Bangladesh鈥檚 banking sector has suffered a serious setback over the years, as people having political clouts received from banks various benefits beyond legal scopes, economists said.
At a programme at the Bangladesh Institute of Development Studies office in the capital Dhaka on Thursday to launch a book titled 鈥楤angladesh鈥檚 Future Development: Agenda for Reform鈥�, they said that widespread political influences in the financial sector caused lack of governance and deviation from principles.
The BIDS and the East West University organised the launching ceremony of the book written by former Bangladesh Bank governor Mohammed Farashuddin.
At the event, Wahiduddin Mahmud, chairman of the Economic Research Group, observed that governments assuming power without fair elections often resort to patronage politics, granting undue benefits to influential groups in an attempt to establish control over society.
He said that the undue benefits to the influential quarter affected honest entrepreneurs and damaged business environment in the country.
There are key sectors in the country that the government should shield them from political interferences, Wahiduddin said.
鈥楾he current regime is an authoritarian government cloaked in a formal democratic framework,鈥� Wahiduddin said, adding that assessing its popularity was complicated due to the absence of fair electoral processes.
He also emphasised that democratic rights, freedom of expression and human rights are crucial for the economic development of a nation.
There is no instance in the world where a country achieved economic development solely through infrastructure development without investing in human capital, Wahiduddin said.
Farashuddin suggested a three-year economic reform programme for the banking sector, saying that defaulted loans affected economy severely.
Criticising the practice of loan rescheduling, he remarked that top bank defaulters were receiving preferential treatment.
Farashuddin observed that loan defaulting, tax evasion and money laundering are all interrelated, often involving the same powerful group in these activities.
He also suggested political and constitutional reforms to ensure economic reforms in the country.
He expressed concern that political leaders often desire economists to serve as their subordinates, which should not be the case.
Instead, political leaders should make decisions based on recommendations from economists, Farashuddin said.
According to the economist, maintaining the taka鈥檚 exchange rate artificially high for a decade, imposing a cap on interest rates for over two years, and having multiple exchange rates severely affected the economy, and recovery would take a considerable amount of time.
Centre for Policy Dialogue executive director Fahmida Khatun said that political influence made the country鈥檚 banking sector weak.
The nation is now grappling with the consequences of poor governance in the financial sector, a situation that did not arise overnight, she said.
Fahmida pointed out that prioritising investment solely in infrastructure, while overlooking allocations for education and public health, has created an imbalance in the country.
She emphasised that such lopsided development would not be sustainable.
Prime minister鈥檚 economic affairs adviser Mashiur Rahman, East West University vice-chancellor Shams Rahman, BIDS director general Binayak Sen, economist MM Akash and BIDS research director Kazi Iqbal, among others, spoke at the event.
