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Drastic cut in unproductive spendings and import needed : Acting President

99 pc funds for development budget come from foreign assistance

Star Economic Report
Acting President Justice Shahabuddin Ahmed in his inaugural address on Friday to the fift^ Jatiyo Sangsad (Parliament) stressed the need for a drastic cut in unproductive expenditures and import of luxury items to reduce the current heavy dependence on external assistance.
He drew the attention of the Sangsad to the critical economic issues facing the country.
The budget deficit tn 1990-91 will further escalate be cause of shortfall in revenue receipts and additional expenditures for payment of 10 per cent dearness allowance to the government employees and repatriation of about a hundred thousand Bangladeshis from Kuwait, he said.
The Acting President noted that attempts to reduce dependence on foreign assistance failed tn the past years.
The quantum of foreign aid tn 1973 budget was 74 per cent and the degree of dependence went on rising over the years. In 1989-90. 99 per cent of funds for the developing budget xame. 4mm foreign aid and only one per cent could be provided from domestic resources.
He pointed out that the surplus in the revenue budget in 1989 90 stood at only Taka 0 38 billton compared with Taka 10 billion target. The revenue income was Taka 67.78 billion while revenue expenditure increased to Taka 67.40 billion in the last fiscal year. The share of domestic resources for the development budget was marginal.
About the budgetary outlook for.current fiscal year, the Acting President said the projected Income in the revenue budget was Taka 80.5 billion against an estimated expend! ture of Taka 73 billion. leaving a revenue surplus of Taka 7.5 billion for the development budget But the collection till now shows that the revenue deficit in the year may decline by four to five per cent. The revenue expenditure will go up by Taka 1.25 billion on account of 10 per cent dearness allowance allowed for employees of government, semi-government and autonomous organisations. he said
Meanwhile, the National Pay Commission, constituted in 1989. submitted its report barely 15 to 20 days back, he added.
He added that the entire budget for the projected development expenditure of Taka 56 billion in 1990-91 would have to come as foreign aid.
About the state of the economy. he noted that only 3.5 per cent of Gross Domestic Product (GDP) or total national Income was saved and 10 per cent of the national Income was invested with bulk of the funds for the same coming from foreign assistance. The rate of national savings and that of investment in the neighbouring countries are three to four times larger than those in Bangladesh, he added
The annual per capita Income in Bangladesh, he said, is 170 US Dollars while It Is 400 Dollars in India and 450 Dollars in Pakistan. The same income in advanced countries ranges between 15 to 20 thousand Dollars.
He said Bangladesh's balance of trade was always adverse with imports being about three times larger than exports in value. The average annual import bill is Taka 120 billion against export receipts of Taka 45 billion.
The Acting President stated that not even 10 per cent of whatever money was pumped out from the nationalised banks as industrial loan could be recovered. The grand total of outstanding industrial loans stand at Taka 100 billion and many persons who received industrial loans from the Industrial Bank. the Investment Corporation and the state-owned financial institutions in different names
had neither set up Industries nor were repaying loans. "In the event of our failure to realise this outstanding loan, the implementation of our development programmes, which is dependent on foreign aid may come to a halt", he observed.
He noted that the pace of industrialisation did not pick up to the mark though emphasis was laid on the private sector Involvement tn Industrialisation. Smuggling which now takes place through land, sea and air routes must be checked with firm hands, he said. He pointed out that the country's textile mills faced closure because the local market was flooded with smuggled textiles.
Justice Shahabuddin said the country's total foreign loans stand at Taka 400 billion at current prices and the interest payable against the loan Taka five billion a year.
About the five-year development plans, he noted that not a single plan attained its targets, though four five-year plans were adopted since independence. The rate of growth was projected at five to seven per cent but, in reality, what was attained was 3.5 per cent, he added. Most of the successive governments which had come and gone since the partition of India In 1947 failed to effect economic advancement of the country. No worthwhile effort was made to reduce population growth rate and attain self-sufficiency in food, he noted.
The Acting President observed that the new government would have to take effective measures to address itself to the major problems like population explosion, poverty. Illiteracy and unemployment.
He stressed the need for reducing unproductive expenditures and practising austerity in all sectors "to help save the country and nation*. In this context, he pointed out that all ministries, organisations, offices and establishments were directed at the beginning of the current financial year to reduce expenses by 10 per cent "All but one or two have defied the Instruction", he added.