So, just in 2021 when forex was increasing positively, somehow they got a very funny idea of pouring forex money into unnecessary expensive 'infrastructure' development. And then comes the war, skyrocketing energy price coupled with tremendous corruption and mismanagement got us where we are today.
It was by design, they didn't suddenly get the idea. The forex increase (if you look at current account being small net accrual yearly at best) was driven by foreign loans, bonds etc (i.e capital account side). i.e it wasnt export driven (given pressing needs of imports that propelled side by side with RMG rise etc).
India and lot of developing countries in general have this same (capt account driven forex rise) phenomenon, but the key difference is the credit rating you have and expat/diaspora size + their wealth pool (in forex that you want to tap in to) and overall investment climate/reliability and so on.
That leads to India using NRI bonds significantly for example and ability to get loans/bonds past that at larger amounts, lower rates and longer maturities etc. Along with what India gets on the FDI and FPI side....that BD doesnt get in any sizeable amount but somehow BBS shows a sizeable bump to BD gross capital formation (I guess to show results of the loan intake catching and converting to domestic investment push) according to its estimates.
So BD "forex rise" had higher rates and shorter maturities and the loans as you say were overpriced w.r.t what they delivered as well given things like the below average quality BD bureaucracy, lack of technical expertise pool locally, conglomerates of scale to bid on infra and so on (i.e its relative monopoly-autocracy situation at its core).
So the maturities and rates intensely coming to bear with the post-covid world economy (and US using fed rate as it does now that soaks up lot of world latent investment compared to before) means forex attrition that you see now as nothing really structurally changed and set in beneficially during the rise phase.
If you question it, the lady is threatening to shut everything down:
I would shut everything if they talk much: PM Hasina
Prime Minister Sheikh Hasina has criticised the individuals critical of the government and its handling of forex reserves and warned that she would shut everything down and observe the aftermath if they talk too much. In a press conference at Ganabhaban, she said, If they talk too much, I would...
en.prothomalo.com
Even Sri Lanka has managed to increase their forex from near zero to 3.5 billions or something in just two years. So, this Ukraine war excuse is mostly bullshit. I am no expert but I think, just with the right management alone we can be right back on the track within a year.
Maybe we will have to see. The loan market internationally is not going to go back to the 2009 - 2019 climate (post finance crisis pre covid) this decade at least IMO. Loan model on same credit rating and investment climate BD has as before becomes much harder to pull off.
BD needs deep structural change.
The base is very small, revenue is anaemic and not growing at rate that BBS estimates GDP is growing by.About tax, afaik 7 millions out of 170 millions are only registered and even then, only 60% of these 7 millions actually pay their taxes in full.
I don’t know much about economics, hence my question would be, how does more tax help here? Specially considering that anything defence related require USD or Euro.
Or is it about overall development?
When the country is in defence import heavy reliance phase, true the tax revenue (in Taka) doesnt have as much meaningful impact like forex does.
But it does grow options for everything that can be done or developed at some proximate ease with resource and asset pool you already have in domestic Taka (salaries, procurements etc relevant to these)...and setting up everything to do more of that later with end-end Taka for defence production, RnD etc.
Past that higher tax revenue means better credit rating and virtuous cycle starting from a deeper onion layer (since you put that much off the loan-monopoly-autocrat reliance table etc for investment and growth, and investors do take note of this better "competition" so to speak and give better rates, amounts, maturities etc and even increase FDI and FPI with time too as those routes later take hold too). That will have indirect role on forex sustainable rise for the country.