By Special Correspondent :
By all accounts, the country’s economy is not in a good shape. Downscaling of the economy began due to internal political uncertainty following the 15th Constitutional amendment causing political turmoil. Conversely, the world economy is regaining from the recession. Variables of macro parameters of the economy are in red for absence of investment-friendly atmosphere despite the liquidity overflowing at the banks. Lax confidence among local investors forced them to be reluctant from taking new ventures. Existence of top-to-bottom corruption in administration gobbled big chunks of revenue, and unchecked expenditures aiming at sustaining bureaucrats’ support ultimately put a burden on the masses. Aggressiveness to extract VAT, tax, and tariffs for swelling revenue and raising prices of gas and electricity utilities mount pressure on the masses, who are battling to merely survive.
The government had taken some policies to rebuild the economy but failed as corruption foiled all initiatives. Government’s poor moral strength to govern people and failure to secure the confidence of the investors put the economy in a trap. In spite of escalating external debts due to high interest, excessive internal borrowings from banks and non-banking financial institutions, increasing taxes, raising utility costs, and printing currency notes to meet the government expenditures, the sinking economy failed to rebound.
The government’s non-bank borrowing surged in November because of its utter failure to make better use of available soft foreign funds due to poor project implementation capabilities. As a result, the government’s debt servicing cost would rise in fiscal 2014-15. To plug the holes in deficit financing, the government, during the July-September period, depended heavily on non-bank borrowing through sale of savings instruments. If the current trend continues, the sale of the savings instruments would be 301 percent higher than that of the original target by this fiscal end which will further increase the government’s debt servicing costs and further jeopardize the economy.
In this situation, the government recently has framed a medium-term debt strategy estimating to borrow as much as 60 percent of its total borrowing from external sources like WB, ADB, and IDB including costly commercial loans. The strategy forecasts that the portion of concessional loans of the foreign loan portfolio would come down to 65 percent by 2017 from the existing 75pc, and the share of commercial loans or semi-concessional loans would rise from current 6.1 percent to above 14 percent by that period pushing down the nation under the wide blanket of debt.
Reports said the government could not utilise the foreign funds due to its perennial poor record of project implementation, although more than $19 billion in low interest loans were available for the country. In monetary terms, the net foreign financing declined by Tk 1,699 crore and the bank financing by Tk 34 crore in the first quarter of this FY.
The country’s existing debt portfolio as of 30th June 2013 shows that total debt stock was US$ 50.55 billion – of which external debt was US$ 22.59 billion or 45 percent of the total debt, and domestic debt was US$ 27.96 billion or 55 per cent of the stock, according to the Finance Ministry data.
The government’s overall revenue earning was very poor in the first quarter of this FY. In July-September, the total revenue declined 0.04 percent on a year-on-year basis. During the period, the total revenue collection was Tk 34,785 crore, which was Tk 36,231 crore in the same quarter last fiscal. The non-NBR revenue collection was the worst, slumping 45 percent on a year-on-year basis to Tk 6,543 crore.
The revenue deficit stood at Tk 1,738 crore in the first quarter, a stark contrast from the same period last fiscal year, when the amount was Tk 4,031 crore in the surplus. In the first quarter, expenditure increased by 13.4 percent on a year-on-year basis despite the slow pace of development spending. Total non-development spending was Tk 29,695 crore in the first quarter.
To meet the government’s vigorous expenditures demand, the central bank on last Monday sold greenbacks equal to USD 45 million to five banks, a report said.
In the meantime, a plan was chalked to increase the tariffs of gas and electricity from January 2015 for households, businesses and industries. Depending on users, gas prices might increase between 5 and 122 percent. The citizens are already battling to survive as they are struck by the ailing economy. The proposed pay hike of the government employees will push them further back.
The embattled economy of the country is further mired by financial mismatches. The corruption at the state-owned banks in collaboration with the high-ups pushed the banking system on the verge of collapse.
The state apparatus of intimidation and punishment through NBR and the ACC are all out to fetch more money for the cash starved government to meet expenses of their luxuries from the people by any means – lawful or unlawful. But the people are so pressed that they have hardly any money left to survive in honour. They are the victims of the oppression of the corrupt and inept government.
The worsening condition of the economy is the failure of government that necessarily deserves a change through a free, fair and credible elections.
