IMMEDIATELY after the presentation of the national budget for the fiscal 2006-07 by Finance Minister M. Saifur Rahman on June 08 last, a section of the media and economists did not take too long a time to deliver the verdict: The government has kept a huge block allocation in the non-development part of the budget with an ill motive to influence the voters before the next general elections.
The finance minister in a rather defensive tone had said because of procedural reasons the ministries would not receive funds from the block allocation within the remaining period of the tenure of the present government.
But a good number of ministries and government agencies are now approaching the finance ministry for additional funds to meet very urgent and regular expenditures. The demands altogether until now has exceeded the block allocation in the budget by more than 50 per cent. The finance minister, if he desires so, may launch a counter attack on his critics. The way things are progressing, the demand from additional funds from various ministries and public sector agencies might even go beyond Tk.40 billion this fiscal.
The ministries/agencies that have placed demands with the finance ministry for additional funds include the education ministry, the Bangladesh Petroleum Corporation (BPC), the Biman, Bangladesh Airlines, the Power Division, Sonali Bank and the Bangladesh Telepgraph and Telephone Board (BTTB).
The education ministry has been forced to seek additional fund of Tk. 2.86 billion following the recent government decision to pay the remaining 10 per cent of the basic pay of the government teachers. The BPC, the Biman and the Power Division, which is working on behalf of the Power Development Board (PDB), are rather habitual fund seekers. It is an irony that the Sonali Bank, the largest public sector bank that used to dominate the call money market, is now pleading for funds from the finance ministry. But what is interesting is that the reasons for the four entities approaching the finance ministry for additional funds are interlinked.
The BPC needs additional fund to make payment against the import of fuel oils. It has been facing serious liquidity crisis because of the mismatch between the procurement and the sale prices of the fuel oils and the failure of the public sector buyers, namely, the Biman and then Power Development Board, to make payment against the purchase of petroleum products. The Sonali Bank is in deep trouble because the BPC owes it over Tk. 45 billion. More than a half of the amount has become non-performing. Another public sector Bank-Janata Bank-may soon be found in the corridor of the finance ministry seeking bailout funds.
Managing things, it seems, has become really difficult for the finance ministry. For instance, the finance ministry cannot ask the BPC to pay the money it owes to the Sonali Bank, for the Corporation has been forced by the government to pay fuel oils well blow its procurement costs. It has genuine ground to demand of the government the amount given as subsidy on fuel oils over the years. But the problem is that the government cannot ask the BPC straightway to increase fuel oil prices in the retail level to recoup a part of its losses, for obvious reasons. Similarly, the PDB sells power to the distribution companies below its procurement costs and incurring losses for years after years. This has forced the Board to default on the payments to the BPC against diesel oil purchase for some of its generation plants. The Biman management, being pressed by the BPC, had recently made it clear that no payment could be made on its part to against the purchase of jet fuel unless the government provides it with funds.
The quagmire in which the government finds itself now is the sheer outcome of its indifference to resolve the problems of corruption, inefficiency and prudent pricing of fuel oils.
Market analysts have predicted that the fuel oil prices in the international market would maintain an uptrend during the remaining months of the current calendar year because of geo-political reasons. In that event, the caretaker government as well as the next elected government might have to go through a difficult time when mobilization of domestic as well as external resources would not be that easy.
A near-drought situation in the northern part of the country has brought a bad omen for Aman, the second largest rice crop of the country, this year. If there was a shortfall in Aman production, the government might be forced to use a part of the reserve for rice import, thus making things more difficult for the finance ministry.