|
|
Change Your Life! |
Increased
govt borrowing may land annual national budget in a vicious credit cycle |
|
News |
May 29, 2000 Dhaka,
May 28 (UNB) – Increased government borrowing stakes may land annual
national budget in a vicious credit cycle, financial experts cautioned
today. “Maximum
of the net credits from the banking system, for the first time in the
current fiscal, accounts for the public sector compared to the private
sector,” said eminent economist Prof Wahid Uddin Mahmud, refraining from
disclosing the figure. However,
informed sources say the public-sector borrowings stood at around Tk 5,000
crore in July-May period of the outgoing fiscal 1999-2000. “The
budget may lead to the vicious cycle of credits and thus lose its
credibility if the borrowings exceed the permissible limits,” said the
Economics teacher of Dhaka University, who is also a member of the
advisory council on the Finance Ministry of the government.
Addressing
a seminar he observed the interest on the borrowed bank money would have
to be paid from the revenue budget. Bangladesh
Institute of Bank Management (BIBM) organised the seminar on “Politics
in Bangladesh and Changing Pattern of Banking” in its conference room. Chaired
by BIBM director general Dr Muinul Islam, the seminar was also addressed
Dr Atiur Rahman of Bangladesh Institute of Development Studies (BIDS) and
Dr Tawfique Ahmed Chowdhury of BIBM. Journalist Ajoy Das Gupta presented
the keynote. Prof
Mahmud said analysing political influence behind the unpaid loans was not
possible at all for want of necessary information – when the credits
were given. Citing
a study conducted by BIBM recently on some 150 defaulters, he said 80 per
cent of the loans were given under political and trade union influences
while only 20 per cent could avail the credit facilities directly from the
banks. Out
of the total directed loans, ministers influenced 46 per cent, parliament
members 35 per cent, ruling party leaders 13 per cent and labour leaders 4
per cent, he told the function quoting the survey. The
study report is not yet published. “The
forces behind the bad debts could be traced if the debts were found to be
influenced,” said the Economics professor. He
said the competitiveness in deposit mobilisation by the commercial banks
increased in present times due to liberalised banking system, which is not
being seen in credit distribution. He
said deregulation in the banking sector did not help increase the
efficiency in the banking system and reduce the difference between the
rates of deposit and lending. Instead, the gap widened from 6-7 per cent
to 7-8 per cent.
|