The man with the plan, is the impression one walks away with after an audience with Finance Minister AHM Mustafa Kamal. Later, one is invariably met with the question: was he being a little too optimistic and naive?

Jovial, conversational and clued in with the facts on the ground, Mustafa Kamal seems to delight in the unconventional when it comes to solving some of the problems troubling the country and the economy.

Take the case of the single-digit interest rates that the government set for banks from April 1, which Kamal brokered. 

The move is his boldest yet since taking charge of the finance ministry on January 7 last year and has theoretically broken down the market mechanism for funds: it dictated a uniform interest rate for loans and savings, instead of letting the interplay of demand and supply determine them.  

“This will be a turning point for Bangladesh’s manufacturing sector,” he told The Daily Star on the eve of the announcement of this significant government move, in what was his first interview with the media since becoming Bangladesh’s finance czar.

Not only will entrepreneurs be rushing to banks to materialise their longed-for investment plans, which they put in the back burner for the prohibitively high interest rate, the move will also solve the malaise of default loans, he thinks.

Kamal is of the opinion that the root cause of default loans in Bangladesh is not the lax corporate governance, corruption or the absence of enforcing rules and regulations -- but the high interest rates.

“Our scheme will save everyone. The outstanding loans will not race ahead. We will know who the genuine businessmen are.” 

He went on to cite the case of a businessman who took a loan of Tk 97 lakh from a private bank in 2012. In 2014, he repaid Tk 1.10 crore. But, the bank is still demanding Tk 1.73 crore after waiving off Tk 40 lakh of interest. 

The businessman does not have the capacity to pay the bank anymore and is now going through health problems because of the anxiety stemming from this outstanding loan with the bank. 

“I get very upset when I hear such cases. What is the point of earning and expanding your balance sheet this way? What is the point of increasing assets at inflated rates? It is not good to charge so much.”

When asked if it is correct to fix the interest rates for banks in a market economy, Kamal was dismissive. “In the name of quantitative easing, didn’t the US, the biggest proponent of free market, print papers?”

But, he feels he has cracked a win-win situation for all.

Sonali, Janata, Rajshahi Krishi Unnayan Bank and their ilk give out loans at 5 percent interest under many schemes, he said.

“They get those funds from the government. If they can, why can’t the private banks? We will give them those funds now. If they get money on the cheap, why will they not give out loans at low interest?”

Indeed, in his media briefing the following day, he announced that 50 percent of the government funds, which were almost exclusively in the hands of state banks, will be kept with private banks to provide them a steady supply of funds.

“It’s a fool-proof system. Banks had an important role in our development, in halving our poverty rates. They will never face losses -- I will make them stronger.”

He also means to help banks recover loans from willful defaulters like Hall-Mark Group and has even thought up a plan.

“We will try to take out their cases from court. Many of them have 3-4 members of the family in jail and their properties are going astray. We will try to bring one of them out on bail -- maybe the women first -- so that they can sell off their assets. From jail, they can’t do anything and the government is the eventual loser in all this.”

He will sit with the stakeholders soon and work out a scheme for willful defaulters, who might have to pay 25 percent down payment to regularise their loans. 

“We are not taking the matter lightly. We might have to look at the issue from a human viewpoint.”

Asked for a timeframe for this plan, the youthful-looking 72-year-old was surprisingly candid: “Does anything happen according to timeframe in Bangladesh?”

His sideswipe is not without reason.

When he became the finance minister, he was assured that all tools needed to implement the much-delayed VAT and Supplementary Duty Act 2012 from this fiscal year will be ready.

“I was assured by the finance secretary that we have the allocation and we will get the machines and scanners as and when needed.”

But that has not been the case.

“It’s one thing to plan and another to execute. I thought it would be so easy. But now I know that is not the case. Those who were working on it never said anything negative or asked me to back out from the July 1 roll-out.”

He blames this for the flagging tax collection in the first four months of the fiscal year as the value-added tax is the biggest source of revenue for the exchequer.

“Now that I know what the situation is I will be very hands-on. Hopefully we will see some results over the next six months,” he said, adding that he will sit at the National Board of Revenue premises for two days a week from now on.

His plan is to install the 10,000 electronic fiscal devices that have arrived -- out of the requisite 2 lakh -- at places with high sales turnover like in supermarkets to set the ball rolling. 

He will also recruit 1,000 to oversee VAT and income tax collection this year. 

The initiatives are expected to yield 10-12 percent collection growth of the NBR come the end of the fiscal year.

Over the next four years, he plans to recruit 25,000 in total for the revenue authority. They will assess whether the individuals have the capacity to give income tax and ask them to file returns. At the same time, if people are paying less tax, they will look into it too. 

They will try to convince those people but there will not be any harassment, he said, adding that he will assign people up to the upazila level and set up multiple tax offices in the economically flourishing places.

“I’ll collect tax from those who have the capacity to pay -- they cannot get away without paying any tax. Even if it’s a little they will have to pay. To start off they will pay less and then gradually increase.”

These two avenues will have to shoulder the burden for mobilising revenue for the government: customs will be cut some slack as an expansive list of duty waivers has been offered for the mega projects and to spur industrialisation.

“No country in the world gives as much exemptions as us. It was not possible to collect any revenue from them what we imported thus far in the fiscal year.”

Were those duty waivers not in place, Bangladesh’s tax-GDP ratio would have been 14 percent and not the existing 9.2 percent, which is one of the lowest in the world, according to Kamal.

Some of the exemptions are necessary but some will be reviewed too, he said, while citing the case of the power sector to further his point. At the onset, the power sector was given a host of exemptions; but they are slowly being withdrawn.

“At the moment, employment generation is more important for us than revenue generation. If we seek applications for 1,000 vacancies, 25,000 show up. If we can’t give them employment, what’s the point of the government? We would have failed in our responsibilities.”

But, a restructuring of the tax administration to get it up to speed with modern times -- and particularly automation -- is definitely on the cards.

“It’s not possible to do everything overnight,” he said, adding that the reforms he will be ushering in will eventually pay off.  

Kamal, who was in the textile business previously, also seems to have devised a plan for garment exporters, who have been crying out for devaluation of the local currency to give them a competitive edge.

He is emphatically against the possibility of devaluation, an idea which has been pushed by economists and exporters alike. “I will not devalue as we are import-dependent. We will die!” 

But in keeping with his alternative thinking, he is planning to give garment exporters Tk 5 extra for every dollar of their export receipts.

He has dispatched men to India, Vietnam, Sri Lanka and Thailand -- all Bangladesh’s competitors in global apparel trade -- to get first-hand knowledge of whether those countries’ governments are giving this benefit to their garment exporters to give them a leg up.

“If they are, we will too.”

The move will cost the government Tk 4,000 crore extra, but that may be offset by the surge in foreign currency, like his similar initiative for remitters have done.

In his maiden budget, he allocated Tk 3,500 crore to provide 2 percent cash incentive to remitters -- a move the government credits for the record remittance inflow of $18.32 billion in 2019.

That budget -- which was long on promises but short on specifics and came across as empty rhetoric -- will be the blueprint for his next four budgets.

“I’ve prepared the budget for 2041 -- it was a comprehensive budget.”

What the country needs to become an advanced nation is in there, he said.

“Whichever areas need reforms are in there. All I need is to implement them. I need to work hard. It’s a long road ahead -- and we are just getting started.”