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Economists wary of unused aid

Express concern about inflation, govt's bank borrowing, growth at pre-budget discussion

Staff Correspondent
Economists at a pre-budget discussion yesterday expressed concern over the government's failure to utilise foreign aid and also the shrinking scope for the private sector in getting bank loans.
These two combined will slow down economic growth, they fear.
The amount of unused foreign assistance has reached a record $16 billion, up from $13 billion at the beginning of the current fiscal year. Never before has the amount been that staggering.
Speaking at the discussion, former caretaker government adviser M Hafizuddin Khan proposed an enquiry into why the government had failed to use such a huge amount.
The economists' apprehension comes just two days after some lawmakers at a pre-budget meeting with the Finance Minister AMA Muhith questioned the government's ability to utilise foreign aid.
At yesterday's discussion at his secretariat office, Muhith criticised such inability, saying, “As local resources have increased, various ministries have been reluctant to utilise foreign assistance.”
He said the government had been taking steps to increase utilisation of donors' money in some big projects, but added he did not expect "big achievements" in the area in the remaining two years of the government.
Foreign assistance allocated for Bangladesh is deposited in foreign banks, said former finance secretary Siddiqur Rahman Chowdhury.
Citing his experience, he said the donor representatives had told him during his
service that they could not answer to their authorities about the matter.
Muhith also agreed that the space for the private sector in getting bank loans has indeed shrunk compared to situation for the public sector.
”It has to be examined carefully," he said.
Also present at the discussion was distinguished fellow of Centre for Police Dialogue Debapriya Bhattacharya, its Executive Director Mustafizur Rahman and former Bangladesh Bank governor Mohammad Farashuddin, among others.
Debapriya said there had been a big conflict between fiscal policy and monetary policy. In monetary policy the government has been given bigger space for getting credit than the private sector.
Achieving the 7 percent target growth is not possible by cutting credit flow in the private sector, he warned.
“It is undeniable that stability has to be maintained in the economy but it should not be done at the cost of growth."
He added that the next
budget should prioritise growth.
Farashuddin said bank borrowing by the government, especially from the central bank, is suicidal for the economy. He advised the government to stay away from it.
Mustafizur Rahman said inflation was increasing due to a rise in commodity prices on the international market and also due to domestic factors.
Depreciation of the taka against the US dollar has also been causing inflation, he added.
The adviser of a former caretaker government, Jamilur Reza Chowdhury, said there should be an accreditation council for the private universities. He said many of these universities had been giving certificates in return for money.
Banker Mamun Rashid said state-owned enterprises like Bangladesh Petroleum Corporation and Power Development Board had no transparency in their accounts.
The auditing system of these enterprises needs reform, he added.