The government of Bangladesh is not fully committed to reforming the banking sector, combating syndication, and enforcing laws against money laundering, according to Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD). He criticized the government’s approach as inconsistent, taking steps forward but often retreating, resulting in half-hearted initiatives that avoid politically sensitive areas.
Rahman emphasized the need for robust macroeconomic management, good governance, and zero tolerance for anomalies to achieve macroeconomic stability and reduce inflation. He highlighted the importance of addressing the pressures on marginalized, fixed-income, and low-income groups through budget allocations, fiscal policies, and incentives.
He suggested slowing down on new transport infrastructure projects and prioritizing the completion of ongoing ones. In rural areas, Rahman called for expanding the family card program and strengthening entitlements. For urban workers, he proposed the introduction of urban rationing and a midday meal program in schools to improve children’s nutrition.
Rahman also stressed the need to improve the country’s revenue-GDP ratio, one of the lowest globally, through digitalizing the taxation system and investing in the National Board of Revenue’s human and technological resources. He warned against financing the budget deficit through excessive borrowing from the banking sector, which could crowd out the private sector, and instead suggested relying more on external sources to avoid unsustainable debt servicing.
He noted that private sector investments have stagnated at 23-24% of GDP in recent years, partly due to increased costs from high-interest rates and other expenses, such as transport and business operation costs. Although the depreciation of the taka has enhanced export competitiveness, Rahman cautioned that without a conducive business environment, this advantage would not be fully realized.
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