Economist Ahsan H Mansur on Wednesday said that the country鈥檚 economy would collapse if a strategy for restructuring the ailing banking sector was not taken straightaway.
He made the remark at a post-budget discussion organised jointly by the Metropolitan Chamber of Commerce and Industry, Dhaka and the Policy Research Institute at the MCCI auditorium in the capital Dhaka.
In the keynote, Mansur, also the executive director of the PRI, said that the financial system in Bangladesh was shrinking and the proposed budget was silent about structural reforms that the government needed to initiate in the financial sector with particular focus on the banking sector.
He said that officially the amount of non-performing loans in the banking sector increased further to Tk聽1.82 trillion, but the real figure of NPL could be as high as Tk聽4 trillion or 22 per cent of the total assets of the banking system.
鈥楽ome banks have NPL as high as 60 to 70 per cent of their total assets, making those banks de facto bankrupt. This cannot continue for long,鈥� Ahsan said, adding that merger of weaker banks with stronger ones appeared to have failed due to lack of political support and deficiencies in designing the framework for consolidation.
He urged the government not to bail out bankrupt banks.
Mentioning that the Bangladesh Bank could help reduce high inflation rates by taking a few key actions, including adopting a strong monetary policy, avoiding injecting liquidity in the form of liquidity support to commercial banks and refraining from printing extra money to cover the government鈥簊 budget deficit, he said that inflation should begin to decrease within six to nine months if these steps were strictly followed.
鈥楾aking cue from the international experience, we can expect that the inflation rate will come down to 6-5 per cent if similar developments happen in Bangladesh,鈥� he said.
Zaidi Sattar, chairman of the PRI, discussed the 鈥楳ade in Bangladesh鈥� initiative in the budget.
He mentioned that if policies supporting 鈥楳ade in Bangladesh鈥� focused on selling products globally, the country鈥簊 economic growth could increase by 7-8 per cent, potentially reaching 10 per cent.
Kamran T Ahmed, president of the MCCI, said that to implement the budget properly, reformation of tax policies, automation of the tax system, reducing system losses in the overall tax collection, capacity enhancement of tax administration and adequate services delivery to the public were necessary.
鈥榃e also believe in having an interim evaluation of the budget after every three months,鈥� he said
Mashiur Rahman, economic affairs adviser to the prime minister, said that focus should be given on increasing productivity, as well as on diversification of products and markets.
He also said, 鈥楾he government should take steps with significant investments to create more employment in the country.鈥�
Habibullah N Karim, senior vice-president of the MCCI, among others, was present in the discussion.
