Former Bangladesh Bank governor Dr. Salehuddin Ahmed for swift reforms amid economic challenges

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Ensuring the accountability of state institutions is of paramount importance for the provision of services to the people, fostering sustainable development, and combatting corruption in any democratic nation. Regrettably, in Bangladesh, numerous state institutions struggle to fulfil their responsibilities, which impedes socio-economic progress. This concern was highlighted by former Bangladesh Bank governor Dr. Salehuddin Ahmed in a recent interview with New Age Business magazine, where he discussed these issues with Special Correspondent Shakhawat Hossain.
In light of the complex economic challenges facing our country, including an economic downturn, a dollar crisis, geopolitical issues, high inflation, an influx of bad loans, and capital flight, Dr. Salehuddin Ahmed, currently a professor of Economics at the Business School of BRAC University, emphasised the pivotal role of functioning state institutions.
He stated, ‘No strategies can succeed if state institutions do not operate effectively.’
Discussing the precarious state of our country’s financial sector, Dr. Ahmed pointed out the decline in foreign currency reserves, escalating foreign debt, unequal asset distribution, low foreign direct investment, inconsistent policies, and a lack of political will to implement necessary reforms.
He highlighted several state institutions, including the Bangladesh Bank, Security Exchange Commission, Bangladesh Telecom Regulatory Commission, and Bangladesh Energy Commission, which, in his opinion, were struggling due to insufficient political will.
Salehuddin Ahmed emphasised that the political party in power should limit its involvement to policymaking and refrain from interfering in the day-to-day operations of these institutions.
He criticised the practice of banks granting loans based on political considerations and expressed concerns about the Bangladesh Bank repeatedly accommodating loan rescheduling requests under pressure from vested interests.
Referring to the recurring loan rescheduling as pervasive incentives, he argued that this sends the wrong message to responsible entrepreneurs who consistently repay their loans.
He warned, ‘If this culture of concessions persists, the number of responsible entrepreneurs will decline’.
Dr. Ahmed pointed out that due to repeated loan rescheduling over the past decade and loan scandals in both state-owned and private banks during the same period, depositors’ interests had been compromised, and the overall banking sector had weakened.
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