Finance Division has expressed its worries over excessive government borrowing from banking sector, which has nearly crossed Tk28,000 crore as of July 22 this year.
The ministries and divisions encashed cheques for development projects at the end of the last fiscal year without making substantial progress in implementation works, official sources said.
Major part of the ADP funds was released in May-June period through cheques this year too in continuation of previous two fiscal years.
“The May-June syndrome hit the government’s financial transaction in development projects again for the third consecutive year, while last year the practice was the most of it,” said a finance division official.
It was also alleged that there were massive irregularities with the eleventh hour encashing of most of the cheques by officials concerned and project directors.
Public Works Ministry, Local Government Division, Home Ministry, Roads and Highway Division, Industry Ministry and Power Division are among the authorities which withdrew the money through cheques.
More than Tk9,000 crore was borrowed from the country’s banking sector on July 2. It was unprecedented as the government never withdrew such a big amount from banks on a single day since independence.
A high official termed the day as “Black Thursday” in the country’s cash withdrawal history from banks by government.
Transparency International Bangladesh Executive Director Dr Iftekharuzzaman said: “It’s good that finance division has identified the problem, but that’s not enough. The corrupt officials must be brought to justice setting example for others. Internal control and mechanisms must be strengthened.”
However, Bank and Financial Institutions Division Secretary M Aslam Alam emphasised the need to make proper use of the funds.
“The government’s high borrowing will be good for the country’s banking sector as it now has excess liquidity. But it’s necessary to make sure that the funds are utilised rightly,” he said.
According to the finance division data, as of July 22 the total borrowing from the country’s banking sector was Tk27,973 crore and the payment was Tk20,889 crore.
Of July 2 withdrawal, the power division got Tk4,099.13 crore on the same day, one of the big receipts.
Power division sources alleged that a Chinese company withdrew Tk70 crore from the finance division to procure energy-saving light bulbs under the power division development project in last fiscal year.
They also alleged the trumped-up land owner of Matarbari project withdrew fund from power division which was allocated for the development project in last fiscal year.
Power division withdrew Tk4,099.13 crore, and most of the which went to the payment to quick rental power plants.
As of 22 July local government division spent Tk1,242.09 crore to pay for development projects while public works ministry spent Tk1,106.56 crore, railway division Tk603.42 crore, roads and highways division Tk945.63 crore for the same purpose.
Other ministries and divisions that withdrew money at the end of the fiscal year include home ministry Tk1,578.04 crore, health ministry Tk1,463.56 crore, primary education Tk1438.17 crore, education ministry Tk1,302.28 crore, industries ministry Tk911.37 crore, agriculture ministry Tk861.62 crore, Bangladesh Army Tk543.44 crore and Bangladesh Navy Tk479.15 crore.
Besides, the government spent Tk1,114.21 crore to pay interest against domestic loans, Tk524.29 crore to pay interest of foreign loans, Tk3,827.04 crore for treasury bill and Tk308.67 crore for National Saving Instruments.
“But there is a great possibility of the development project funds being misused if the project bills are drawn from banks without showing progress of projects,” Dr AB Mirza Azizul Islam, former adviser to caretaker government, told Dhaka Tribune.
He added: “There is a risk of corruption if funds are taken in large scale for development projects.”
He said when the National Board of Revenue failed to collect sufficient revenue, the bank borrowing increased.
Meanwhile, bankers said the sluggish demand for money has been affecting banks’ business and swelling their unutilised funds.
Now, the banking sector has nearly Tk1,00,000 crore in excess liquidity while total liquidity of banking system is Tk6,00,000 crore.
– See more at: http://www.dhakatribune.com/business/2015/aug/02/bank-borrowing-exceeds-tk28000cr#sthash.I6KPWKB2.dpuf