Prothom Alo: Why did you change the fiscal year? What will be the benefit?
Amir Khasru Mahmud Chowdhury: The fiscal year had been July-June all along. Now it will be April-March. When the fiscal year starts in July, it's the monsoon season. We noticed that preparation is done during the dry season, but work starts in the monsoon, delaying budget implementation. Most work is done towards the end, meaning a significant amount of time is lost in preparation. Now, work can be done in full swing during the dry season, making project implementation much easier. Previously, work had to start in water, leading to wastage and corruption. We used to say that money went in the water, and this is similar. Many times, money released at the last moment would literally end up in water. We decided on a new fiscal year to avoid this.
Prothom Alo :
Prothom Alo: Was any study or analysis conducted before this decision was taken?
Amir Khasru Mahmud Chowdhury: Why is that necessary? Everything is already in our hands. We can see everything. With this new decision, we expect project implementation to be much faster, reducing waste and corruption.
Prothom Alo :
Prothom Alo: When you took charge six months ago, what was the state of the economy, and in which indicators are we better off now? We want to know about both successes and failures. What challenges are you facing, and where are the obstacles?
Amir Khasru Mahmud Chowdhury: Let's talk about the successes first. Firstly, the foreign currency reserve was 34. 02 billion dollars on 15 February. By 13 August, it increased to 37.11 billion. The balance of payments was 2.28 billion dollars surplus on 26 January, and it rose to 6.61 billion dollars by 26 July. As we all know, remittance growth continues. The policy interest rate has been reduced from 10 per cent to 9.5 per cent. Interbank transaction rates and other interest rates are also decreasing. Public confidence is returning to the banking system. There has been significant growth in bank deposits. We have somewhat been able to prevent capital flight. Necessary measures have been taken to discourage the culture of loan defaults. A strict stance has been taken towards establishing accountability in the banking sector. The government's and Bangladesh Bank's measures to prevent bad loans from increasing further are starting to work. I believe there has been good progress in the financial sector over these six months.
Prothom Alo: What are the failures then?
Amir Khasru Mahmud Chowdhury: The first thing I would mention is inflation. We have reduced it a bit in July, but we still don't think it's under control. It needs to be reduced further. Secondly, private sector investment and loan growth have not increased as expected. Thirdly, the problems with gas and electricity persist. We haven't reached the desired level of industrial production. These issues are interconnected; we can't just increase electricity production or gas supply overnight. It will take time. But external pressures have caused us significant harm. Unfortunately, the war in the Middle East started within a week of us taking office, leading to increased prices for all goods. The impact of rising oil and gas prices on productivity is inevitable.
Prothom Alo :
Prothom Alo: You did not mention what you are unable to do due to obstacles?
Amir Khasru Mahmud Chowdhury: No, there is no opportunity to face any obstruction. We are an elected government. We have a manifesto and promises to the people. Our first task is to fully deliver on these promises, which we are implementing one by one. There will always be both positive and negative aspects to the economy. But we will continue to fulfill our fundamental responsibilities to the citizens.
Prothom Alo :
Prothom Alo: The interim government had undertaken several initiatives, such as making the exchange rate more market-based, merging five banks, dividing the NBR into two parts, listing business groups for recovering embezzled funds internationally, and enacting a Bank Resolution Act. Which of these initiatives do you not support, meaning which, if absent, could have been better and are now your responsibility to carry?
Amir Khasru Mahmud Chowdhury: We are implementing these fully. However, they did some things halfway, making it cumbersome for us and giving us a hard time. They couldn't manage these matters well. For instance, NBR was divided into two halves incompletely, creating some problems, and now we're fixing them. For this reason, we haven't passed the related bill yet. If tax policy isn't determined accurately and by the right person, it impacts the overall tax system. We are aware of this. Therefore, we decided the creators of tax policy won't exclusively be bureaucratic; there will be a team of experts. Discussions will happen not just internally but also with stakeholders. There will be evaluations of how tax policy impacts inflation, living standards, and the environment. But the interim government left it in a way where many complications have arisen. I'm hesitant to articulate these issues. The work is progressing - the NBR will be divided into two.
Prothom Alo: And the merger of five banks and other issues?
Amir Khasru Mahmud Chowdhury: That was also half-done. I can't discuss whether it's for good or bad now. The Bank Resolution issue is very tough. There's nearly Tk 2 trillion deficit. It's tough for the government alone to cover that. Significant embezzlement happened abroad too. Perhaps this could have been handled better. Since it has happened, our duty now is to see how we can implement it properly. We're working on it, Insha'Allah. We'll manage, but it'll take time. There's no need to debate whether it could have been done differently now. Our priority is to ensure depositors' funds remain protected. A clause in the Bank Resolution was included, that has been cancelled, but all else remains intact. The exchange rate is almost market-based.
Prothom Alo :
Prothom Alo: Will depositors in the five banks, those who had deposited 10 one crore, two crores, or five crores, get their money back?
Amir Khasru Mahmud Chowdhury: We are working on ensuring that with full vigour. If we can't provide security to the depositors, and they lose faith in the banking sector, then the economy won’t operate. We will implement this, even if it takes some time.
Prothom Alo :
Prothom Alo: Which type of depositors are you referring to? Small or large?
Amir Khasru Mahmud Chowdhury: Depositors mean depositors. There's no issue of big or small here. Again, stating that whoever has deposited in the bank, if their funds aren't protected within this banking system, the public will lose faith. So our initiatives are for everyone, not just the small or large ones. Many people have deposited their lifetime earnings with great difficulty in the bank; I hope we will succeed in returning it.
Prothom Alo: You have often discussed economic reforms and deregulation after assuming office as Finance Minister. How much have you managed to achieve?
Amir Khasru Mahmud Chowdhury: This too is a challenging task. The problem is so ingrained in the culture of Bangladesh that removing it by its roots will take time, as it's entangled with corrupt businessmen and government officials. But we are committed to doing it. Without this, we won't be able to transform the economy in the direction we envision. We can't achieve economic democratisation which we're advocating without deregulation. Investment won't come without deregulation, which in turn won't generate employment, or fuel economic growth. For years, the country became overly regulated due to the favour-based economy.
Prothom Alo :
Prothom Alo: Ordinary people assess government success by market prices, income, and employment. In these six months, have people seen any real changes in any of these three?
Amir Khasru Mahmud Chowdhury: The employment package announced for Tk 650 billion aims to enhance employment. Small and medium industries produce more employment. The policy rate has been reduced. Inflation has slightly decreased. A quasi-market-based exchange rate is functioning. Nearly 12-13 thousand jobs have been added within the banking sector itself. We've deregulated and relaxed tariff rates to attract investment. The initiatives we've taken according to our manifesto, and those to be taken, if implemented fully, will foster employment, growth, and reduced inflation.
Prothom Alo :
Prothom Alo: Between boosting growth and reducing inflation, which would you prioritise?
Amir Khasru Mahmud Chowdhury: We need to achieve both - growth and controlled inflation. International factors affect inflation, which we can't control. Inside the country, if we can cut business costs and create a business-friendly environment, we'll undoubtedly see positive results. Previously, due to corruption and the tax system, people faced hardships.
Prothom Alo: Why should someone invest in Bangladesh?
Amir Khasru Mahmud Chowdhury: Investment has occurred in Bangladesh. Both local and foreign investors have stepped in. But without moving away from patronage politics, genuine investors might hesitate. We have managed to cultivate that environment. Our message is clear—there's no room for patronage anymore. We've created and will continue to create an environment where everyone can participate and benefit from the economy.
Even the stock market, which faced major issues, corruption, and embezzlement, won't face the same troubles again. It had turned into something akin to a casino. No reputable company will enter a casino-like market. With the environment we're crafting, a new commission formed, and restored public trust in this commission, we see the stock market is gaining traction. Companies are motivated to enlist.
There's another matter too—there's a connection between the banking sector and the stock market. The stock market had collapsed in the past. Everyone was forced to take loans from banks. This shouldn’t be. Massive loans at high interests—how feasible is that? Banks took short-term deposits to offer long-term loans. This scenario shouldn't occur. The arena for large financing is the stock market. Banks should furnish working capital.
Prothom Alo :
Prothom Alo: When can we see this scenario where the stock market handles large financing and banks manage working capital?
Amir Khasru Mahmud Chowdhury: One can't set a date for the economy. For creating momentum in the economy, we have taken many steps, laws have changed and will change further. Restored trust in the stock market is important. Since changing the commission, trust has returned.
Prothom Alo: Why didn't you change it sooner? Trust would have returned earlier.
Amir Khasru Mahmud Chowdhury: Appointments take time. Rushed appointments can't be granted. We worked for three months to ensure appointments. We've decided not to appoint anyone political to the financial sector. Expertise, integrity were checked before appointments, and once made, people saw they were justly appointed.
Prothom Alo :
Prothom Alo: Recently, former leaders from Chhatra Dal and Juba Dal have been appointed as chairmen of various corporations or entities.
Amir Khasru Mahmud Chowdhury: Those are fine. I referred to the financial sector. However, proper audits will now proceed in these organisations too. Previously, audits weren't conducted properly.
Prothom Alo :
Prothom Alo: You were discussing investment and employment. You're aware of the low loan growth in the private sector. Rather than offer to entrepreneurs, some state-owned banks like Sonali are investing heavily in treasury bonds. Is this their responsibility?
Amir Khasru Mahmud Chowdhury: You've pointed at the right spot. I am aware and am stopping it. We'll set a liments in treasury bonds, in reality, it's weak performance.
Prothom Alo :
Prothom Alo: Despite relief in dollar markets and reserves, imports of capital machinery and raw materials are declining. Private sector loan growth is at its lowest, and businessmen are waiting for new investment decisions even after six months. How long will this wait last?
Amir Khasru Mahmud Chowdhury: From both the Awami League and the interim government, we inherited a colossal problem. This isn't something that can be corrected overnight. We're trying to exit this problem promptly, but it will take time. We are in a transition from a patronage-based model to democratisation. We've gained some results from the initiatives taken. The private sector is highly encouraged by our policy measures. We have received full support for the budget from the private sector. They have warmly received this budget. You've seen that after the budget, commodity prices haven't spiked.
Prothom Alo :
Prothom Alo: You mention reducing the interest rate for policy loans. Is this enough for investment amidst crises in gas and electricity, extortion, weak law enforcement, and bureaucratic complexities? Will lower policy rates alone attract investments?
Amir Khasru Mahmud Chowdhury: You're correct, I agree with you. However, my argument is to follow the trajectory of the economy. Is it heading downward? It's not. We are encouraging entrepreneurs to touch the stock market. Taking loans from the stock market incurs no huge interests. If profits occur, they will pay dividends. We've simplified direct listing - applications previously lying for years will now be processed within three months. Roughly 20 companies lean toward listing. The remaining challenges will take some time.
Prothom Alo: You mentioned a two-year timeline to overcome the gas and electricity crisis and a two-year timeline to tackle economic stagnation to establish complete recovery within four years. What are the interim plans to increase production, restart closed factories, boost investments, increase employment, and control inflation during this period?
Amir Khasru Mahmud Chowdhury: I referred to transitions from fragile to stable and finally to prosperity in two years and four years. This will proceed sequentially. Unfortunately, the 18-month tenure of the interim government wasted much of our time. During that period, they barely focused on gas sectors. The time went to waste, causing substantial harm. They dragged the country further down during that long pause. Now we have to do everything all at once.
Prothom Alo :
Prothom Alo: Did you equate the interim government's tenure with that of the Awami League?
Amir Khasru Mahmud Chowdhury: Yes. Add the interim period of a year and a half with the Awami League’s 15 and a half years, making 17 years of clutter to clean up and advance the economy. We need to pull it out of the pit first, then stabilise it before the economy gains true momentum. You will see that the economy will take off by the fourth or fifth year. We are doing all the policy work, reformations, and receiving positive feedback. Foreign fund managers are coming. We expect to bring in 2 billion US dollars from Hong Kong. Confidence in the economy is growing.
Prothom Alo :
Prothom Alo: In the recovery of bad loans and embezzled funds over the last six months, how visible is the progress?
Amir Khasru Mahmud Chowdhury: We've identified about 70 to 80 thousand crore takas (Tk 700 billion to 800 billion) of embezzled funds. We are still trying to identify more. Work is ongoing. If I say money will be returned shortly, it will be misinformation. Extracting those funds from embezzled host countries is challenging. The governments of those countries may not cooperate, nor do those who have the money. However, recovery efforts continue. Those who think they can embezzle and enjoy abroad will be disappointed. Recovery attempts will persist till the last day. Some results will be noticed.
Prothom Alo: The electoral manifesto includes promises of forming a commission for financial sector reform and abolishing the Financial Institutions Division under the Ministry of Finance. Do you still hold that position?
Amir Khasru Mahmud Chowdhury: Certainly. We're progressing with our reforms. In the budget, most of our reform steps have been introduced. The commission's task was deregulation, which we fulfilled largely now. For the rest, if feedback indicates issues, they can be addressed too. The matter of the Financial Institutions Division is still a part of our thinking. The economy is so delicate that closing it will not result in a stronger economy tomorrow morning. I need a good position before heading that way. Still, what we said is on our mind. Once the economy stabilises, we'll tackle that.
Prothom Alo :
Prothom Alo: The government backed away from the earlier IMF programme because it didn't align with national interests. Which conditions were objected to? In the new IMF programme, what reforms are required? Should conditions arise to cut subsidies, raise taxes, or increase power and energy prices, what will be the government's position?
Amir Khasru Mahmud Chowdhury: Our primary responsibility remains towards the people. Globally except for us, almost all countries have raised electricity prices. Due to the energy crisis, they have raised oil prices; the US prices doubled, Sri Lanka's by 25 per cent. People's purchasing power has dwindled. Initially, we were reluctant to raise prices until the very end. After that, there remains the subsidy. Removing the oil subsidy would increase electricity prices four to five times—is that acceptable to Bangladeshi citizens? Could they afford it? They’re providing their statements, and so are we, stating that we'll execute everything but with sequencing. In today's economic backdrop, making such moves is tough. Eventually, we'll head in that direction, but our economy must first reach a certain point.
Prothom Alo: What's the status of the IMF's new loan programme?
Amir Khasru Mahmud Chowdhury: We exited the previous IMF programme. There's no benefit in accepting IMF loans contrary to our national and public interest. The past fascist Sheikh Hasina government accepted everything. They had no responsibility toward the public. But we do, as an elected government. We've told them to drop the previous one and develop a new programme. The updates on the new programme are being done; discussions will begin. We've stated that everything will be done, but the sequence must be different. Discussions on the new programme will commence anew.
Prothom Alo :
Prothom Alo: Can it be a situation where, if the IMF conditions aren’t met, then the loan won't be available?
Amir Khasru Mahmud Chowdhury: Let's see. The loan isn't too significant. We've provided an electoral manifesto. The public believed in us, which is most important for me.
Prothom Alo :
Prothom Alo: On one side, you're indicating a shortfall in the government treasury, while on the other, you plan for a new pay structure and a large development budget. Where will the funding come from? Many think this will increase debt or inflationary pressure. What's your opinion?
Amir Khasru Mahmud Chowdhury: Look, our tax to GDP ratio is one of the lowest globally. With the initiatives taken, we hope tax collection will increase. Previously, inefficiency, lack of governance, and corruption plagued tax collection, which we're rectifying. You've seen good collection in the fourth quarter of the last fiscal year. We're striving for transparency in this regard, and the message has spread. We expect to meet our target. We're noticing signs. Management is strengthening. NBR will become two parts. Collectively, I can say we won't need excessive borrowing. We'll explore alternative financing modes, as the government always borrows from the banking sector, often depriving the private sector.
Prothom Alo: Where will funding come from for the new pay structure?
Amir Khasru Mahmud Chowdhury: We can't provide it all at once.
Prothom Alo :
Prothom Alo: Even in two installments, it's a hefty sum.
Amir Khasru Mahmud Chowdhury: Not even in two. We're working on this. Calculations are ongoing. Due to massive imports, revenue space has significantly shrunk. Even with intent, we can't release everything at once.
Prothom Alo :
Prothom Alo: Will the announcement to give from July this year be upheld?
Amir Khasru Mahmud Chowdhury: As I mentioned, we're working on this.
Prothom Alo :
Prothom Alo: You're elected for five years; six months have passed. What is the plan for the remaining four and a half years? What's the message?
Amir Khasru Mahmud Chowdhury: The message is we're navigating carefully and accurately. We ask for cooperation to successfully democratise the economy, as intended. We're transitioning from a challenging state, and government alone can't achieve this. A collective effort is needed.