But what is clear is that the government’s growing to switch to non-concessional loans and suppliers’ debt would only increase the per capita debt burden of the people and on the future debt servicing liability for the nation. For any government the huge chunk of the budget for debt servicing will only eat up the country’s growth potentials to a large extend that can’t be part of any good fiscal policy of a sensible government. Reports said annual debt servicing liability would be $ 3 billion once those loans become effective while the interest rate will also be 5 percent higher and repayment period will be shorter. Many fear that the country is stepping into a debt trap and our policy makers must be aware of it.
What is noticeable is that the country is facing the backlash of uncomfortable investment climate as both local and foreign investment is not enough forthcoming fearing risk of political uncertainty. This is a time capital flight is running high as most people want to protect their illegal money moving out abroad. But the government is switching at the same time to high cost loan to overcome investment shortfall that may come from money in normal situation from people moving out the money abroad.
What is most intriguing is that import bills on industrial machinery have increased by 48.10 percent over the past 10 months of the outgoing fiscal 2016-17 although such booming activities are not noticeable in the ground. That means most of the money has gone out of the country through over invoicing. There is ambiguity at all levels and lack of transparency and accountability shows that our financial system is totally unprotected. Money heist from Bangladesh Bank allowed the Governor to go escort free. Powerful people escaped from facing prosecution for grabbing several thousands crore taka from state- owned banks.
The Finance Minister is planning to use the high cost non-concessional loans and supplier’s credit for projects like Rooppur Nuclear Power Plant and Padma Bridge Rail-link, Karnaphuli Tunnel under the river and such other projects. But many fear that the high cost factors may make those projects unsustainable.
