Bangladesh says banks, private sector need two-year buffer as ‘stolen funds’ deepen stress

He warns that "a lot of banks are practically bankrupt" without urgent recovery

Finance Minister Amir Khosru Mahmud Chowdhury has said Bangladesh is grappling with a massive capital deficit of around $200 billion, underlining the creation of a short-term economic “cushion” to stabilise the banking system and the private sector.

Speaking in a featured interview aired during the Atlantic Council’s coverage of the IMF-World Bank Spring Meetings, Khosru laid out what he described as the scale of financial “looting” that has weakened the domestic economy.

“The stolen money that came out of Bangladesh is over $200 billion,” Khosru asserted.

He identified this outflow as the central driver of the country’s current liquidity crisis, arguing that the loss of such a vast volume of capital has eroded the foundations of the financial system.

He explained that this sustained drainage of resources “has created a capital deficit that is there in the private sector”.

The consequences, he suggested, are already visible across the banking system, which is under acute liquidity stress.

Offering a stark assessment, Khosru said: “A lot of banks are practically bankrupt.”

He stressed that immediate stabilisation requires a buffer period.

“For now, what Bangladesh needs is a cushion for the next two years by way of replenishing the capital deficit in the banks and the private sector… These are the top priorities.”

“Without this, talk about any other reforms is not going to get us anywhere,” he said, underlining that broader economic restructuring would be ineffective unless the lost wealth is brought back into the system.

Khosru also pointed to mounting external pressures that are compounding the crisis, particularly the impact of geopolitical instability in the Middle East on global energy markets.

Bangladesh, heavily reliant on imported fuel, has been forced to absorb rising costs.

“We are out of pocket by nearly $2 billion already,” Khosru said, referring to the additional burden of securing energy supplies from the spot market amid disruption.

This dual strain -- internal capital erosion and external price shocks -- has intensified what he described as business stress, leaving the private sector constrained and unable to operate at full capacity.

“The private sector now needs to be salvaged,” Khosru said.

Without such intervention, the capital deficit would continue to suppress growth, weaken investment and hinder efforts to improve the country’s tax-to-GDP ratio, he added.

He acknowledged the difficulty of salvaging the private sector is “a big challenge” for the government.