The Finance Minister, Amir Khosru Mahmud Chowdhury, highlighted the significant challenge of repaying a large debt amount and emphasized the limited fiscal space of the government. Speaking at a seminar organized by the Bangladesh Economic Association (BEA), he disclosed that the debt repayment stands at approximately Tk 1.25 lakh crore, underscoring the shrinking fiscal space that complicates the repayment process.
Despite the mounting debt burden, the minister expressed the government’s ambition to generate 1 crore jobs in the upcoming years, citing that robust economic growth would facilitate the repayment process. Criticizing the development model inherited by the Awami League government, he mentioned the burden posed by around 1,300 development projects, some of which are already halfway completed, creating a dilemma in decision-making.
To tackle the crisis, the minister emphasized the necessity of revamping the nation’s balance sheet by reviewing and potentially canceling certain projects while reconfiguring others where feasible. He attributed the banking sector’s challenges not only to outright malpractice but also to the excessive reliance on banks for long-term financing, advocating for a stronger capital market as a viable solution.
In a bid to restore investor trust, the government has established a new capital market commission comprising seasoned professionals without any political affiliations. Furthermore, significant legal and tax reforms are underway in the capital market, garnering international interest, including from global fund management firms like JPMorgan.
Despite the prevailing challenges, the minister expressed optimism that progress is being made in the right direction. Abu Ahmed, chairman of the Investment Corporation of Bangladesh, concurred that the narrowing fiscal space necessitates private sector expansion to stimulate economic activities. He proposed a reduction in the policy rate to encourage investment, highlighting the persistent inflation despite the central bank’s stance on high policy rates.
Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), deemed the 6.5 percent GDP growth target as ambitious yet achievable based on Bangladesh’s historical performance. He underscored the need for robust revenue growth to meet the fiscal year 2027 targets, emphasizing the imperative of a credible roadmap.
Addressing the fiscal challenge, he emphasized the importance of effective revenue mobilization post-debt servicing. Noteworthy allocations for healthcare and education were acknowledged, with concerns raised on the effective implementation of spending. Additionally, emphasis on preventive healthcare and the need to enhance education quality were highlighted by experts from various institutions.
In conclusion, recommendations were made to link public service access with tax compliance, strengthen the National Board of Revenue, and introduce universal tax identification numbers for citizens upon adulthood to expand the fiscal space. The event was chaired by Mahbub Ullah, convener of the interim committee of the BEA, with Mohammed Helal Uddin, member secretary of the BEA, moderating the discussion. Other speakers included renowned experts from academic and research institutions, shedding light on diverse facets of the country’s economic landscape.
