Govt conceals info of Tk 41,000cr debt

BB unethically provide the loan

Mahfuja Mukul: During the time of former governor Abdur Rauf Talukder, Bangladesh Bank has given a loan of about Tk 41 thousand crores to the government in 62 days by concealing the information. This huge loan was given at the end of the last financial year. According to the report of the Central Bank, Tk 6,457 crore has been adjusted against the previous liabilities without taking new loans.
After the change of government, the incident of giving money by concealing the information and giving the loan came out.
The Central Bank hid information and gave a loan of Tk 41 thousand crores to the government at a time when there was high inflation in the country. In the last month of July, overall inflation stood at 11.66 percent. And food price inflation is 14.10 percent. In order to control high inflation, the central bank announced in July last year that no direct loans would be given to the government to control the money supply in the market. Because direct lending increases money supply in the market and causes inflation.
Abdur Rauf Talukder, who recently resigned from the post of governor, said in various statements that the government’s debt to the central bank is decreasing.
Generally, the government borrows from the banking system by issuing treasury bills and bonds. Until June of last year, if the loan was not received from the commercial banks in the auction of bills and bonds, it was imposed on Bangladesh Bank (development).
In the fiscal year 2022-23, out of the Tk 1 lakh 22 thousand 980 crores loan given to the government by the banking system, the central bank gave Tk 97,684 crores. In the midst of criticism, the central bank announced that the government will not be given a loan from Bangladesh Bank.
This is also shown in the central bank report. In the latest financial year 2023-24, the net debt of the government from the banking system is shown as Tk 94,282 crores. Of this, Tk 97,927 crores are shown from commercial banks. And it is mentioned in the report that the loan in Bangladesh Bank has decreased by Tk 6,457 crores instead of increasing.
Officials of the central bank said that apart from the issue of instruments like treasury bills and bonds, the government can take loans as ‘instrument advance’ and ‘over draft’ in case of urgent need. Till June of the last financial year, the limit was set at 8 thousand crore rupees in two cases. Till January 23, 2023 which was Tk 6000 crores. However, recently the limit was increased to Tk 12 thousand crores. If the government needs emergency money beyond the limit, it can be taken by following the prescribed rules. A high-level committee consisting of Bangladesh Bank, NBR and Financial Institutions Department headed by the Secretary of the Ministry of Finance can temporarily suspend the limit of the ‘over draft’ sector with the approval of the Finance Minister. However, the loan must be adjusted within 90 days.
But the central bank has given loans to the government in the overdraft sector without paying attention to this rule. Last June, its status stood at Tk 48,745 crores. This decision was implemented on the verbal instructions of the governor without regard to the rules.
Bangladesh Bank sent a letter to the Ministry of Finance for immediate approval on August 1, if the situation in the country worsens due to the student movement against discrimination of students in government jobs. After a two-day weekly holiday, the office was open on August 4. On that day, breaking the curfew, students started a round of non-cooperation movement to overthrow the government. The next day on August 5, Sheikh Hasina left the post of Prime Minister and went to India. That is why the Ministry of Finance did not approve this loan. Officials are in a panic because the governor has resigned and fled.
When asked to comment, the former lead economist of the Dhaka office of the World Bank Zahid Hossain told that financing Bangladesh Bank means printing money. The central bank has said that money printing is not on the way after June 2023. Then he lied.
Lending so much money to the government has fueled inflation like fuel to the fire. He said, another thing is that an irregularity has been done by giving loans without complying with the prescribed limits. An inquiry committee can be formed for this. Those who were in the process of giving the loan, if they have given the verbal instructions of the Governor, they will tell that committee. Finding the direction of money is not a difficult task. No one took it in a briefcase. Where and how it has been spent should be investigated.
The report sent by the Bangladesh Bank to the Ministry of Finance shows how much money has been paid to the government in violation of the rules. According to the report, the maximum debt in the overdraft sector was Tk 70,826 crore on June 26 last year. This means that the limit was Tk 62,826 crore. The next day on June 27, the status was Tk 55,220 crores. On the last day of the financial year, it was reduced to Tk 48,745 crores.
An official of Bangladesh Bank told that the former governor Rauf Talukder did not care about the regulations. He did not take into account the irregularity in lending to the government. In the changed situation now Finance Adviser and the new Governor will surely look into the matter. On August 1, a letter was sent to the Ministry of Finance seeking immediate approval, but no response was received.