The country’s economy is not in a good shape. Internal economic recession began due to political uncertainty following the 15th constitutional amendment which erupted the political turmoil. Contrarily, the world economy has regained from the recession.
Variables of macro economy are in the red for the absence of an investment-friendly atmosphere despite the liquidity at banks remaining superfluous. Shortage of confidence forced local investors to be reluctant in initiating new ventures resulting in a deadlock of the entire economy.
Top-to-bottom corruption in governance has gobbled up big chunks of revenue, and unchecked expenditures aiming at sustaining bureaucrats’ support ultimately laundered pockets of the masses. Aggressiveness to extract VAT, tax, levy, and tariffs for swelling revenue and raising prices of gas and electricity utilities, mount pressure on ordinary people who are in a battle to survive.
The policy taken by the government to reconstruct the economy has failed, as the systematic corruption is leaking out of all oratory initiatives. Because of poor moral strength to govern, and failure in securing confidence of the investors, the incumbent government has put the economy in a trap.
In spite of escalating external debt on 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, our sinking economy has failed to bounce back.
The government’s borrowing from the banking system unprecedentedly soared to 263% on a year-on-year basis in the first nine days of the current fiscal year as the expenditures exceeded revenue incomes, according to Bangladesh Bank estimation. The amount was Tk5,011cr during July 1-9, against Tk1,380cr in the same period of 2013, according to the central bank.
Moreover, the government has set a target to borrow Tk31,221cr from the banking system during the fiscal. But this oversized government borrowing from banks will only fail to achieve inflation-taming targets, and will provide less space for the banks to lend to the private sector.
Meanwhile, the government’s non-bank borrowing also surged in November because of its utter failure to make better use of available foreign funds due to poor project implementation. 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 the sale of savings instruments. If the current trend continues, the sale of the savings instruments would total 301% higher than that of the original target by the end of this fiscal year, which will further increase the government’s debt-servicing costs, jeopardising the economy.
In this situation, the government has recently framed a medium-term debt strategy, estimating to borrow as much as 60% of its total borrowing from external sources like WB, ADB, and IDB, including those of costly commercial loans.
Reports said the government could not utilise the foreign funds due to its perennial poor record of project implementation, although more than $19bn low interest loans were available for the country. In monetary terms, the net foreign financing declined by Tk1,699cr, and the bank financing by Tk34cr in the first quarter of this FY.
In the meantime, the government’s overall revenue earning was very poor in the first quarter of this FY. In July-September, the total revenue declined by 0.04% on a year-on-year basis. During the period, the total revenue collection was Tk34,785cr, which was Tk36,231cr in the same quarter last fiscal. The non-NBR revenue collection was the worst, slumping 45% on year-on-year basis to Tk6,543cr.
To meet the government’s vigorous expenditures demand, the central bank recently sold greenbacks of $45mn to five banks that explores the central bank’s inadequacy also. A plan was chalked to increase the tariffs of gas and electricity from January 2015 for households to businesses and industries.
Depending on users, gas prices might increase between 5% to 122%. The citizens are already battling to survive being struck by an ailing economy. The proposed pay hike of the government employees will push them further back.
Moreover, share market scams, the loan scams of Hall-Mark and Sonali Bank, Destiny, and money siphoning in state-owned Basic Bank slowed the once boosting economy. All efforts of the people to spell their fortune are being swallowed by the politics of vengeance.
The embattled economy of the country is further being mired by financial mismatches. The corruption in the state-owned banks has laundered millions in collaboration with the high-ups of the government, and the ruling party is pushing the banking system to the verge of a collapse.
The state apparatus of intimidation and punishment through NBR and ACC are all out to fetch more money for the corrupt appetite of the government. But the people are so pressed that they have hardly any money left to survive with dignity. This condition of the economy is caused by nothing but the total failure of the government. We demand a people’s government through free, fair, credible, and inclusive elections.
