Written by The Banking Post
IMF estimates pegged need at up to $35 billion; stakeholders warn of institutional decay and demand political reform
The interim government is preparing a bailout package worth $5 to $6 billion to stabilise Bangladesh’s troubled banking sector, which is struggling under the weight of years of systemic irregularities, said Finance Adviser Dr Salehuddin Ahmed on Saturday.
The proposed figure stands in stark contrast to the International Monetary Fund’s (IMF) earlier estimate, which began at $18 billion and later ballooned to $35 billion.
“The IMF asked where we would get such a huge sum. I told them, let’s first see if we can restructure the sector within $5 to $6 billion,” Dr Ahmed said at the launch of a new book by Hossain Zillur Rahman, former adviser to a caretaker government.
Dr Ahmed, who is also a former central bank governor, acknowledged that the interim administration inherited an economy on the verge of collapse. While early signs of recovery are now visible, he cautioned that full recovery remains a complex and long-term challenge.
Banking Sector Hollowed Out
Citing severe institutional dysfunction, Dr Ahmed said some banks have up to 80 percent of their total loans classified as bad debts, a figure that underscores the gravity of the situation.
“If a bank’s total loan portfolio is Tk 20,000 crore, nearly Tk 16,000 crore has effectively vanished. This level of looting is unprecedented globally,” he remarked.
He further noted that while the infrastructure of public institutions remains intact, those responsible for their deterioration have not been held accountable. In many cases, administrative continuity has been prioritised over accountability.
“We’re trying to work with existing personnel—either by persuasion or pressure—but clearly, a countervailing force within the system is essential,” said the adviser.
