ICG claimed. “There is now fear the government is undermining the very democratic institutions it set out to rescue,” it said in a report.
But Islam denied the arrests have created a climate of fear or fuelled mistrust between the established political parties and the military-backed transitional administration.
“You cannot compromise on basic principles of morality. No-one has complained that anyone against whom the government has taken action was really honest.”
Islam said that public discontent would not prolong the state of emergency that is to be lifted for elections in December.
The military intervened in Bangladesh’s ailing democracy in January 2007, by forcing the president to declare a state of emergency, outlawing political party activity and cancelling an election scheduled that month.
But garment workers staged mass demonstrations in the capital in April, Dhaka, defying the state of emergency, demanding higher wages to offset the soaring cost of food and fuel with inflation now standing at 10%.
Islam revealed that curbs on political party activity would be lifted ahead of the polls while the administration will maintain “prohibitions that have been in place to deal with crimes such as corruption and money laundering”.
Bangladesh has enjoyed a bumper harvest this year with 17.5 million tonnes of high-yield boro rice likely to be produced – 17 % more than last year – boosting hopes that food prices will cool. But Islam refused to be sanguine.
“The combination of population and income growth obviously raises the structural demand...while agricultural productivity cycle has never been very rapid so we will have a big demand and supply imbalance,” Islam said.
In addition, more farmers are using their land to develop high value crops such as papyrus and pineapple but the “government should not take away the right of farmers to pursue this income,” he concluded.