SEOUL. Apr 3: The newly elected government of Prime Minister Khaleda Zia will follow a free market-oriented economic policy.

All assistance will also be given to the private sector to generate sustained growth in the economy.

In an exclusive interview to The Dally Star correspondent in the South Korean capital. Seoul. Finance and Planning Minister Sal fur Rahman also said that the first priority of the government would be to reduce current government expenditure by cutting down on casts wherever possible, reducing wastage, improving the efficiency of government machinery and introducing strlct'auBterity measures tn every sector of government activity

The government will examine very carefully the need and function of every government office and try to cut down wherever possible.

The interview was given to The Daily Star correspondent during the Finance Minister's three-day visit to South Korea to address the 47th session of the Economic and Social Commission for Asia and the Pacific (ESCAP) tn the caplial Seoul Enunciating the economic policy of the new government the Minister declared in clear and in no uncertain terms that it will be based on free market principles and that the private sector will be given all encouragement and facilities to increase its investment and thereby contribute to growth

"Private sector will be the main vehicle of economic growth tn the country and not the public sector." the Minister said.

"The government’s role will be restricted to building phys leal and social Infrastructure." meaning roads, transport, communications, human resources. schools, health facilities and measures of this type.

However the Minister felt that the agriculture sector was not yet ready to be left to market forces alone and that the government will continue to play its role In that sector for the time being.

"Duc to total financial and budgetary Indiscipline of the Ershad regime, current government expenditure had shot up three-fold in the last nine years, rising to 60 per cent of the total government expenditure." the Minister told The Star.

This has resulted tn massive wastage of taxpayers money and has led to drastic reduc tk>n in development outlay, he said.

This will be corrected through a widespread austerity drive touching every branch of the government. 'No more fancy and prestige projects. I assure you. " he said.

To change the current state of stagnation tn the Industrial sector government wifi institute wide-ranging reforms aimed at comprehensive deregulation and simplification of official procedures io encourage the private sector to come forward to invest more.

"To Implement the reforms I will set up reform committees. Immediately on my return to Dhaka, to devise short term and long term measures'

The minister Informed the Star that a set of measures recommended by the World Bank, the Asian Development Bank, the UNDP and other multilateral and bilateral bodies were already available to him. There is no time to lose in correcting the baste flaws tn our economy." the Minister emphasized.

The Finance and Planning Minister laid great stress on domestic resource mobillza-Uon which the government will alm to achieve through a more efficient tax-collection

meclianism. plugging the holes tn i Ik- existing tax system, and making the tax collection system less expensive and waste fuL

In response to a question whether the government Intended to raise taxes, the Minister replied that no such plans existed yet. However he pointed out that currently Bangladesh had the lowest tax GDP ratio In the world, which Is 9 per cent. No self-reliant development process can be sustained at such a low level of tax GDP ratio This ratio must Increase by at least two per rent a year.

Answering a question on non-repayment of bank loans the Minister expressed 1n emphatic terms that stern mea stires will be adopted against defaulters. He said bad loans have placed our banks In a critical state which resulted 1n a drying up of investment hinds for new Initiatives

"I Intend to order all banks to submit detailed reports On how they had come to granj loans without thoroughly examining the viability of the projects they were funding"

Much of the bad loans, the Minister ascribed to political pressure, favouritism and crony patronage by the Ershad regime.

Explaining the current crisis in development expenditure. the Minister explained that due to arbitrary, whims! cal and unplanned method of spending by the government of Gen Ershad development ex penditure in projects provided for the Annual Development Plan (ADP) had be drastically cut resulting in the Increase of project aid pipeline to over US • 5 billion.

Giving examples of wasteful and unplanned expenditure of the previous government. Saifur Rahman cited the greater Dhaka Flood Control Scheme. City Beautification Scheme, the creation of the President's Secretariat (costing about Tk 100 million) and the renovation of Bangabhaban (costing Tk 400 million).

Selling up the President's Secretariat was not only expensive but also totally urmee essary. It created a parallel body duplicating the function of the Central Secretariat, seating numerous bottlenecks, additional paper work, not to speak of dislocation and confusion In the chain of bureaucratic command.

The present government will restore the function and status of the Central Secretariat. the Minister said