‘Debt servicing a concern’
Around 18 per cent of Bangladesh's revenue is currently spent on debt servicing each year, creating a concern for the economy, according to Syed M Ahsan, professor emeritus at Concordia University in Canada.
"If the amount increases, the government's capacity to finance other sectors, such as health and education, will squeeze," he said at a seminar, titled "Debt and Development: Where is Bangladesh Headed?"
The Bangladesh Institute of Development Studies (BIDS) organised the seminar at its office in Dhaka.
"The number of banks in Bangladesh is much higher than its economic volume. This will not bring any positive for the financial sector," Ahsan said.
"We do not allow any bank to fail but this is a bad culture. Banks facing losses should be allowed to fail," he added.
Ahsan then suggested that deposit insurance should be increased to protect the clients' funds.
Almost all countries monitor all types of economic activities, he said, adding that the black economy is available in every country.
The black economy refers to people who operate entirely outside the tax and regulatory system.
A group of people does not show their business transactions to avoid taxation, he said.
However, such types of economic activities are also calculated by the respective authority of the foreign nations, Ahsan added.
With this backdrop, he urged the central bank to detect the volume of the black economy and bring such activities under regulation.
Binayak Sen, director general of BIDS, said the ongoing Russia-Ukraine war has had a more adverse impact on the economy than the coronavirus pandemic.
"If the war prolongs, the economy will face more problems," he added.
Sen then said that Bangladesh has taken loan from the International Monetary Policy at the right time.
"If the suggestions of the IMF are implemented properly, the country will get benefit from it," he added.
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