***Reduce subsidies and turn loss making enterprises into profit making companies through essentially private, profit seeking management Land, factories and buildings as non-liquid asset have proved to be useless. There is a limit to losses which can be sustained and we have reached that critical limit***

NO, there is no money. Therefore we are a poor country. The

overwhelming majority of the working population struggle very hard to survive on less than a dollar a day. The rich, on the other hand, have borrowed money well beyond their capacity and those who make a business out of money, the banks now with empty tills, are running after them to square off the accounts. The biggest spender of all. the government, is also engaged in the same struggle. Its revenue earnings are in perpetual short supply to meet salary and subsidy payments — the two most important items of government expenditures.

Under the circumstances, where do we find the precious money to Invest. In particular? The traditional approach has been beg. borrow or steal. We Ibeg money from abroad which ‘end up as official development assistance or ODA. In cash and kind, such assistance over last 25 years averaged at around 1.5 to 2.0 billion dollars per annum. It is no small amount and most of it. say 75 per cent, ought to have ended up as productive asset, contributing to human and physical capital development of the country. If 25 per cent of ODA. on the average, were absorbed as expendable, then over USS 32 billion worth of asset in terms of physical infrastructure, trained manpower, other social overheads should now be in existence. Where are these assets? No doubt, some of them are quite visible, the latest addition being the 11th longest bridge over river Jamuna. However, will they all add up to 32 billion dollars?

Borrowings have taken place on an enormous scale. It is well known that from one single

party, the banks together owe Tk. 4,000 crores. Government, through state owned enterprises (SOEs) accounts for a substantial part of the huge bad debt. The continuous accumulation of nonperforming loans have eroded the vitality of the banking system. The credit crunch Is Indeed very serious. There is not enough money left for lending unless large part of overdue loans are realized and new funds are put in as fresh deposits.

Rampant corruption is a major source of money for many in Bangladesh today. This is what 1 term as stealing. For those who are corrupt, money should not be a problem. Unfortunately, it Is a non-taxable income. Government revenue budget cannot be augmented through this source. Also, it is termed as black money and cannot easily find its way either into the banking system or as productive private investment resource. There are also strong suspicion that a large part of the black money have been converted into foreign currencies (when it loses its black color) and benefited foreign banks and their economies as well. This is an ideal example of reverse development. In fact we have, by this time, completed the full round of the vicious circle of wasted foreign aid, stolen bank credit and squandered public revenue. As a consequence, conserving and augmenting resources for directly productive purposes should be the one and only guideline for the government, banks and

donors. The political authority who can and do profoundly influence the course of the national economy, must fully appreciate the predicament. Unless and until we get out of the vicious circle through large scale reversal of existing policies, we are all doomed when politicians will definitely go down first.

It Is very difficult, if not impossible, to appreciate that loss-ridden state owned enterprises (SOEs) annually absorb Tk. 2500 crores as subsidy while another 1500 crores are owed to the banks as bad debts. The two amounts put

together could have financed 100 modern textile mills each year — meeting 100 per cent requirements of ready-made garment industry. It is not only SOEs. According to reports, the Jute Research Institute in 40 years of existence has had zero impact so far. Same is the status of several other research institutes and so called development institutions funded by the government. Bangladesh Railway and large national utilities for electricity, gas and water all survive because of subsidies doled out by Government.

There are few cash cows of government like the Telegraph and Telephone Board (BTTB).

However it has got no access to its own earnings. Hence essential investments are being denied and tele-density in Bangladesh today is lower than in Nepal. In the process. Government is losing more revenue over a period of time. Government owned lands in Dhaka City alone can earn Tk 5.000 crores within through proper planning and investment in urban development. With millions of Bangladeshis working or visiting abroad, why the national airline should not be a money earning enterprise of the Government? The same

question may be asked about the postal department. In Japan. postal savings constitute a significant source of public savings. If properly organized, money orders alone should be a big business for the government.

If the annual salary bill of the government including state enterprises is assumed to be Tk. 10,000 crores and out of it 12.5 per cent is deducted at the source as contributory provident fund, then Tk. 1.250 crores should be the annual accumulation in that fund. If this fund is deposited in commercial banks as the source for industrial, and housing finance . then the present

outcry against shortage of long term lending could have been partly obviated.

Where is the money? The Eroblem is money will always e scarce. The golden rule is to conserve and prudently use the little bit that we have in order to generate more money in the shortest possible time. Payment of Tk.2000 crores subsidy is anti-conservation and highly imprudent use of scarce resources. Instead, privatize state owned enterprises. It would not only stop colossal waste but bring In additional private investment. Even if the industries are closed down . It really does not matter since loss making enterprises cannot ever be Justified. On the other hand, government will get rid of subsidy burden year alter year. In case where total Brivatization Is ruled out. like iman or BTTB, efficient management should be ensured through private participation and profit oriented corporate organization.

The vast majority of Bangladeshis working abroad are not high paid or even middle level professionals. They earn a modest income by international standards, spend as little as possible and send money home to their families. The wage earners development bond was therefore an excellent device to divert as much as possible of this remittance to savings by offering attractive rates of interest. There was no risk from depreciating exchange rate; while purchasers of those bonds are interested in Taka funds only. However, it is widely known that a large part

of remittance comes through unofficial channels and helps finance a large part of the crossborder informal trade. The wage earners development bond also failed to emerge as a significant Instrument for mobilizing private savings of non-resident Bangladeshis.

The proposed dollar denominated bond as a source of industrial development fund (IDF) seems to be a non-starter from the very beginning.. Who will buy those bonds? They are very few. The bond must carry an attractive rate of interest. The big question is the exchange rate .

The risks are too high. The results of high inflow of dollar funds which have to be paid back in dollars, were not too happy In the recent past elsewhere in the region. Taking all these factors into account, cost of capital from IDF Is going to be high.

Given the above background, the best course under the circumstances will be reduce subsidies and turn loss making enterprises into profit making companies through essentially private, profit seeking management. Land, factories and buildings as non-liquid asset have proved to be useless. There is a limit to losses which can be sustained and we have reached that critical limit.

Therefore, unless the political authority behind the government is determined to keep us poor, bold and positive actions ought to be the headline news tomorrow. One of the Ministers recently stated that we would be one of the ten richest countries of Asia within the next ten years. Unfortunately, it would remain a distant mirage if the present Inertia on the economic front continues for the rest of the year.