Kazi Zahidul Hasan :
State-owned Enterprises (SoEs) continue to suck money from the state coffer owing to accumulated losses and outstanding loans to public banks posing a big fiscal risk for the government.
From fiscal year 2007-08 to 2016-17, SoEs’ accumulated losses stood at Tk 31,193 crore, according to Bangladesh Economic Review 2017.
On the other hand, out of 49 public enterprises, 11 received Tk 10,247 crore government subsidies/ grants from the fiscal year 2010-11 to 2016-17.
The SoEs also enjoyed a considerable advantage in access to funding through the banking system despite their moribund financial performance.
Combined debts (funded and non-funded) of SoEs in public banks stood at Tk 32,352 crore as of May this year compared with Tk 26,794 crore in fiscal 2016-17, according to an official figure.
The figure shows, SoEs racked up Tk 20,502.77 crore debts to Sonali Bank, Tk 5,796.43 crore to Rupali Bank, Tk 4,451.50 crore to Janata Bank, Tk1,654.24 crore to Agrani Bank and Tk 339.47 crore to BASIC Bank during the period.
“Losses of problematic public enterprises have mounted due to their operational inefficiency and poor governance. This situation was threatening to ruin public financing as the government had to provide taxpayers’ money to run the inefficient public enterprises,” Dr AB Mirza Azizul Islam, former Adviser to the Caretaker Government told The New Nation yesterday.
He said, the government should take reform measures to bring them in right shape, otherwise, they would pose huge burden on national economy.
When asked, Dr AB Mirza Azizul Islam said SoEs could merely turn profitable unless management and governance structures are improved. The government should modernize the SoEs, which are running well, and those found to be uncompetitive would be shut down.
“More than a quarter of SoEs are consistently making losses ultimately causing drainage to government funds. Besides, debt of public enterprises remains a major cause of concern because it was affecting the government’s ability to toe the fiscal line. The unprofitable SoEs also pose a ‘systematic risk’ to the public banks owing large chuck of outstanding loans,” Dr Zahid Hussain, Lead Economist at the World Bank’s Dhaka Office, told The New Nation yesterday.
He said the government should go for drastic reforms in the ‘debt-bloated’ public enterprises to improve their operational efficiency. “The government was supposed to initiate meaningful reforms in the ownership of SoEs, but it was stalled due to opposition from vested interest group which even halted SoEs’ privatization process.
Dr Zahid Hussain said that there is no logic to run the loss-making public enterprises with taxpayers’ money. Such practice, in the long run, will only enlarge the leakage of the state coffer and thereby pose huge burden on national economy.
