Finance Minister AHM Mustafa Kamal defended on Wednesday the government's move to transfer idle money of state entities to the public exchequer, saying that it was intended to stop misuse of fund.
"Many state-owned entities do not utilise funds rationally," he said.
He made the comments while talking with reporters after a meeting of the cabinet committee on economic affairs at the Bangladesh secretariat.
He said state entities spend arbitrarily, take salary and incentives at will, care little about getting government's approval, though it is public money.
"We saw various irregularities in their spending," he said.
Mr Kamal said a coordinated approach to using public money can benefit all. "And that's why, we want to bring their idle money into the public exchequer."
Citing an example, he said even the National Board of Revenue considers spending public money at their will to be "its right."
"In many cases, they do not obtain permission from the ECNEC (Executive Committee of the National Economic Council) and the Prime Minister, nor from any committee, but builds big-sized buildings one after another," he said.
"That can't continue. So, we decided to tack back the money," said the minister.
However, Mr Kamal said the entities will be able to keep money enough to run their day-to-day affairs as well as development activities.
"Apart from operational costs, they will be able to keep an additional 25 per cent of their idle money as reserve. Even they will be able to keep money to fund their upcoming development projects," he said.
The minister, however, dismissed the apprehension of possible liquidity crisis in the banking sector once the money is taken back to the exchequer.
"The finance ministry itself is not a bank, where we will keep the money, even there is no suitcase at office," he said.
He called the fear unrealistic, saying none will be affected.
"It's only an accounting entry through which the money will come to the public exchequer," Mr Kamal said.
"No money will be withdrawn from banks, thus the banks' liquidity won't be affected," he added.
He said most of the entities kept their idle money as fixed deposits. "You don't need to encash now but you will have to inform the government about their existence."
"Once the deposits are encashed after maturity, then the money will be moved to the exchequer," he said.
Replying to a query whether he faced opposition from any ministry or division against the move, he answered in the negative: "This is not an issue of opposing."
"We want to bring back discipline in the public financial system. If the discipline breaks down the public financial management will become fragile," he said.
The minister said the issue of special facility and exit plan for loan defaulters, which is now under court order, will be resolved soon.
Asked whether implementation of the reforms is possible, the minister said unless any bank follows the order they will be merged.
"We gave the permission for banking. They should run in line with the government order. Otherwise, we will revoke their (licences)," he said.
When his attention was drawn to the state-run Bangladesh Petroleum Corporation's non-payment of large amount of money despite repeated reminders from the finance ministry, he said now they will pay the dues. "The situation won't remain the same."
When the jute corporation or banks need refinancing the government pays the money, he said, adding the authority has the right to control such agencies so that they can operate effectively.
Replying to another query, he said the Hallmark Group will also pay back the money it took as loans.
"If it returns money, it will get loan again."
Asked why the government borrowed Tk 260 billion from banks in July this year when the Annual Development Programme spending was only Tk 40 billion.
He said the increased import for capital machinery for mega projects was behind it. "The government has the responsibility to repay all these things and the government is doing that."
Asked whether the government was following in the Indian footsteps of merging ailing state banks, the minister said: "We need to restructure some banks. But before that we have to dig deeper into that."
"Making profit is not the main motto of our banks. The primary responsibility of the banks is providing services to people," Mr Kamal said
"If we find the banks are working in line with the government's directives, we won't go for merger," he said.
Referring to the cabinet committee meeting, the minister said the Dhaka North City Corporation has bought some 200 fogger machines, 150 hand spray machines, and 40,000 liters of malathion adulticide at a cost of Tk 53.25 million.
The committee approved the completion of the procurement under the direct purchase method.
The minister said the government wants to keep the entire Bangladesh free from chikungunya and dengue fever.
The effort to destroy mosquito larva will continue throughout the year, he said.
© 2017 - All Rights with The Financial Express