The ousted Awami League government held the people hostage by securing an International Monetary Fund bailout under harsh conditions because it had no accountability to the public, Prime Minister’s Economic and Planning Adviser Rashed Al Mahmud Titumir said today (18 April).
Speaking as chief guest at a seminar titled “Macroeconomic Stability, Financial Capacity and the Government’s 180-Day Action Plan,” organised by the Economic Reporters Forum, Titumir said the previous government had entered into the IMF agreement under terms that were harmful to Bangladesh’s interests.
“They [IMF] said they can change their conditions, but we cannot change ours,” he said. “The previous government took shelter in the IMF programme and held the people hostage.”
Titumir said the current government’s policy is to respect agreements signed with the IMF and the United States, but any provision found to be contrary to the country’s interests would be reviewed.
“Our principle is to respect the agreements signed with the IMF and the US. But if there is anything contrary to the national interest, we will examine it carefully,” he said.
He questioned whether Bangladesh could realistically raise the tax-to-GDP ratio to 9.2% when the economy had been left with only 3% growth.
“We inherited an economy growing at 3%. If we are now told to raise the tax-to-GDP ratio to 9.2%, can we do that?” he asked.
Titumir also criticised the IMF’s recommendation to impose turnover tax.
“They are asking for a turnover tax. If a single businessman from Teknaf to Tetulia wants such a measure, then we will do it,” he said.
The adviser said the IMF’s Article IV consultations apply to all countries and argued that its approach to subsidy reduction should therefore also be applied equally.
He said Bangladesh supported reform of the Special Drawing Rights system.
Titumir defended the government’s decision not to increase fuel prices despite IMF pressure to reduce subsidies.
“During the Russia-Ukraine war, the Awami League government repeatedly increased electricity prices even though international oil and gas prices did not rise,” he said.
“Now, if fuel prices are adjusted further, inflation will increase sharply. Diesel carries the largest subsidy, and if its price is raised during the irrigation season, farmers will suffer. That is why the government has not increased fuel prices.”
The adviser said the IMF’s own figures showed that poverty in Bangladesh had increased over the past three years.
“Now, when we are introducing farmer’s cards to reduce poverty, they say direct subsidies cannot be provided in this way. This contradiction cannot continue,” he said.
Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue, who attended the seminar as a guest of honour, said uncertainty over whether Bangladesh would receive the sixth and seventh tranches of the IMF loan programme due to difficulties in meeting the conditions would send a negative signal to the market.
He criticised the trade agreement signed with the US, saying it would not only be economically harmful for Bangladesh but could also have geopolitical implications.
“The government will have to make a decision on this as well,” he said.
Mustafizur said inequality in Bangladesh is increasing and warned that the government’s ambition to build a $1 trillion economy might not be inclusive.
He noted that debt servicing had received the largest budget allocation over the past three years and said Bangladesh must increase revenue collection to avoid falling into a debt trap.
The economist also questioned how the government would finance its commitment to allocate 5% of GDP each to education and health and 3% to social protection.
“At present, these three sectors together receive 5% of GDP. If the government wants to raise the allocation by another 8% percentage points, it must explain which sectors will face cuts,” he said.
Mustafizur added that investment would not recover unless the banking sector improved.
“How much profit will an investor have to make if borrowing costs are 13-14%?” he asked.
Titumir said the government would work to prevent the poverty rate from rising while increasing investment, employment and revenue collection. He said allocations for education, health and social protection would be raised gradually.
He also said the government is working to ensure strategic reserves of key products, including fuel and edible oil.
Agreeing with business leaders’ demands for policy continuity, the adviser said the government would not only maintain policies but would also monitor implementation on a quarterly basis.
He said the Bangladesh Bank would introduce a “large package” to help revive closed and distressed factories. “This may take the form of a refinancing scheme, a credit guarantee or another arrangement. The monitoring process may also be simplified.”
On the provision in the proposed Bank Resolution Bill allowing former owners to return to failed banks, Titumir said the measure was intended to ensure equal opportunity for all.
“Anyone who opposes it may challenge it in the higher courts,” he said.
The adviser also said the government would support business leaders if they organised a buyers’ conference aimed at persuading foreign clothing retailers to pay fairer prices for garments produced in Bangladesh.
The seminar, chaired by ERF President Daulat Akter Mala, and moderated by ERF General Secretary Abul Kashem, was also addressed by BGMEA President Mahmud Hasan Khan, BKMEA President Mohammad Hatem and Footwear Leather Goods and Accessories Exporters Association Secretary General Md Rafiqul Islam.
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