Analysts question ‘absence’ of plans for troubled banking sector in Kamal’s first budget

Analysts have questioned the “absence” of any clear plans in AHM Mustafa Kamal’s maiden budget to tackle the mounting default loans and lack of discipline in banks.

Published : 13 June 2019, 07:23 PM
Updated : 13 June 2019, 07:48 PM

Economists have also questioned whether it is wise to propose a huge revenue target of Tk 3.7 trillion for 2019-20 in the Tk 5.23 trillion budget while the collection missed the target by Tk 220 billion in the outgoing fiscal year.

“Stern measures will be taken against the willful defaulters of bank loans,” Kamal said in his speech in parliament on Thursday, without specifying the measures.

He noted that the government has launched a scheme for borrowers, who defaulted “unwillingly”, to repay the loans with down payment and interests. 

He said instruments like Wage Earners’ Bond, venture capital, treasury bond, including a vibrant bond market, will be encouraged to stop the banks from giving long-term loans by collecting short-term deposits.

Palli Karma-Sahayak Foundation or PKSF Chairman Qazi Kholiquzzaman Ahmad, however, thinks Kamal should have been more specific on his plans about taking the banking sector out of trouble. 

Qazi Kholiquzzaman Ahmad

Many electoral pledges of the Awami League, like providing rural people with urban facilities, creating jobs for the youth, and reducing inequality, have been reflected in the budget along with emphasis on education and technology, according to Kholiquzzaman. 

“But we have a big issue in our banking sector. It should have been addressed in the budget more clearly. It speaks about a banking commission. Maybe they (commission) will be able to solve the problem,” he added.

Zaid Bakht

Zaid Bakht, now working as Agrani Bank chairman, said some things have been said in general, some specific on the banking sector, but there are no details. “Maybe for strategic reasons since not all things can be said in budget.”

He said he did not like the facilities given to loan defaulters for repayment. 

“Only two of the 11 groups were able to use the exit (similar facilities) the last time,” Bakht said.

Debapriya Bhattacharya

“There have only been a few remarks about the troubled banking sector in the budget speech, but nothing recognisable,” Centre for Policy Dialogue or CPD Distinguished Fellow Debapriya Bhattacharya said in an immediate reaction.  

“And what’s more, where will the individual investors get the money if the government borrows from the banking sector?” he asked.    

Selim Raihan

Agriculture and the “much-discussed fragile banking sector did not get “desired” attention in the budget, Dhaka University economics teacher Selim Raihan said.


To meet the revenue target, Kamal plans to bring all eligible taxpayers under the tax net.

“He (Kamal) has revised down the revenue target by Tk 220 billion for the previous year (2018-19) but we believe there will be a deficit of Tk 850 billion. So the revenue collection target this time is not realistic,” Debapriya said.

In Raihan’s view, with the “poor” structure of the tax system and laws, it is “not possible” to increase the tax-GDP ratio “significantly” within the next couple of years, as mentioned by Kamal.

Bakht sees implementing the budget will be a challenge, for which he says skills and political will be needed.

Toufique Imrose Khalidi
Editor-in-Chief and Publisher