Economy 'shifted from ICU to HDU, will soon be in ward': Finance adviser

Finance Adviser Salehuddin Ahmed likened Bangladesh's economic recovery over the past year to moving from a hospital's Intensive Care Unit (ICU) to the High Dependency Unit (HDU), saying the economy has been pulled back from the brink of collapse.

Responding to a question during a press conference at the Secretariat today, he elaborated on the medical metaphor, saying, "For a poor country, the economy will not return to a cabin — it will move to a paying bed or a ward first, and then go home." 

He added that by January next year, the economy is expected to be healthy enough to return to the ward.

Salehuddin said during its one-year tenure, the interim government stabilised the economy, but restoring private sector confidence remains a major challenge.

He noted that restoring the private sector's confidence will depend on the policies adopted by the next government, which will assume office through a general election, likely in February.

Acknowledging that regulatory issues still persist in the banking sector, the adviser said many banks are still unable to return depositors' money despite large bailouts.

He added that the economy is now relatively stable, with lower inflation, improved banking sector stability, a balanced balance of payments, stabilised exchange rates, and rising foreign reserves.

Several reforms have been implemented quietly. Outstanding bills to companies like Adani, Chevron, and ITFC have been cleared, the adviser said. "We haven't completed everything, but we've started on the right path. Progress could be faster, and mistakes may have happened."

Explaining the need to borrow from abroad due to insufficient revenue collection, he said revenue depends on the state of business and trade. "If business confidence improves, revenue collection will also increase."

Regarding the recent NBR protest, the adviser said, "At that time, I called them [protesting NBR officials] for talks several times, but they did not come. In no country do government employees halt everything to protest."

Salehuddin Ahmed expressed hope that although the initial GDP growth estimate was 3.97%, the final figure will be between 5% and 5.5%. "Many countries, including Indonesia, are experiencing negative growth. Our tunnel isn't dark; there is light."

The finance adviser added that while macroeconomic stability has returned, there has been no change at the micro level. "According to statistics, employment and wage rates have fallen, yet it's still hard to find workers in rural areas."

List of money launderers prepared

Salehuddin Ahmed said efforts are ongoing to recover stolen assets linked to 11 influential individuals from the previous government. Additionally, a list of over 25 money launderers, each involved in laundering more than Tk200 crore, has been compiled.

Recovering laundered money is difficult, but the key destinations have been identified. Assets have been seized abroad, including in the UK, and all domestic assets of the launderers are frozen.

Salehuddin emphasised that sending a strong warning to launderers is more important than recovering funds. "If the next government ignores these cases and encourages laundering, the problem will worsen," he said.

BB has full independence in policy, operations

Salehuddin Ahmed affirmed that the Bangladesh Bank operates with full independence in policy and operations. Unlike the Bank of England, which only handles monetary policy, the Bangladesh Bank also monitors the banking sector.

"During my tenure as governor across three governments, I saw no compromise in independence," he said.

He said a sovereign government and central bank should maintain a system of checks and balances, agreeing with some of the bank's demands for independence.

BB governor's remarks cause some banks' deposits to decline

Salehuddin Ahmed said that deposits at some banks have decreased following comments by Bangladesh Bank Governor Ahsan H Mansur on bank restructuring. "I wouldn't have said that," he added.

The adviser mentioned that funds have been allocated in the budget for bank restructuring, but the exact amount cannot be disclosed. He assured, "We guarantee that no depositor will lose their money. Every depositor will get their money back."

The finance adviser added that there is an ongoing internal discussion on the timeline for restructuring banks and non-banks. "I have asked the governor to prepare a resolution regarding non-banks that cannot return depositors' funds—how much is owed and how they will repay. If necessary, the finance ministry will provide funds."

Regarding banking sector reforms, Salehuddin said discussions with political parties have been fairly extensive. "Necessary steps will be taken by December. But if the next government changes everything and takes over banks again like the previous AL era, nothing can be done."

The finance adviser also mentioned ongoing reforms in the insurance sector.