Abu Hena
In his essay, ‘Politics and English Language’ George Orwell condemned political rhetoric as a tool used “to make lies sound truthful” and “to give an appearance of solidity to pure wind.” Were he alive today, Orwell might be moved to use his pen in the use of financial lingo. Remember those state patronized financial scams in the Sonali and the BASIC banks, the default loans written off every year, the non–performing mortgages and collateralized debt obligations festering on the books of the state-owned banks?
Finance Minister’s 5th June budget speech has been transformed into a valuable collection that’s being left as an example for posterity. “Violence unleashed by the opposition parties,” the budget speech attempted to describe a phenomena causing carnage, is crazy. More insidiously such words are most frequently deployed to deflect blame.
The Government gets nothing from the four state – owned commercial banks, yet it has been pumping billions of taka almost every year in those banks in the name of recapitalization. In the upcoming budget the government has kept a provision for “dividend and profit” amounting to Tk. 30 million although these banks which have been constantly incurring losses hardly make any profit and pay dividend. The government has injected Tk. 41 billion into the four state – owned banks during the last fiscal as they faced capital shortfall following the financial scams for which they are losing their entities.
FM’s benevolence
The benevolent FM has planned to give another Tk. 50 billion to these banks in the next final year to meet liquidity crisis and Tk. 30 million as dividend and profit from the taxpayers funded budget ignoring the losses they continue to incur. Here a potential loss is spun as a political gain, an unbearable burden is shown as a beneficial gift. That’s what we mean by “Orwellian.” All these scandals are not the creations of the “violence unleashed by the opposition parties.”
‘Deficit financing’ is one of those expressions that is so negative that it is just a hyperbole. Its prior nomenclature—‘excess of expenditure or liabilities over income’ was just corrosive. So the shrewd financial operators came up with the new sugarcoated coinage to make it palatable to the public. The goal is to present unpleasant things in a way which is acceptable. ‘Deficit financing’ simply means government funding of spending by borrowing. And deficit spending means, government spending in excess of revenue, of funds raised by borrowing rather than from taxation. In other words, the government is living beyond its means due to reckless spending.
This can go on for some time only if the borrowed spending generates, at a certain point, a critical leap in growth raising corresponding revenue earning to wipe off the deficit. But no such watershed has been envisaged by our budget planners, and they habitually take deficits for granted in careless national budgeting. The deficit financing is justified for boosting development activity only. It is certainly not justified for recurring expenditure or to meet unnecessary establishment costs which should be discarded. In the previous financial year, spending exceeded budgetary allocations on non – developmental sectors.
Deficit growing menacingly
The financing of the deficit budget in FY 2015 is set at 5 percent of the GDP but at the end of the day it will reach 6 percent at least to meet the senseless extravagance of the Writers’ Building style secretariat which hosts a ‘generalist’ establishment. The excess expenditure called the deficit will be met largely by domestic borrowing at a higher cost.
Last year the share of government’s bank borrowing rose to 64.7 percent against budgetary limit of 44.2 percent. During the first nine months of the current fiscal year, interest payment increased by 18. 9 percent against the limit of 16.2 percent projected in the budget. The planned budgetary framework for FY 2015 reveals that total expenditure will be increased by 11.9 percent. Total revenue increase on the other hand will be only 9 percent. Increased domestic borrowing will put the economy under pressure of high interest payment as we failed to secure the WB credit for the Padma Bridge at the interest rate of 0.75 percent payable in 40 years with a 10 year moratorium.
In his budget speech the FM expressed his satisfaction over the implementation of ADP saying, “We achieved remarkable success in the implantation of ADP.” At the same time he said, “the Economic Relations Division has identified 50 projects with slow implementation progress.” In his own words the government failed to match the Asian average of 6.8 percent GDP growth. Private investment scenario is all the more depressed. Investment has been hampered due to lack of infrastructure facilities, high lending interest rates, and lower flow of credit to the private sector. Remittances showed negative growth.
Current account balance dipped by 36 percent to US $1.38 billion in July –April of FY 2014 as against US$ 2.18 during the same period last year. In the FM’s own words: “Experts have identified three main obstacles to achieving the investment and GDP growth target. These are (1) underdeveloped communication infrastructure (2) power and energy deficit and (3)lack of trained manpower.” The expert opinion, thus, has nullified all his boastful narrations about ‘ remarkable’ developments in various sectors.
Govt.’s questionable role
In his speech the FM openly admitted his government’s questionable role in the stock market scandal. Our capital market suffered a major setback, and small investors became the worst victims of the situation by losing their investment,” he said. The erosion of business confidence began with the stock market debacle and then came the banking scam which created a crisis in inter- bank business. All these years under this government the country has been plagued by inflation. It is one of the major identifying factors marking the fragility of Bangladesh economy. “We will ensure participation of people of all strata with the mainstream of nation building. Decentralization of local government has always been our priority and one of the election pledges … we have taken many initiatives to strengthen local government institutions,” he said.
He then expressed his unrepresentative government’s inability in “doing away with the heavily centralized administration.” He pledged to “leave issues like education, health, law enforcement, social safety “in the hand of local government.” Then suddenly he realized, “it will require massive administrative reforms … because of the fact that here centralized administration is so deeply rooted that it is quite hard to dismantle.” ‘Dismantle’ is the word he used which means “take to pieces. “ He has chosen the right word but it will require bulldozers to do it.
All the multi – storied buildings the walls of which are infected with deadly virus of cancer need to be bulldozed by a people’s government. The present parliament which has 153 Hijacker members cannot ‘dismantle’ the entrenched perpetrators in the country’s seat of government which has at least 600 posts called OSDs fed by people’s tax money. This ‘government’ is the epitome of the gross violation of the Fundamental Principles of State Policy as enunciated in the Constitution: “(11). The Republic shall be a democracy in which fundamental human rights and freedoms and respect for the dignity and worth of the human person shall be guaranteed and in which effective participation by the people through their elected representatives in administration at all levels shall be ensured.”
The writer was the country’s first PR to the World Customs Organization in Brussel, retired early from Civil Service and got himself elected to the parliament twice. He was the Secretary General of PROKRICH, an organization of the professional groups in civil service].
Source: Weekly Holiday
