Dollar crisis linked to $7-8b capital flight: ex-minister

Dollar crisis linked to $7-8b capital flight: ex-minister

Finance minister Abul Hassan Mahmood Ali said on Thursday that they had to follow the World Bank for foreign currencies, while former state minister for planning Shamsul Alam blamed capital flights for the country’s prolonged shortage of dollars.

They were speaking at a post-budget discussion arranged by the Bangladesh Agricultural Economists Association in the capital, ahead of the passing of the finance bill in parliament on June 29.

The former state minister for planning, while focusing on the prolonged dollar shortage, said that the government should check capital flight to the tune of $7 billion to $8 billion annually.

He said that capital flights had caused the dollar crisis. 

The former state minister for planning was critical of the country’s banking sector, which was overburdened with bad loans and contributed to the current economic downturn.

Calculating 22 per cent of the overall bank credits as risky, he said that the trend should be reversed with strong reform based on the recommendations of a commission or a strong committee.

He lauded some of the budgetary proposals and suggested the finance minister give more focus to revenue generation, which, according to him, is one of the weakest points.

Due to less-than-expected revenue generation, successive governments have been borrowing from multilateral lenders for foreign funds and meeting the budget deficit.

Highlighting the necessity of foreign funds, the finance minister said in his speech that they had to follow the WB suggestions.

The WB provides us with loans, he said while responding to critics of the economy and the budgetary measures he proposed  for FY25 in parliament on June 6.

He said that they would accept the recommendations of the critics if they provide funds. 

Asking critics to look at what the WB was saying about the country’s economy, the finance minister claimed that the WB had called it alright.

He noted that it was unacceptable that the WB did not understand the economic issues.

The finance minister was also critical of those who said that the country would face bankruptcy like the one its South Asian neighbour Sri Lanka faced in 2022.

He, however, said that the government would consider positive suggestions regarding the national budget before passing it in parliament.

The finance division is keeping feedback, and feasible ones will be considered, he said, adding that the budget has not been passed yet. 

State minister of commerce Ahasanul Islam Titu, the representative of the United Nations Food and Agriculture Organisation appointed in Bangladesh Jiaoqun Shi, and Bangladesh Agricultural Economists Association president Sajjadul Hassan, among others, spoke at the seminar.

The state minister for commerce said it should be reviewed to see how much of the agricultural subsidy was implemented.

He suggested that agricultural experts be involved in the marketing channel and said that focus should be given to protecting perishable items.

Sajjadul Hassan said the subsidy on fertilisers should be monitored properly so that marginalised farmers are not deprived of their due share.