Prolonged interim govt tenure may cause greater economic damage: Fahmida Khatun

Centre for Policy Dialogue (CPD) Executive Director Fahmida Khatun has said prolonging the term of the interim government will cause economic damage, stressing that politics and economics are closely linked and elections are essential for stability.

She made the remark while addressing a "Shadow Parliament" debate competition in Dhaka today (27 September), organised by Debate for Democracy on "Bringing Discipline Back to the Banking Sector Through Bank Mergers."

"Elections are very important. Politics and economics go hand in hand. The longer the interim government's term is, the greater the economic damage will be," she said.

Discussing the banking sector, Fahmida said, "The process of bank merger is complex. Although the Bangladesh Bank is talking about two years, it will take three to four years."

She criticised the way banking licences were granted in the past.

Fahmida said, "The number of banks in our country is much higher than needed. Bank licences were not given for the welfare of the people but for personal interests. The Bangladesh Bank has helped in looting through loopholes in the law.

Elections are very important. Politics and economics go hand in hand. The longer the interim government's term is, the greater the economic damage will be

Fahmida Khatun Executive Director, CPD

"The central bank is moving towards mergers to restore discipline in the country's banking sector. However, there is no good example of a merger in the country before."

She noted that the Bangladesh Bank plans to merge five banks, which together will hold 8.4% of the sector's assets and an authorised capital of Tk40,000 crore.

"There is a plan to reduce costs by increasing the use of technology and improving efficiency. However, if this initiative fails, the current authority will have to take responsibility. And if it is successful, the banking sector will go a long way forward," Fahmida said.

For reforms to work, she said, the central bank's independence must be ensured, along with new laws and integrity among those enforcing them.

Debate for Democracy Chairman Hasan Ahamed Chowdhury Kiran, presiding over the event, said, "The Bangladesh Bank had many policy mistakes. Despite having sufficient legal authority, the Awami League government did not allow the Bangladesh Bank to work properly. Some accepted political influence out of fear of losing their jobs, while others took advantage by abusing their power."

"Banks have practically helped the financial sector's mafia in providing immoral benefits. At that time, a mafia economy was ruling the country. I hope that is now ending," he added.

Kiran further said, "Before our very eyes, several banks, including the best bank, Islami Bank, have been looted. Thieves and robbers have embezzled the money of depositors of these banks in foreign currency and smuggled it abroad. The few banks that were approved on political considerations are now in a very weak condition. The main objective of the owners was to embezzle money and smuggle it abroad."

Calling for reforms and stability, he said, "For this, a stable government is needed to bring discipline back to the financial sector. A government that will learn from past irregularities and take up reform activities. A credible and fair election is needed as soon as possible. If there is a good election in February, stability will return to the country, investment will increase, and good governance will return to the financial sector."

At the debate, Southeast University (government party) and Government Teachers' Training College (opposition party) participated, with the opposition team winning.