Leading business figure and vice president of the International Chamber of Commerce Bangladesh, AK Azad, has called for tough action against loan defaulters, warning that the economy will not recover without accountability.
Speaking at a roundtable organised by the Centre for Policy Dialogue in the capital on Wednesday, Azad said the country’s average default loan rate has reached around 36 percent, rising to nearly 50 percent in state-owned banks.
“Those who took loans but did not invest in businesses must face strict action. Otherwise, the economy will not return to a stable position,” he said.
The event, titled “Looking into Bangladesh’s Development: Priority for the Newly Elected Government in the Short to Medium Term,” was jointly organised by CPD and The Daily Star at BRAC Inn Centre.
Private sector squeezed
Azad highlighted a widening gap between public and private sector borrowing, noting that the government is currently taking 32.19 percent of total bank credit, while private sector growth stands at just 6.1 percent.
“This means there is little or no access to funds for businesses,” he said, adding that gas shortages and limited energy access are further constraining industrial expansion.
He pointed out that 58 percent of government borrowing is spent on salaries, interest payments and subsidies—areas he described as non-productive. At the same time, revenue collection has weakened, with a shortfall of Tk 36,000 crore in just six months.
“With declining VAT, income tax and customs duties, how will development continue?” he questioned.
Energy bottlenecks hurting industry
Calling for increased investment in the energy sector, Azad said thousands of gas connection applications remain pending across ministries and distribution agencies.
Due to the shortage, industries are being forced to use costlier alternatives such as CNG to run boilers, significantly increasing production costs.
“If household gas is shifted to LPG, more gas can be diverted to industries,” he suggested.
He also alleged that around 10 percent of gas is lost through illegal connections and stressed that good governance and rule of law are critical to resolving the crisis.
Cut public spending, improve governance
Azad proposed forming a commission to review the necessity of multiple ministries and government departments as part of efforts to reduce public expenditure.
He also criticised what he described as excessive security spending for lawmakers, saying such costs are burdensome for citizens already struggling with rising living expenses.
Investment climate under pressure
Comparing Bangladesh with neighbouring countries, Azad said regions in India—including Karnataka, Odisha, Andhra Pradesh, Bihar and Gujarat—offer significant incentives such as up to 40 percent support for capital machinery, wage subsidies for female workers and utility subsidies.
“In contrast, we are borrowing at 13 percent interest, operating without gas, facing power shortages and relying on costly diesel. How can industries remain viable?” he said.
Beyond interest rate measures
Azad cautioned that raising bank interest rates alone cannot control inflation. He emphasised that sustainable development depends on stronger revenue mobilisation, increased investment and job creation.
“Only when industries operate fully will revenue grow, GDP rise and employment be generated,” he added