Govt turns to idle funds of state-owned orgs for development funding
The amount is more than the annual development budget for fiscal year 2019-20
In a major policy decision, the government has decided to redirect fixed deposits of different stated-owned organisations into various development projects and social welfare activities.
The government identified a total of 68 autonomous, semi-autonomous and statuary bodies; public non-financial corporations, and other self-governed institutions whose fixed deposits in total stands at Tk 212,100 crore. The amount is more than the annual development budget for fiscal year 2019-20.
Majority of the money is owned by 25 organisations, which also include some educational institutions like National University and Technical Education Board. Bangladesh Petroleum Corporation
(BPC) tops the list with Tk 21,580 crore in long-term deposits with banks, followed by the Petrobangla with 18,204 crore, the Power Development Board (PDB) with Tk13,451 crore, and the Chattogram Port Authority with Tk9,913 crore.
The government will enact a law to bring the money to its exchequer without any legal hassle. Once promulgated, the law, in the form of a draft approved by the cabinet yesterday, will supersede all other exiting financial corporation laws.
Bankers say, the move may put the country’s banks and financial institutions that are already facing liquidity crisis in further trouble.
“The banking sector will face liquidity crisis, if government takes away the fixed deposits of different organisations,” Managing Director and CEO of Mutual Trust Bank Anis A Khan told The Business Standard.
Briefing journalists at the Secretariat, Cabinet Secretary Mohammad Shafiul Alam said that the organisations will deposit all their idle money to the national exchequer, while keeping their necessary operational costs and 25 percent emergency fund.
The cabinet, presided over by the Prime Minister Sheikh Hasina, gave its nod to a draft law that will facilitate 68 state-owned and autonomous bodies to deposit their idle money with the national exchequer.
The cabinet secretary said, there are some projects that remain stalled due to fund crunch, and the idle money can be invested in there.
In a summary sent to the cabinet, Finance Secretary Abdur Rouf Talukder said, additional money can be spent for the country’s infrastructural developments and the mega projects, which will eventually help the government’s plan to build a developed nation.
“We can implement the mega projects speedily by using the idle fund. This will have direct impact on GDP growth, while reducing government lending and interest burden,” he wrote in the summary, drawing a logical ground for the best use of the idle money.
The finance secretary said the organisations, instead of depositing their additional money to national exchequer, are keeping the amount in their bank accounts and, in many cases, not utilising it properly or misusing or using it for luxury; cashing on their autonomy.
Chairman of Brac Bank Ahsan H. Mansur said there could be detrimental effects from this decision. “If they are financial organisations and if they have future investment plans, they may face financial problems in future.”
For example, he said, Chottogram Port Authority uses their surplus money for their expansion programme. “If the government takes their surplus money, how will they continue with the expansion programme?” he questioned, saying the government should make such issues clear.
The banker said the move will prove harmful if it is applied equally to all the organisations.
He sees the move positive from a different perspective. “There are some institutions who hide their money, using the fund for self-interest and taking benefits from the banks against their deposit.”
Asked whether the government’s move will harm autonomy and financial liberty of the organisations, the Cabinet Secretary said that it is not aimed at doing so. “We are not going to put the organisations in trouble,” he told the journalists.
The organisations are run by their own rules. A minister, meanwhile, believes that the entire deposited money of these organisations will not end up in government coffers.
“They will basically now try to reallocate the money under different expenditures,” he said
According to the draft law, the organisations will immediately send additional money to government exchequer within three months after conclusion of the financial year.
If any organization gives false data of its deposit amount, punitive measures can be taken against it, says the draft.