Reforms for country's sake, not just IMF loan

The loan from the International Monetary Fund (IMF) has necessitated reforms. The banking sector, revenue, and energy price adjustments must be scrutinised in this regard.

It is not a stretch to say that the banking sector is not doing well. Money laundering and defaults have continued and need to be checked.

Secondly, our tax-to-GDP ratio is less than 9% – the lowest in South Asia and one of the lowest in the world. The tax net thus needs to be increased. But it must be done in a particular way. Sometimes the rich get to escape paying taxes as others have paid their taxes.

Then, we need to look at our energy policy. The import cost, domestic production cost etc all must be reviewed.

We have these sudden hikes in price, which is absurd. Once the price goes up, it never comes down again. The weaknesses are inherent in the current practice.

When energy costs rise, everyone wants to pass on the buck. The independent power producers and the Power Division try to transfer all the costs onto others. This would not work. The government needs to shoulder some of the burdens. It should be treated like health and education, i.e., subsidies where required.

Finally, we have the banking sector. Bank directors now have too much influence. Even their tenure has been increased. We need to carefully keep an eye on a bank's capital-debt ratio. The directors also need to play a decisive role. Furthermore, the central bank also has a significant role here.

When we look at the reforms suggested by the IMF, we must also understand: these reforms should not be just for the loan. They need political will. And these must be done for the sake of the country.

Salehuddin Ahmed is former governor of the Bangladesh Bank