The first and major set of problems sprang from an unsound financial system, inadequately regulated and supervised, that channeled capital unwisely and allowed the private sector quietly to accumulate debts that could not be sustained any more. Conflicting microeconomic priorities under political considerations are also responsible for declines in our exchange rate.

Ironically Asian Development Bank suspended aid packages amounting millions of dollars as our government apparently failed to collect required amount of taxes and implement promised fiscal and monetary reforms. In view of the current situation World Bank should shift course and sponsor emergency stimulus package to ease the country's present economic crisis.

Our public sector borrowing requirement should be reduced and austerity measures like wage-price frieze are urgently needed to put our finance on a firmer footing. Unlike western countries, our economy is not structured to introduce tough austerity measures as desired by IMF. It is rather difficult to increase tax revenues as we all know most people cheat on their taxes by understating their incomes. There is a growing underground economy in most countries. Estimates of its size range from a conservative 3 per cent to an astounding as 20 per cent of GNP. Legitimate business people may not report cash incomes or may overstate their tax reductions and thus understate their incomes. Economic growth and inflation have driven many business into high tax brackets, so there is a greater incentive to cheat. Finally tax evasion has become respectable in the eyes of some, who excuse their behaviour with the argument that 'everybody does it'.

Failure of the government to collect taxes also punishes those who scrupulously pay their taxes, because they suffer from higher rates. High employment, price level stability and economic growth are the major microeconomic goals of all societies. Achieving these goals simultaneously is difficult. For example, boosting employment may cause inflation to rise while attempt to curve inflationary pressure may push more workers into unemployment lines. However our focus must be on developing the elements of a modern market based financial system including independent, effective supervision, improved accounting standards, high levels of financial disclosure, and a much cleaner, more transparent relationship between government and business.

In macroeconomic policy, too, government needs to set clear rules and follow them. Our Ministry of Finance has to act decisively to stimulate growth. Most urgent challenges are for government to follow through on their domestic reform commitments. All these measures will take time and a few will be easy. But they can be achieved with strong support from the international community. Continued strong reforms and denationalisation of state owned banks, insurance companies and other ailing industries are sine-qua-non to reduce public debts and enrich government's coffer. Government must reaffirm its commitment to a stable exchange rate and dealing with economic challenges which it faces.

Is Bangladesh at a competitive disadvantage? Our imports have been exceeding exports continuously. The first and most important of several factors that accounts for concern is that Bangladesh has been losing its ability to compete in the globalised market. Most countries are both exporting and importing larger shares of their production and income than ever before, so most of our neighbouring countries are gaining an international flavour, but our growing trade imbalances alarm many people.

Second, exports of many of our neighbouring countries have grown up faster than those of Bangladesh. Some other countries are playing 'catch-up', but in Bangladesh signals are emerging that our rates of gain is slowing down. Our average labour productivity also grew slower than most countries. But we must reverse this pattern.

I think government so far failed to identify agricultural area which needs improvement. Bulk of our water resources is wasted and unless we address the issue of irrigation and the extent of land, we cannot place agriculture on our desired target of self-sufficiency in food.

In Bangladesh more than 6 out of every 10 citizen depend upon agriculture for survival and livelihood. For every tonne of rice produced in a hectre in Bangladesh, China manages two, while productivity in USA and EU countries are three times higher than that of Bangladesh. If farming is a profession and as a way of life is not to collapse, there is a need for attention today to farmers' needs in the areas of irrigation, technology and market and land aquarian reforms.

Because most of our farmers own farms that are small and fragmented, they also do not get the capital needed to take advantage of new technology and new processes. The global trade in food products and food processing is enormous, worth more than $200 billion a year. Some big multinationals with brand images are keen to outsource manufacturing plants to third world countries because of cost factor. If government under private-public partnership can set up modern cold storages in properly identified locations across the country, Bangladesh could witness a big surge in food processing exports. More than 50 per cent of our fruit and vegetable outputs are sold at throw away prices or rot because there are no proper cold storage facilities near farmlands.

Value addition in our food processing is next to nothing while a country like Thailand boasts more than 40 per cent. Multinational company like Pepsi foods set up a big food processing plant in Panjab. A large quantity of tomatoes and fruits are processed and sold in many European countries.

What policy makers need to do is to create basic infrastructure and offer a policy environment that will attract private investment, both domestic and foreign, into agriculture and related sectors.

We cannot leave food processing and agro processing in the hands of small entrepreneurs only. Small and fragmented players in this sector cannot generate economies of scale or the market muscle to take on competition in global market. If food processing blooms in our country it will go a long way in solving unemployment problems that plague our agriculture. After the collapse of Soviet Union, geopolitical and strategic scenario of the world has changed. Bangladesh is no longer US strategic asset.

We must realise that trade, not aid is a more fitting standard for America's new relations with us.

Anam A Choudhury is a former investment banker.