Finance Minister Khosru says politicisation ‘drained’ Bangladesh's financial sector

Finance Minister Amir Khosru Mahmud Chowdhury has said the country’s commercial banks have been “emptied” due to extreme politicisation of the financial sector over the years.

Speaking at a pre-budget discussion with the Economic Reporters Forum (ERF) at the finance ministry on Saturday, he painted a grim picture of the economy, noting that the interim government’s 18-month tenure was not significantly better than the ousted Awami League regime in terms of economic indicators.

“The financial sector became so politicised that the banks are now empty,” he added.

Khosru said the stock market has been finished through looting.

“As we try to recover from this, we are facing the massive task of financial sector resolution,” he said.

Both the banking and private sectors are currently "under-capitalised", the minister noted.

He pointed to a 40 percent currency depreciation and 14 percent inflation rate as primary drivers of capital erosion for businesses.

"A businessman’s working capital is being eroded. These people cannot operate, leading to underperformance in industries and subsequent job losses. We need to re-capitalise them, but the government does not have enough funds to do this alone," he said.

Khosru blamed "patronage politics" for the current crisis, saying the economy had fallen into a "ditch" because it was controlled by a few oligarchs.

“When the economy is controlled by a few people, it no longer remains an economy, it becomes a tool for political influence and policy manipulation. We must democratise the economy, not just the politics,” he said.

He mentioned that the government is issuing family and farmer cards to ensure services reach the grassroots, with plans to increase budget allocations for education and health to harness the "demographic dividend".

Bangladesh Bank Governor Md Mostaqur Rahman dismissed reports that the government had printed Tk 200 billion in the last two months.

"The news is not true at all. There is no existence of such a figure," he said.

In a subsequent meeting with editors and senior journalists, representatives proposed extending government advertisements and supplements to online portals and television channels.

They also called for a reduction in the 27.5 percent corporate tax for media houses and the waiver of source tax on honours paid to poets and writers.