Sri Lanka would no longer exist if its situation was like Bangladesh, says finance advisor

The financial situation after fall of Awami League government is worse than Sri Lanka’s near-collapse in 2022, says Salehuddin Ahmed

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Finance Advisor Salehuddin Ahmed says that Bangladesh’s finance sector was in such disarray after the fall of the Awami League government that if Sri Lanka, which has undergone its own dire financial straits, was in the same situation, the country would no longer exist.

He made the remarks after meeting the Advisory Committee on Economic Affairs and Government Procurement on Tuesday.

The advisor said that the financial situation of the country had worsened due to irregularities in the banking sector during the previous government.

He said, "If we had not taken counter measures, the situation in Bangladesh would have been unimaginable. There is no money anywhere. The money has gone from all the banks.”

“Can you imagine! Has this happened in any country in the world? They have taken away the depositors' money. Usually, under such circumstances, the money of the directors is seized and given away,” he added.

“Now there is no money. We are giving out money from the central bank. Now we are planning how to give to CMSMEs [Cottage, Micro, Small and Medium Enterprises] and others through a special fund.”

Asked whether Bangladesh’s situation was better or worse than that of Sri Lanka, which saw its own government turnover in 2022, the finance advisor did not give a yes or no answer.

However, he said that the state of Bangladesh’s finance sector is more fragile than in Sri Lanka.

Following a mass uprising, former Sri Lankan president Nandasena Gotabaya Rajapaksa was forced to flee the country in July 2022. Images of the presidential palace being looted and vandalised spread widely in the international media.

Since then, the political parties opposing Sheikh Hasina have been saying that the situation in Bangladesh will be worse than that of Sri Lanka.

Over this period, Bangladesh provided a loan of more than $500 million to Sri Lanka. Sri Lanka has been able to turn around its economy in a short time and has repaid nearly half that loan.

But now Bangladesh seems to be in a situation similar to Sri Lanka, with inflation hovering around double digits for more than a year.

The finance advisor said, “Many people compare us to Sri Lanka. I see many things on talk shows. Sri Lanka and Bangladesh are not the same. If the situation were like Bangladesh, Sri Lanka would not exist.

“Now, 12 of our banks out of 60 are functionally effective. The rest are running on shoestrings. Has this happened in any country in the world? One-third of the banks are not working.”

“Sri Lanka was in a slightly more comfortable situation compared with Bangladesh. There were not so many conflicts there. There were not so many challenges there,” he mentioned.

“Whatever government took power, they received support. Here, there are many challenges. Many people do not like us. They say - go away. They’ll say anything. Despite this, we are trying.”

INFLATION TO EASE FROM APRIL

Salehuddin said that the steps the government is taking to rein in inflation will come to fruition in the months of April and May.

Regarding inflation, he said, "We will take on a major plan during Ramadan. The results will be seen in April and May. I have decided today.”

“The steps that we take now will bear fruit in May. Around June, if things go ideally, it can go down to 6 or 7 percent,” he added.

“For my part, I am saying that you will see some specific actions around March, particularly focused on the financial sector."