How does the budget this time differ from the budgets of the past years?
Salehuddin Ahmed: The first difference is, this budget in no way can be dubbed as overly ambitious. This budget will have no unrealistic or non-implementable false promises. We have limited resources and so our budget will be small in size.
Prothom Alo :
The budget may be small in size, but you will still have to borrow significantly.
Salehuddin Ahmed: That we will have to do. We will certainly have to borrow from domestic and foreign sources. However, we'll borrow less from domestic sources. We will keep the budget deficit lower than five per cent of the GDP. We will not take too much bank loans.
With the budget ahead, what challenges do you foresee?
Salehuddin Ahmed: Keeping the inflation in control is a significant challenge. We have accepted this challenge. Then there is the matter of maintaining the macro-economy. Actually, not just maintaining it, ensuring that it is sustainable too. Revitalising the private sector is yet another large challenge.
Prothom Alo :
How will you revitalise the private sector? The growth of credit in this sector is only around 7 per cent. Deposit growth is also low. On the other hand, the tax-to-GDP ratio is just a little over 7 per cent. In such tight conditions, why are you taking on mega projects again?"
Salehuddin Ahmed: If the tax-to-GDP ratio had increased by even 0.5 per cent, it would still have crossed 8 per cent. We are taking certain steps. Let's see how it goes. We are planning business-friendly initiatives in the upcoming budget to boost private sector growth. During Awami League's tenure, a lot of loans went bad. Banks can't just issue loans at will. As for the mega projects that you mentioned, they're "mega" per se. Take the Bay Terminal, for example. It will require USD 1 billion (100 crore). It's not a massive project like the metro rail or the Padma Bridge.
How will you tackle the inflation challenge?
Salehuddin Ahmed: We will ensure the supply chain. The agriculture sector will be given priority. We haven’t stopped importing fertiliser. We've also done well in importing rice. Essential items like soybean and lentils are being procured. This will continue. Fortunately, the Sylhet region has seen good production this time. Prices of products like fish and eggs have also come down to a more affordable level. At one point, egg prices had increased significantly. We will take further measures in the upcoming budget. Bangladesh Bank will play a positive role in the small and medium enterprise sector.
Businessmen create various layers to embezzle money. Identifying politicians is much easier. People know that politicians shouldn’t own as many as ten flats, yet in London, one person was found to own so many flats!
Prothom Alo :
Then again, the growth of deposits has dropped too!
Salehuddin Ahmed: If people's businesses don't grow, deposits naturally decline. However, we are working to simplify trade. Licences will no longer need to be renewed every year. Better days are ahead. That’s why the projected growth of private sector credit is being slightly increased. There will be a budget deficit - that’s expected. We will receive USD 3.5 billion (USD 350 crore) from institutions like the International Monetary Fund (IMF), the World Bank, etc. This will help as budgetary support, though it won’t be enough. Because the budget is being downsized, the Annual Development Programme (ADP) is being reduced to Tk 2.16 trillion. (Tk 2 lakh 16 thousand crore). We’ve seen that five-year projects often end up taking 20 years to complete. We’re trying to ensure that doesn’t happen anymore, so that the tendency to print money also decreases.
At the beginning of the government's term, we had the impression that a lot of investment would come in; but isn’t it true that without a political government in charge, no domestic or foreign investment comes due to the uncertainty of policy continuity?
Salehuddin Ahmed: It is easier to take investment decisions when a political government is in place. The interim government has undertaken some reform initiatives. If the reforms in sectors like banking, the NBR, and information technology are successful, they will yield positive results for investment. It will take some time to see the benefits of these reforms. And where would a large volume of investment come from anyway? There is a global economic slowdown going on. Over the past 15 years, control over everything in the country was in the hands of a few groups. There was one group, for instance, that owned banks on one hand and were also members of parliament. At that time, there were no equal opportunities.
Around six or seven banks are unable to return people's money. And around another 20 financial institutions are not in a good shape either. A Bank Resolution Ordinance has been enacted. Many insurance companies are also in poor condition. This is how the financial sector is operating. What will you do?
Salehuddin Ahmed: The Bank Resolution Ordinance will be useful. Work is underway on several aspects of the banking sector. One focus is asset recovery. A special fund is also being created. In addition to recovering funds, this fund will be used for public welfare initiatives. A large amount of money involved in money laundering has also been identified. The main point is that trust in the banks must be restored. It is gradually returning. For example, confidence in Islami Bank is being restored. As for the smaller banks that won’t be able to survive, the Bank Resolution Ordinance can be applied to them. But I can say one thing: all depositors will get their money back. It might take some time. The insurance sector also urgently needs reforms. It was unregulated. Owners used to run off with the premium money. The Insurance Development and Regulatory Authority is trying to fix things, but the owners are unwilling to cooperate.
Prothom Alo :
Cases are being filed against political leaders and they are being caught, but what about the embezzlers of the financial sector?
Salehuddin Ahmed: Twelve groups, including Bashundhara Group, Beximco Group, Summit Group, and Sikder Group, have been identified. Many bank accounts holding more than Tk 20 billion (Tk 200 crore) have been frozen. Our country lacks sufficient expertise in forensic audits, so financial sector fraud cannot be effectively detected. Additionally, businessmen create various layers to embezzle money. Identifying politicians is much easier. People know that politicians shouldn’t own as many as ten flats, yet in London, one person was found to own so many flats! It is natural for businessmen to have money. In this case, it is said that businessmen may have laundered more; whereas in politicians’ cases, it is said they have abused power. Still, we are not letting anyone off the hook, and we are sending a message that in the future, no one will get away.
Prothom Alo :
Isn't there lobbying and requests to release people, catch people?
Salehuddin Ahmed: We are flooded with lobbying and requests -- drop this, drop that, do this, do that. But we take our decisions with much scrutiny and caution. We freeze personal accounts, but not those of companies.
Prothom Alo :
Is Bangladesh Bank running smoothly?
Salehuddin Ahmed: I feel the Bangladesh Bank governor is very serious. Over the past 15 years, the values at Bangladesh Bank regarding monetary policy and foreign exchange rates had become quite negative. There was a lack of leadership. Gradually, trust is returning. However, senior officials are somewhat afraid because of past failures. No one wants to take risks, knowing they will be held accountable if something goes wrong. This has slowed down the pace of work. I say they can move forward with moral courage.
A reform commission has been formed for the financial sector. How far will the commission's recommendations be reflected in the budget?
Salehuddin Ahmed: Financial accounts are no longer negative. Even before receiving funds from the IMF, the reserves are in good shape. The recommendations will be implemented as much as possible.
Prothom Alo :
Is there any possibility of getting back the money that has been siphoned out of the country?
Salehuddin Ahmed: There are certain procedures for this and these are underway. Some have been identified. Some accounts have been frozen, and some assets are being auctioned. It is difficult to recover what has gone abroad, especially to places like the Cayman Islands, where no taxes are imposed.
Prothom Alo :
From the next fiscal, will land registration fees be based on market value, instead of the current mouza-based value?
Salehuddin Ahmed: We are working on this to see if it can be somewhat market-based. This hasn't been finalised as yet.
In Gulshan, Dhaka, when a flat is registered, the buyer is the one who has to pay the registration fee based on the declared price of a flat. A flat worth Tk 30 million (Tk 3 crore) might be registered at just Tk 6 million (Tk 60 lakh).
So black money is being generated through the government’s own system!
Salehuddin Ahmed: Yes, many honest people are becoming owners for black money for no reason at all. For now, we’re not considering this at the village level. We’re thinking about it in the pourashavas or divisional cities. We might not be able to do it this time. A committee has been formed on this matter, headed by the land secretary. They held a meeting last Tuesday. Nothing will be done abruptly in this budget. If it's implemented indiscriminately, this may lead to injustice.
Those who live in the United States are not poor. At least they are not like those in the Middle East. As it is, there is a 2.5 per cent incentive. Let's see what can be done now. We cannot increase or decrease it all of a sudden.
The share market is virtually inert. What are your plans for the market?
Salehuddin Ahmed: The main regulator of this market is very strong. Many are calling for his resignation, but he doesn’t compromise. The irregularities in the stock market over the past 15 years are no less than those in the banking sector. A floor price was imposed in this market. Which country in the world does that? We’ve seen cases where a company registered at an address in Gazipur where cows are grazing on the land, yet its Tk 100 shares have risen to Tk 600. Why aren’t major companies coming out with Initial Public Offerings (IPOs)? Because going public means disclosing your profit and loss information, undergoing audits, and facing scrutiny at annual general meetings. Under the name of Sukuk bonds, Salman F Rahman took Tk 30 billion (Tk 3,000 crore) from ICB. There is a certain Abul Khayer Hiru from the department of cooperatives. He’s made a lot of money too. In my view, the stock market is not a place for short-term investment. In no stock market in the world do people earn profits month after month. Investment here should be for the long term.
Prothom Alo :
There is talk of lowering allocations for the social safety net sector in the next budget.
Salehuddin Ahmed: It will decrease in comparison to the GDP. However, certain allowances will increase. We now have to pay the primary school teachers. Their pension had been held up all these days. If you compare this with Korea or Thailand, we are nowhere near them.
What about India imposing a ban on 17 May on the import of certain Bangladeshi goods through the land ports?
Salehuddin Ahmed: The commerce ministry is assessing the situation. We will not get into any fracas with India over this, we will discuss and negotiate.
Prothom Alo :
A 5 per cent tax is going to be imposed on remittances sent from the United States. Won’t this be a serious cause for concern for Bangladesh?
Salehuddin Ahmed: What is to be done? We can carry out a study. However, those who live in the United States are not poor. At least they are not like those in the Middle East. As it is, there is a 2.5 per cent incentive. Let's see what can be done now. We cannot increase or decrease it all of a sudden.
Prothom Alo :
What are we finally doing about US' reciprocal tariff?
Salehuddin Ahmed: We are considering reducing tariffs on 100 items. In any case, tariff rates will have to be brought down, as that is the international practice.
Prothom Alo :
What is your final position on the implementation of the NBR division ordinance? The strike is still ongoing.
Salehuddin Ahmed: Dividing NBR into two departments is actually an international practice. The person who formulates the policy does not collect the revenue. However, they are not happy with this. They want to become secretaries of both departments. But this kind of thing doesn’t happen in any other country in the world. I have told them that people from the revenue sector will be given priority, but they don’t want priority. They want to be specifically assigned from the tax department.
If this ordinance is to be implemented, will the income tax, VAT and customs laws have to be amended?
Salehuddin Ahmed: The laws will have to be amended and that is why we are taking six months' time for this. It will not be implemented right now. Why are they so worried?
The staff structure will have to change. The number of NBR staff will not decrease, it will increase. And in the policy division, perhaps around 100 people will be employed. Senior officials have probably given the younger officers their version of the matter - they have their interests after all.
Prothom Alo :
In the same line of reasoning, then, the audit and accounts departments should have been separated too. This has been overlooked in the recent ordinance.
Salehuddin Ahmed: Yes, that would have been good, but we didn't want to take up so many things so suddenly at the same time.
Prothom Alo :
Let's end with a question on the budget. What sort of budget do we have in the offing?
Salehuddin Ahmed: This will be an equitable and welfare-oriented budget. The growth achieved earlier did not benefit all sections of society. The growth that will happen now will benefit all levels of society. Growth does not mean that just a few industries will sprout up, that won’t happen. We are preparing this budget with the goal that everyone should receive the benefits of growth. This budget will improve the lives and livelihoods of the people. It will be realistic, welfare-focused, and equitable.
Prothom Alo :
Thank you for the interview.
Salehuddin Ahmed: Thank you to Prothom Alo, too.
* This interview appeared in the print and online edition of Prothom Alo and has been rewritten for the English edition by Ayesha Kabir