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The Bangladesh Economic Zones Authority (BEZA) has said it is unable to repay government debt with interest and has instead requested an additional five years to do so, according to officials.
According to sources, BEZA currently owes Tk 1.31 billion to the government, and in January of this year, the Ministry of Finance requested that the authority return the money.
Rather than making the required payment, BEZA sought the intervention of the Prime Minister’s Office to avoid immediate repayment.
In May, the Treasury and Debt Management Wing of the finance ministry once again reminded BEZA of its repayment obligation. Now, BEZA says it needs five years for the payback.
In a recent letter to the Prime Minister’s Office (PMO), BEZA Executive Chairman Shaikh Yusuf Harun wrote that the authority had borrowed funds from the government for the development of various economic zones.
He said the Finance Division approved a Tk 10.59 billion annual budget for BEZA to spend in the current fiscal year. However, BEZA’s sources of earnings are significantly limited, totalling only Tk 3.27 billion, in comparison to the substantial sum earmarked for spending.
BEZA spends money for infrastructure development at the economic zones by leasing out lands to investors. But due to the Covid-19 pandemic linked disruptions and economic slowdown following the Russia-Ukraine war, Mr Harun wrote, both the domestic and foreign investments are not coming as expected.
Many investors are currently facing financial crises, resulting in delayed payments for leased lands. Moreover, a considerable number of investors have withdrawn their earnest money and lease payments due to the suspension or cancellation of investment plans.
As a consequence, the establishment of industrial units within the economic zones has not progressed as anticipated, leading to a failure on BEZA’s part to collect adequate service charges and subsequently hindered revenue growth.
According to Mr Harun, BEZA has signed a total of seven loan agreements or subsidiary loan agreements with the finance ministry, against which it owes Tk 1.31 billion to the government as principal and interest of loans.
“…there is no required money in BEZA’s fund to pay back the dues to the government,” he wrote.
He further noted that repaying the debt at this time would impede ongoing development projects and investment initiatives.
Mr Harun reiterated his request to the PMO for a letter recommending the finance ministry to grant a five-year extension for debt repayment, taking into consideration BEZA’s financial condition.
A senior finance official told the FE that due to the decline in government revenue resulting from the disruptions caused by the pandemic and the war, the finance ministry has decided to recover funds from borrowers to help meet the financial needs.
Many departments and government bodies under various ministries have already repaid similar debts with interest and others are in the process of repayment in phases.
“We will continue our efforts to get back the money from the debtors for the smooth operation of the government expenditures,” he said.