There has been a coup in Bangladesh. The interim government faces the challenge of bringing law and order to the economy back on track. Since the country is facing a serious economic crisis. Banks are on bailout. Food inflation is the highest in 13 years. Food inflation has crossed 14 percent in July. After the violence the supply chain has also collapsed. Questions are being raised that how will the Bangladesh fleet cross?
In Bangladesh, students were protesting since July regarding quota and gradually the uproar increased across the country. The situation was such that first the supply chain across the country was affected and after that the challenges increased. Prices of essential commodities and other things increased. Data from the Bureau of Statistics show that the Consumer Price Index increased from 1.94 to 11.66 percent in July. From this it can be estimated how quickly the situation deteriorated.
Many banks are clinically dead
The condition of banks in Bangladesh is also not good. Fahmida Khatoon, executive director of Center for Policy Dialogue (CPD), said that many banks in the country are clinically dead, but they are being operated through bailout. Fahmida said at an event in Dhaka that banks which were on the verge of collapse should be allowed to be closed. CPD had organized this media briefing a few days after the swearing-in of the interim government.
Fahmida said, there are some third and fourth generation banks, which were given licenses when the Awami League was in power. They have become lethargic now. Additionally, many previously good banks have also suffered decline in performance due to wrongful acquisitions by capitalists. For example, the condition of Islami Bank Bangladesh deteriorated when S Alam Group took over the bank and took a loan of about Tk 30,000 crore. Similarly, public sector Janata Bank violated the single borrower limit and gave a loan of Tk 10,000 crore to Anontex Group.
Fahmida said that giving large amount of loan worsens the condition of the bank and small investors have to bear the loss. They are deprived of taking loans. He asked, if so much loan is given to only one person then what will other customers get?
Fahmida said that these banks are being run through bailout by investing public money, but it would be better if such banks are closed. The CPD also said that about Tk 92,261 crore was embezzled through 24 major banking scams between 2008 and 2023. This amount is equivalent to 12 percent of Bangladesh’s national budget for fiscal year 2024 or about 2 percent of the country’s GDP for fiscal year 2023.
Getting the economy back on track is a priority
Finance and planning advisor Salehuddin Ahmed said that the top priority of the interim government of Bangladesh is to bring the economy back on track and restore people’s confidence in banks. Ahmed, former governor of Bangladesh Bank, has been given the charge of finance and planning ministries by interim government head Muhammad Yunus. He announced the portfolios of his 16-member advisory council on Friday. Ahmed said that the priority of the government is to restore the confidence of the common people in the banks by resuming the operations of the central bank. Then we will work on bringing improvements.
He further said, due to various reasons the country’s economy has slowed down. Our aim will be to revive the economy as soon as possible. Once the economy stops, it becomes very difficult to restart it.
According to Dhaka Tribune, he said, there are many problems in the economy. There are issues of banking sector, inflation and many other complexities. We will need to work on all fronts.
On Friday, Bangladesh Bank Governor Abdur Rauf Talukdar resigned citing personal reasons. Earlier, Chief Justice of Bangladesh Obaidul Hasan also resigned. After the fall of Sheikh Hasina government in Bangladesh, violence broke out across the country and more than 230 people were killed in separate incidents. Anti-quota protests started for the first time in mid-July. Since then the death toll has reached 560.
(Input – Ashutosh)