Economist Ahsan H Mansur on Saturday said that the printing of money by the Bangladesh Bank to keep some troubled Islamic banks afloat must be halted immediately to check inflation in the country.
He observed that continued printing money would only raise the inflation rate which has been nearly 10 per cent in recent months.
Mansur, who is the executive director at the Policy Research Institute of Bangladesh, made the remarks at a seminar organised by the Economic Reporters Forum at the ERF office in the capital Dhaka.
At the seminar titled 鈥楻easons behind the Crisis in Banking Sector in Bangladesh鈥�, he criticised the central bank鈥檚 actions, stating that printing money to sustain non-functioning banks had not only harmed the general public, but also weakened the government鈥檚 borrowing capacity.
He also said that some Shariah-based banks were showing high profits by treating interest income accrued from non-performing loans as receivables, even though these loans were unlikely to be recovered.
Mansur said that a group of people having political clout was plundering depositors鈥� money, leading to a chaos in the country鈥檚 financial sector.
He observed that there were significant discrepancies in the data from the various sectors, with that of the banking sector being the most misleading.
While non-performing loans are officially stated to be 11 per cent, the actual figure is 24-25 per cent, he said.
鈥楾he sector is rife with inaccurate information, which is like hiding dirt under a carpet鈥� which will inevitably start to smell,鈥� Mansur said.
He warned that this situation was unsustainable for the country鈥檚 proper functioning.
Questions about the security of bank deposits have now arisen, and as long as capital flight continues, these issues will persist, he said.
He asserted that there was no alternative to political goodwill for tackling the financial sector crisis.
Mansur suggested an end to the remittance incentive, saying that it was being exploited by vested quarters based in Dubai.
He criticised the strategy of borrowing to temporarily increase foreign exchange reserves, and suggested raising the reserves through proper policies.
Without these measures, he warned, a country with a GDP of $450 billion cannot be sustained with only $13 billion in reserves.
The economist underscored the country鈥檚 dire financial state lacking the dollar and the taka due to a distressed banking sector, which has diminished the government鈥檚 capacity to secure loans.
He stressed the need for transparency in the financial sector, warning that without it, the situation would deteriorate further.
The seminar was presided over by ERF president Refayet Ullah Mirdha, with general secretary Abul Kashem moderating.
