Dr Salehuddin Ahmed, a distinguished economist and adviser to the Ministry of Finance and Planning under the interim government since 8 August 2024, has elaborated on the nation's economic challenges and recovery strategies.
Over the years, he has served in esteemed academic and policy-making roles, including tenure at Dhaka University, BRAC University, and the Integrated Rural Development Centre for the Asia-Pacific (CIRDAP), along with directorial responsibilities at the Bangladesh Academy for Rural Development (BARD).
During a recent interview with a national daily, Dr Ahmed dissected the financial crisis inherited by the interim administration and its subsequent remedial measures.
"The economic situation was dire when we assumed office. The banking sector, the National Board of Revenue (NBR), and the capital markets were in a precarious state. Corruption, defaulted loans, capital flight, and stock market manipulation had crippled financial institutions," he remarked.
He attributed much of the financial disorder to the previous administration’s mismanagement, citing rampant corruption in state-owned and private banks, extensive embezzlement, and illicit fund transfers.
He pointed to the former prime minister's adviser on Private Industry and Investment, Salman F Rahman, alleging that he misappropriated Tk3,000 crore from the Investment Corporation of Bangladesh (ICB) fund and defaulted on a $4.5 billion letter of credit (LC) payment.
The interim government, he noted, has undertaken rigorous measures to stabilise the economy, including restructuring state-owned banks and tightening regulatory oversight.
"We imposed restrictions on certain bank accounts and restructured financial governance. While challenges persist, we have restored some discipline to the financial sector."
The crisis was exacerbated by excessive borrowing under the previous government in the name of mega projects, which resulted in mounting debt obligations.
"Padma Bridge and the Padma Rail Link were exorbitantly costly. Beyond the expenses, our immediate challenge is to repay these loans. International lenders such as the World Bank, IMF, ADB, and Islamic Development Bank have been engaged in discussions, with ADB already disbursing $500 million in December and another $500 million expected in June."
A critical concern remains the burgeoning non-performing loans (NPLs), which have soared to Tk2.5 lakh crore from Tk38,000 crore when Dr Ahmed last served at Bangladesh Bank. Liquidity shortages in banks have reached such an extent that depositors face withdrawal restrictions.
"A cheque of Tk100,000 often results in only Tk10,000 being disbursed due to liquidity shortages," he observed.
Addressing this crisis is paramount, and he sees a glimmer of hope in the macroeconomic stabilisation efforts underway.
On the subject of inflation and market manipulation, Dr Ahmed acknowledged the entrenched power of syndicates that control supply chains.
"Syndicates do not operate from identifiable offices; they function as interconnected networks—importers, wholesalers, and even small retailers contribute to artificial price hikes. Breaking such networks is a complex challenge."
He highlighted the importance of digitalisation in financial governance, noting that while progress has been made in online tax returns, corporate tax procedures remain cumbersome.
"National Board of Revenue must prioritise automation over increasing manpower. Customs and income tax processes have made some strides, but full-scale digital integration is imperative."
With Ramadan approaching, the government has taken steps to curb price surges in essential commodities by reducing duties on staple imports such as lentils and dates.
Additionally, the Trading Corporation of Bangladesh (TCB) has resumed its family card and truck-sale initiatives in Dhaka and Chattogram to provide subsidised goods to low-income citizens.
However, Dr Ahmed warned that unless market control measures are strengthened, price instability could persist.
"Inflation has slightly declined, but supply-side constraints must be addressed to achieve further reductions. Market oversight must be reinforced to prevent speculative hoarding."
Despite these pressing concerns, Dr Ahmed remains cautiously optimistic.
"While we are far from complete economic recovery, stability is gradually returning. The challenges are immense, but we are committed to tackling them head-on."
