Page 67 - ICE BUSINESS TIMES January 2020

Identifying rescheduling of bad loans is also increasing. outstanding loans. On the other hand,

the banking sector is facing a liquidity
Several policies have been undertaken in
crisis. Domestic credit to the private
2019 which are not going to help improve the
sector has also been below the target of
health of the banking sector, rather benefit
the loan defaulters. Those are taking the
Bangladesh Bank. On the other hand,
government borrowing from the banking
banking sector backwards. All good practices
system has been on the rise due to low
are being scrapped one after another in the
banking sector. The independence of the
high expenditures of several mega
central bank has been undermined by external
projects. The cost of these mega projects
influence. All banking policies are being
has escalated over time due to weak
devised under the directives of the powerful revenue generation and underwriting the
and groups. In June 2019, the total share of accountability and transparency.
NPL was as high as 11.69 percent of total Therefore, on the one hand, low revenue
generation and on the other hand, high
bank borrowing by the government are
going to have serious ramifications on
the government’s fiscal management.
Currently, Bangladesh’s youth
unemployment rate is 10.6
percent, more than two and a
half times the national average.
How can this issue be best
addressed?
High economic growth has not been able
to create enough jobs in the economy.
Particularly, the youth have not been able
to find suitable jobs despite university
and college degrees. One of the features
of our growth has been that, surprisingly,
growth has been achieved despite low
As we step into the new private investment. Indeed private
decade, what is the investment has been stagnant at around
biggest challenge that 23 percent of GDP for the last couple of
lies ahead for our years. Hence without any private
economy? investment, the economy could not create
Our domestic resource at 16.1 percent revenue-GDP tax net, but also the large tax adequate jobs. More worrying, the higher
the education level, the higher the
generation has become a ratio and tax-GDP at 14.1 evaders whose incomes are not
major challenge, especially in percent by FY 2019-2020. It is always accounted for. The NBR unemployment level. The other feature is
that though there are some demand for
view of high development now unlikely that these targets has to be fully automated and
expenditures. Despite high of 7FYP will be fulfilled. Efforts human resource development workforce in the economy, employers do
not find our educated youth suitable for
growth of gross domestic towards generation of revenue should be an ongoing process.
product (GDP), tax-GDP ratio through higher direct taxes those jobs. This implies that there is a
mismatch between the demand of the
in Bangladesh is the lowest in should be the priority. We are Bangladesh’s ranking in
South Asia. This trend of gradually becoming dependent soundness of banks is employers and the supply of graduates.
This emphasizes the need for
shortfall from the targets has on indirect taxes which are the lowest among the
started since FYI 2012. The inequitable and discriminating South Asian countries, modernising our education system in line
with the need of the market. On the other
short-fall of revenue –GDP towards the lower income what are the factors that
ratio is now on an increasing groups. We have not seen lead the sector to this hand, our economy is not large enough to
accommodate each and every job seeker.
trend. Our tax-GDP ratio is effective implementation of the
even lower than the average new Value Added Tax (VAT) state? How will the Therefore, opportunities for self-
employment have to be created. Youths
ratio in the Least Developed law. Initiatives are needed for fallout affect the
Countries (LDCs) where it was expansion of tax net and government? who want to be entrepreneurs should be
provided with training and access to
about 15 percent in 2017. We reduction of tax avoidance. The banking is in shambles at
are about to complete the The National Board of Revenue the moment. The amount of finance. Sadly, while thousands of crores
are being siphoned off from the banks by
tenure of the Seventh Five (NBR) should not only target non-performing loans (NPLs)
Year Plan (7FYP). In the 7FYP the fixed income salaried has been increasing Dr Fahmida Khatun loan defaulters, banks show little interest
to provide loans to new small
the Revenue-GPD target is set people who are already in the continuously. On top of it, the Executive Director
practice of writing off and Centre for Policy Dialogue (CPD) entrepreneurs.
61
www.ibtbd.net