Noted economists yesterday called for institutional reforms to curb a banking sector culture of defaulting on loans and ensure proper use of development funds.
They said there should be a provision for punishment for delays in project implementation.
They made the observations at a pre-budget meeting with Finance Minister AMA Muhith at the auditorium of National Economic Council in Dhaka.
Prof Rehman Sobhan, chairman of think-tank the Centre for Policy Dialogue (CPD), said when an election approaches many get their loans rescheduled. He cautioned the government to remain alert about it.
In response, Muhith said, “I am assuring you that it will definitely not happen.” Prof Sobhan suggested that the parliament follows up on rescheduling of loans during parliamentary elections as there has been no such initiative.
Mustafizur Rahman, a distinguished fellow at the CPD, said Muhith in previous budgets spoke of a number of reforms and some draft proposals such as a Civil Service Act were also prepared.
Emphasis should be given on implementing those, he said.
M Matiul Islam, a former finance secretary, said banks were suffering from a serious liquidity crisis, pushing up the rate of interest to 12 percent.
He also said due to the crisis confronting Farmers Bank, government agencies were relocating deposits from private banks to state-owned banks.
Islam called for a policy for state-run banks to put government funds in private banks.
In reply, Muhith said he would consider the proposal.
About the crisis confronting private banks, Mohammed Farashuddin, a former governor of Bangladesh Bank, said there was no law at present in the country facilitating mergers and acquisitions. He said a draft law was prepared in 2000 which should be enacted now.
Siddiqur Rahman Chowdhury, another former finance secretary, said projects were being taken without any feasibility study. As a result, the cost is going up and the implementation is being delayed, he said.
Mohammad Tareque, also a former finance secretary, said budget implementation has not improved and stress should be placed on monitoring.
CPD Executive Director Fahmida Khatun said the Rohingya crisis may put a big pressure on the economy.
She said the development partners were now giving funds on humanitarian grounds but the flow would slow down.
The finance minister needs to outline the government's long-term plan to face the Rohingya crisis, said the economist.
CPD Distinguished Fellow Debapriya Bhattacharya said NGOs have been playing an important role in the development of Bangladesh, but donors' fund for non-governmental organisations was shrinking for various reasons.
He called for a budgetary allocation to form a Tk 1,000 crore trust fund from which the government could give financial assistance to NGOs, he said.
M Syeduzzaman, a former minister, said Bangladesh required more public and private investment considering the type of development the country was aspiring to achieve.
The upcoming budget should address under-employment, he said.