Due to political considerations, more banks have been approved in Bangladesh than necessary. Among them, some are in a very fragile condition and lack the capacity to handle unexpected shocks. As a result, the private research organization Center for Policy Dialogue (CPD) has recommended closing these banks.
Today, Wednesday (January 29), at a press conference organized by the CPD in Dhaka’s Dhanmondi, this recommendation was presented regarding the economic situation of Bangladesh for the current fiscal year 2024-25.
CPD Executive Director Dr. Fahmida Khatun said, ‘More banks have been approved in the country than necessary. Some banks, primarily operated for political reasons, are in a very distressed state. These banks are on life support, and their customers are at risk. These banks do not have the capacity to withstand unexpected shocks. Therefore, considering the overall situation, it may be advisable to close down the banks that are on life support.
She said, “To reduce non-performing loans in the banking sector, the accounts of willful defaulters could be seized. If necessary, bankruptcy laws need to be amended. Alternative dispute resolution mechanisms should be strengthened, and the independence of the central bank must be increased.”
The Executive Director of CPD stated that there have been many irregularities in the energy sector, with public funds being wasted. Therefore, previous contracts should be canceled, and the policy of ‘no electricity, no money’ should be adopted. Additionally, new sources of gas and energy need to be explored, and stronger measures should be taken in drilling wells.
In response to a question, he said that extortion is still ongoing. Therefore, simply increasing interest rates will not reduce the price of goods. Additionally, the higher number of intermediaries in the supply chain is driving up costs, which ultimately the consumer has to bear.
Regarding the repatriation of laundered money, Dr. Fahmida said that Bangladesh is not the first to attempt this. There is more global experience in this regard, and the government can follow this path. To do so, the BFIU (Bangladesh Financial Intelligence Unit) needs to be strengthened. Special attention should be given to the issue of reserve theft, and no one involved, including former governors, should be spared.
Regarding the government’s revenue collection strategy, she said that taxes need to be increased. Instead of focusing on VAT, the scope of direct taxes should be expanded. The revenue should be spent wisely, and foreign investment should be made easier. This is important because the revenue growth has decreased from 17.17% to just 3.7% in the current fiscal year. Therefore, tax collection needs to be enhanced. Furthermore, 80% of the ADP (Annual Development Program) spending on internal debt interest should not have occurred, as it will hinder the country’s development.
The Executive Director of CPD stated that economic reforms are not possible without political reforms. Therefore, time must be given for this. The announcement for internal government elections is appropriate, and the political government will make decisions on these matters later.
Liberty News’ economic correspondent reports that at the press conference, a concept paper titled “Bangladesh’s Economy 2024-25: The Challenge of Meeting Expectations in Times of Crisis” was presented. During this time, CPD’s Honorary Fellow Professor Mustafizur Rahman, Research Director Dr. Khandaker Golam Moazzem, and Research Director Mustasir Kamal were present.
LND/SAKIB
