‘Standing committees should have say on ministry budgets’

Former caretaker adviser Akbar Ali Khan has suggested parliamentary standing committees to scrutinise the budgets of their respective ministries and place their recommendations. Khan also recommended abolishment of the Committee on Estimates, responsible for going over the budgets of 37 ministries, saying it is “unrealistic”. He further said the standing committee on the Ministry of Finance should be entrusted with holding a public hearing on budget preparation. Khan made the observations at a budget dialogue, organised by Shamunnay and Manusher Jonno, at Dhaka Sheraton Hotel on Sunday. He said the changes would reverse a situation whereby many MPs do not get scope to participate in the budgetary discussions. “Currently, the finance minister presents the budget, some cut motions are presented that the speaker waves away, and finally the budget is passed in a hurry in line with the government’s plan.” Khan said, “The average time devoted to budget discussions in parliament during 1999-2006 was 35.1 hours only and 4.16 hours for discussions on supplementary budgets.” “Whereas, if the standing committees sit for budget discussions for a couple of days, they would be more fruitful,” he said. Khan recommended changes to section 111 (2) of RoP, which clearly stipulates that the budget shall not be referred to any standing committee. Khan said parliament’s rules of procedure empower the Committee on Estimates to scrutinise all ministry budgets. But, he pointed out, there were no standing committees when the Committee on Estimates was created. Now each ministry had its own standing committee, Khan said and the estimates committee has limitations. “It cannot submit any recommendation before the approval of the budget, and it is extremely difficult for one committee to oversee the estimates of all ministries.” Khan said the ministries should heed recommendations by standing committees as guidelines for budget preparation since their recommendations are not mandatory to go by, but rather “suggestive”. “The ministries may use them as guidelines in preparing supplementary budgets and for the following year’s budget too,” he said. A public budget hearing by the finance committee every year should also start with a review of recommendations of the previous year, which will create moral pressure on the government to consider, he also said. He believed it would ensure effectiveness to discuss budget policy with various stakeholders such as academicians, chambers of commerce, economic reporters and civil society members. Khan suggested if the standing committee on finance holds the responsibility to analyse the form and contents of the budget every year, it would ensure that the finance ministry can change the format in a continuous manner. “This will provide an opportunity to review the implementation progress of recommendations,” he said.

Source: bdnews24.com

Public hearing for transparent budget demanded

As the preparation of national budget lacks direct involvement of people and active participation of lawmakers, a mid-year public hearing by the relevant parliamentary panel can impel the budget makers to reflect on people’s aspirations in the annual financial statement.
   The demand for parliamentary hearing designed to improve transparency and accountability in public resource management came from a national dialogue held on Sunday on ‘To What Extent is Our National Budget is Open’.
   It also raised the demand for bringing transparency in the national defence budget by detailing actual expenditures instead of describing the defence expenditures only in the budget speech and by holding threadbare discussions at the parliamentary standing committee level.
   The country scored 42 per cent in a global open budget index 2008 compared to more than 80 per cent score by the UK, South Africa, France, New Zealand and the US.
   Bangladesh’s performance is marginal than global average of 39 per cent in the index and only above the position of undemocratic or corruption-ridden countries. This is because of lack of pre-budget statement by the finance minister, simplified version of citizens’ budget, mid-year review, year-end report and publication of audit report in the entire process of budget preparation and implementation.
   Former finance adviser Akbar Ali Khan, now chairman of Regulatory Reforms Commission, spearheaded the demand for brining slight changes in the format of budget making and introducing the practice of making recommendations on budgetary issues by the parliamentary standing committee on the finance ministry.
   ‘Such hearing will ensure participation of Members of Parliament and the standing committee can also take views of civil society and experts,’ he told the discussion, organised by research organisation Shamunnoy at a city hotel.
   Although their recommendations might not have binding obligations for the finance minister, the former finance secretary added, the practice would exert a moral pressure on the finance ministry to pay heed to public concerns and maintain transparency.
   ‘I don’t understand why defence budget cannot be discussed in public when the country’s enemies are well aware of the budget size. At least the parliamentary standing committee on defence ministry should have the scope to discussion in details the defence budget,’ Khan observed.
   Arastu Khan, an additional secretary of the finance division, said the defence budget was mentioned in a single line in view of sensitivity of the issue.
   He also expressed the conviction that the responsibility of preparing the format of the national budget should be kept under the jurisdiction of the finance ministry and that the standing committee should not be given such responsibility because of its lack of capacity in terms of manpower to deal with the matter.
   ‘Who am I or are you to give them authority to make recommendations? It is already there although the committee’s suggestions may not have binding obligations on the finance ministry,’ Akbar Khan said.
   Dwelling on Arastu Khan’s point that the fiscal responsibility act would improve transparency, Akbar Khan said the legal obligation to make quarterly statement on the state of economy in parliament by the finance ministry might not be possible if the parliament was not in session at that time.
   He also pointed out that it could not guarantee that lawmakers would be able to make the best budget if they were given more responsibility. ‘So, what is needed is the participation of diverse groups of people to improve representation and make the budget people-oriented.’
   Humayun Kabir Hiru, a former Member of Parliament, recommended that there should be a parallel body in the form of economic council to discuss the issues of national budget round the year.
   The convenor of Equity and Justice Working Group, Rezaul Kairm Chowdhury, said the local government institutions had been made paralyzed deliberately to make it easier for global lenders and multinational companies to negotiate only with a few people on matters of economic policy. ‘Almost 20 per cent budgetary money is being spent for debt servicing while a section of people is engaged in plundering national resources,’ he added.
   ‘Bangladesh’s score on the Open Budget Index suggests that public access to information has to be improved,’ said M Abu Yusuf of Shamunnoy, explaining that Bangladesh met only three criteria out of eight in the global index.

Source: New Age

The cost of country’s largest infrastructure project could hit $US2.4 billion dollars

The cost of country’s largest infrastructure project, a 6.15 kilometre multipurpose bridge over the river Padma, could hit $US2.4 billion dollars, officials said Saturday.

Auckland-based Maunsell Aecom, which is designing the project, has said the increased cost was due to last minute addition of electric train tracks, improved safety requirements, railway approach bridge and tourism facilities.

The consultant firm has submitted its ’scheme design’ of the proposed project to the Bangladesh Bridge Authority late last month, which contains hints on the likely cost of construction.

“Based on Maunsell’s estimate, the cost of the Padma multipurpose bridge could now reach $2.4 billion,” said a senior official familiar with the project.

“The consultants have given extra emphasis on safety and functional requirements, as the life-span of the bridge has been projected to be over 100 years,” the official said.

He said unlike the bridge over the Jamuna, the Padma bridge would be made of steel truss composite, which requires extra safety arrangements, requiring tens of millions of additional dollars.

The bridge will also have facilities for electric train tracks, the first time in the country, and extra-load bearing capacity keeping in mind that the country’s foreign trade would increase several fold in the future.

“In addition, the last minute introduction of railway approach bridge and tourism facilities such as watch towers and audio-visual centers added more cost,” he said.

The government has earlier estimated that the Padma bridge at the Mawa-Janjira point would cost about $1.8 billion. The figure was based on the preliminary feasibility study of the project.

Maunsell officials held a tripartite meeting with a panel of consultants and project officials on Saturday when they discussed the scheme design and the possible cost of the project.

The consultants and the project officials have earlier agreed to build the bridge with steel truss to ensure longevity and reduce the time of construction.

The Awami League government wants to finish the construction — one of its priority projects — by 2013, a year before its five-year tenure expires.

Officials said the contractors can build a steel bridge over the Padma in three and a half years, whereas a concrete structure may take at least six years.

Experts and officials said steel bridge lasts longer than a concrete bridge.

“Across the globe, steel truss composite is the best option for construction of road-cum-railway bridge. The Hardinge Bridge at Bheramara has been built with steel more than 100 years ago,” another official said.

He said building of rail-cum-road bridge with concrete sometimes pose serious safety concerns for the main structure, as vibration between the two tracks could result in cracks.

“We think the cracks at the Jamuna bridge were developed due to this reason,” the official said, preferring anonymity.

In the first design, the length of the Padma Multipurpose Bridge has been estimated at 6.15 km and width 21.10 metre.

It will be the longest bridge in the country, surpassing the 4.80 km long Jamuna Multipurpose bridge constructed in 1997.

It will have four-lane road on the top and a broad-gauge rail lane below, with 150 spans, four-kilometre approach road at Mawa and 12 km in the other side in Madaripur.

The World Bank has assured to lend $460 million for the project. The Asian Development Bank said it would provide $ 350 million, Japan International Cooperation Agency of $200 million and Islamic Development Bank of $ 300 million.

Source: Financial Express

Govt may amend PRSP – Incorporation of poll pledges increases resource gap

The government facing a fund shortage of Tk 1160.41 billion is going to amend the three-year poverty reduction strategy paper (PRSP), now under implementation.

The PRSP, adopted in 2008, will be implemented by FY2011, officials said.

Pledges made in election manifesto by the ruling Awami League have burdened the revised PRSP with widening gap between resources and expenditure, a senior planning ministry official told the FE.

The estimated public expenditure for achieving the strategic goals and targets set out in the revised PRSP is Tk 3750.86 billion against the total estimated income of Tk 2590.45 billion from the domestic resources, leaving Tk 1160.41 billion (US$16.58 billion) in fund shortage.

In the original PRSP, adopted by the last caretaker government in October 2008, the resource gap was Tk 630.94 billion against the total public spending target of Tk 3108.27 billion.

After taking over in January this year, the Awami League-led government decided to amend the second PRSP, which has already completed one and a half years of execution period.

After completion of the proposed amendment, the planning ministry Wednesday placed the country’s lone development guideline before the cabinet.

The cabinet has decided to place the revised development document before parliament after bringing some minor changes to it. The cabinet has already asked the planning ministry to make the changes.

“We hope to place the revised PRSP before parliament during its ongoing session,” a senior planning ministry official said.

He said the resources gap, as recommended, should be minimised through external borrowing.

Experts termed the expenditure target as “very high and unrealistic” as it will be difficult to make up the resources shortfall through mobilizing from external sources.

Former finance adviser Mirza Azizul Islam said Friday: “Mobilising from the external sources to make up the shortfall is quite impossible.”

“If there is such massive resources gap the goals in country’s economic development will be difficult to achieve,” he told the FE.

The government should be more realistic to maintain six or six per cent plus GDP (gross domestic product) growth of the country, Mr. Islam said.

Research director of Bangladesh Institute of Development Studies (BIDS), Zaid Bakth said: “Deficit financing projected in the PRSP is too high. Mobilising the money will be very challenging for the government.”

“I don’t think that the government will be able to mobilise such huge $16.58 billion dollar, means $5.50 billion every year, from the foreign sources as the country in financial year 2007-08 received highest $2.1 billion,” he told the FE.
Implementation period of the first three-year strategy paper ended in FY07. Then the government prepared the extended version of PRSP for FY08.

The PRSP has been formulated at the behest of the country’s development partners, mainly the World Bank, which wants the country to adopt its only development plan, instead of being forced upon by the donors.

Source: Financial express

SCBs outstanding loans rise in seven years

The percentage of the outstanding loans of the state-owned commercial banks and specialised banks has increased in the last seven years (2001-08) due mainly to political reasons, said official sources.
   The percentage of waiver of interest decreased slightly in the last seven years, from 2.23 per cent in 2001 to 1.64 per cent in 2008.
   ‘The percentage of outstanding loans of the nine state-owned banks and financial institutions increased in the 2008 calendar year compared to 2001,’ said a senior official of the finance ministry.
   He said the report also showed that the percentage of the outstanding loans and waiver of interest increased due to political reasons.
   Sources said the report would be placed at meeting of the Executive Committee of the National Economic Council next week.
   Former economic adviser of the Bangladesh Bank and director general of Bangladesh Development Studies, Mustafa K Mujeri, told that the concerned authorities would find out the reasons behind the waiver of the interest on the loans of the SCBs.
   ‘We will have to take all the necessary measures to reduce the number of defaulted loans of the state-run banks,’ he added.
   Earlier, Prime Minister Sheikh Hasina had asked the finance minister to report to her on the financial irregularities of the state-owned financial institutions, particularly the SCBs, in the last seven years.
   She had asked the finance minister to report to her on the matter while presiding over a meeting of the ECNEC on July 21.
   According to the report, a total of Tk 3,500 crore was spent on loans and waiver of interest in the last seven years ( 2001-2008) .
   The amount of loan and interest of the Sonali Bank stood at Tk 952 crore in 207 loan accounts in the last seven years, of Janata it stood at Tk 624 crore, of Agrani at Tk 661 crore and of Rupali at Tk 183 crore.
   The total outstanding percentage of loans of Tk 1 crore and above in Agrani was 53.36 per cent in 2001 and in 2008 it was 55.38 per cent; of Janata it was 62.26 per cent in 2001 and 68.29 per cent in 2008; of Rupali 64.40 per cent in 2001 and 68.29 per cent in 2008. The total outstanding loans of the Sonali Bank amounted to 45.11 per cent in 2001 and 78.32 per cent in 2008.
   The percentage of the total outstanding loans of the Bangladesh Krishi was 15.25 per cent in 2001 and 16.75 per cent in 2008. The percentages of the outstanding loans of the Bangladesh Shilpa Bank, Bangladesh Shilpa Rin Sangstha, Rajshahi Krishi Unnayan Bank and BASIC Bank were 65.19, 9.60, 89.63 and 48.97 per cent respectively in 2001 and 76.72, 8.49, 81.39 and 56.18 in 2008 respectively. The highest increase in the percentage of outstanding loans in the last seven years was recorded in Janata Bank (6.03 per cent), BASIC bank (8.21 per cent) and Sonali Bank (3.92 per cent).
   Besides, the percentage of total waivers of the interest of loans to Agrani was 2.25 per cent in 2001 and 4.60 per cent in 2008; of Janata 1.26 per cent in 2001 and only 1.15 in 2008; of Rupali 0.76 per cent in 2001 and 0.40 per cent in 2008.
   The percentage of the waivers of interest on loans to Sonali Bank, Bangladesh Krishi Bank, Bangladesh Shilpa Bank, Bangladesh Shilpa Rin Sangstha, Rajshahi Krishi Unnayan Bank and BASIC Bank in 2001 was 1.57, 2.74, 8.35, 2.84, 4.95 and 00.00 per cent respectively and 0.66, 6.19, 4.18, 0.97, 6.04 and 00.00 per cent in 2008.
   The percentage of total waivers of the interest on loans to Janata, Rupali, Sonali, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank has somewhat diminished in the last seven years.
   Earlier, the finance ministry had asked for the lists of loan defaulters and the SCBs and specialised banks had to send them to the finance ministry last month.

DWASA to buy 200 generators

The Dhaka Water Supply and Sewerage Authority will purchase some 200 electric generators with its own funds amounting to Tk 54 crore aiming to ensure uninterrupted water supply in the capital city during the next dry season.
   The purchase plan was disclosed on Tuesday at an evaluation meeting on the progress of the ongoing projects undertaken by the local government under the Annual Development Programme for 2009-10.
   The state minister for LGRD and cooperatives, Jahangir Kabir Nanak, presided over the meeting, which was also informed that the work of installation of 85 deep tube-wells at a cost of Tk 60 crore is going on satisfactorily.
   Besides, a total of Tk 548.39 crore has been spent till July this year out of Tk 5545.53 crore allocated for some 126 projects with the rate of progress being 74 per cent.
   The meeting, held in the conference room of the local government department, was attended by the Sylhet mayor Badaruddin Ahmed Kamran, local government secretary M Monjur Hossain and heads of different institutions and project directors.

Source: New Age

PADMA BRIDGE FUNDING-Moves taken to raise Tk 60b from bonds, surcharge

The finance ministry has sought opinions from the Securities and Exchange Commission and the internal resources division to raise about Tk 6,000 crore from local sources to fund the construction of the proposed Padma Multipurpose Bridge. Of the amount, it has planned to raise some Tk 4,000 crore from the local market through bonds which will be issued through SEC, ministry officials said. The rest of the amount is expected to be raised through imposing levy on some 48.12 million phone users, including 46.12 million cell phone subscribers, they said. IRD secretary Nasiruddin Ahmed told New Age that they were examining the proposal for levying the phone users. The IRD was trying its best to send its opinion to the newly established Bridge Division under the communication ministry as early as possible, he added. The communications ministry that will implement the most expensive infrastructure project worth $2.0 billion had proposed the finance ministry to identify the local funding sources before it floats an international tender next December. Communications minister Abul Hossian said his ministry made the suggestions on the local funding sources in a way that would enable a wide range of people to contribute in funding the bridge with a length 6.01 km—which will be the country’s longest. The government is committed to provide one-third of the project cost or more than $600 million by mobilising funds from the local sources. Lenders like Asian Development Bank, World Bank and Japan Bank of International Cooperation have already pledged to lend more than $1.2 billion. Other multilateral and bilateral lenders including Islamic Development Bank committed to provide $120 million in loans. The government is also planning to securitise Jamuna Multipurpose Bridge to raise funds which could also be used for financing the Padma bridge project, said Abul Hossain. The present government took up the Padma bridge as one of its priority infrastructure projects and planned to complete its construction within its five-year tenure. The site has already been selected and initial design of the bridge is nearing completion. The bridge, which will connect Mawa with Janjira on the two banks of the Padma, is expected to contribute to the national economy through boosting the gross domestic product by 1.2 per cent annually.

Source: New Age

Bangladesh has an estimated 2.0 million taxpayers – DFID partners with NBR to bring ‘sea change’ in taxpayers’ service

The National Board of Revenue (NBR) has taken up a programme to make its services “friendlier” to taxpayers as it steps in to polish its image bruised by clients’ complaints and corruption, officials said Sunday.

Under the five-year programme, the revenue administration and the British donor-Department for International Development (DFID)-will pick an international consultancy early next year to come up with a string of “innovative” solutions that can greatly change the way the Board functions now.

“It’s going to be an uphill task,” a senior NBR official acknowledged, referring to the continuing challenges for the Board to improve its decades-long services.

Still, the official is hopeful that the programme would help “make a difference and make NBR an institution looked at by the people no longer with detest, but reverence,” “Let’s try to change the heart of the administration.”

But critics say such a “piecemeal” project would not help ensure people’s services unless a major reform was carried out in the bureaucracy. Businessmen and ordinary taxpayers often blame the system as well as a section of NBR officials for making people shy away from paying taxes while harassing honest revenue givers.

Even last week, the pharmaceuticals mogul and the head of Square Group Samson H Chowdhury publicly accused the NBR of harassing him while paying taxes.

The stinging criticism by a top business leader serves as a fresh reminder of how small taxpayers and ordinary citizens are treated by what critics call “tax hawks.”

Bangladesh has an estimated 2.0 million taxpayers. An insignificant number of them is labelled as large taxpayers.The World Bank says Bangladesh’s tax-GDP (gross domestic product) ratio is among the lowest in South Asia, even lower than that of Nepal.

A business leader welcomed the move but said a serious approach is required to change the “work ethics” of taxmen who see them as masters not servants.A DFID official said the project’s managing agency would look into the root causes of poor service delivery of the revenue administration and provide ideas about how its standard of services could be improved.

He said the Taxpayer Service Project is targeted at both existing and potential taxpayers, allowing them to get faster and better services from the government agency.NBR officials expect to tap the private managing firm in February to manage the five-year programme, they said.The government side signed the agreement with the DFID in June and officials said the British government would spend US$ 15 million for implementing the project.

“Currently people get little services from the Board. The project will try to redress that malady,” the DFID official said.The project will help simplify procedures of tax payment, aided by technology and innovation.”I think, the agency will explore multiple options and may replicate international best practices. But the selected agency itself will come up with its own ideas on how it can clean up the mess,” the official said. “Nothing will be imposed to foster innovation,” he added.

Another component of the project is to help develop the capacity of tax officials so that they can deliver prompt and efficient services to taxpayers.

Source: Financial Express

IMF fund helps forex reserve cross $9.0b

The country’s foreign exchange reserve has crossed US$9.0-billion mark for the first time, after a substantial amount of fund was received from a multilateral donor agency, officials said Tuesday.

The International Monetary Fund (IMF) has released funds worth $630 million as part of the special drawing rights (SDR) allocation, which has been made to all 186 IMF members.

The foreign exchange reserve rose to around $9.18 billion on the day from $8.53 billion of the previous day following disbursement of the fund by the IMF, the central bank officials said.

“The country’s foreign exchange reserve crossed $9.0 billion on the day setting a new record in the history of Bangladesh,” Deputy Governor of the Bangladesh Bank (BB) Ziaul Hassan Siddiqui told the FE.

He also said the foreign exchange reserve may decline slightly this week after a routine payment is made to the Asian Clearing Union (ACU).

The central bank is set to pay $530 million to the ACU against imports for the July-August period of this calendar year, the officials confirmed.

“We expect that the foreign exchange reserve would stay at around $9.0 billion even after making payment to the ACU,” Mr. Siddiqui said without elaborating.

The Washington-based multilateral donor agency would provide additional $105 million shortly to bolster the country’s foreign exchange reserve in the wake of the global economic recession, the BB officials said.

The total $735 would be given not as loan, but as part of a global financial watchdog’s stepped up effort to inject liquidity in the central banks across the globe, they added.

The G-20 countries raised the fund size of IMF by $250 billion in April to increase SDR quota of members proportionately and the disbursement would be completed in September this year.

Currently, Bangladesh has a quota of SDR 533.30 million or $834.63 million in the IMF. Besides, the central bank continues its intervention in the inter-bank foreign exchange market through purchase of the US currency directly from commercial banks, which has also pushed the foreign exchange reserve up.

As part of the move, the central bank of Bangladesh purchased $1.024 billion from commercial banks until September 1 this fiscal.In fiscal 2008-09, the BB bought a total of $1.48 billion directly from the commercial banks against only $202.50 million of the previous fiscal, according to the central bank statistics.

The ACU is an arrangement among Bangladesh, Bhutan, India, Iran, Myanmar, Nepal, Pakistan and Sri Lanka to settle payments for intra-regional transactions through the participating central banks on a multilateral basis.

Under the existing ACU provision, settlement of any balance and the accrued interests is made among its member countries at the end of every two months.

Source: Financial Express

Abnormal rise in interest payment against savings tools unnerves govt

The finance ministry has voiced concern over an ‘unusual’ rise in the payment of interest against the state-run savings instruments in the last fiscal year. The debt management wing of the ministry recently sought explanation from the authorities concerned about such an alarming increase in the last fiscal’s interest payment against its borrowing through the savings tools, official sources said. Referring to official data, a senior government official said the government’s payment of interest on account of savings instruments registered a record high of nearly Tk 70.62 billion in the fiscal year (FY) 2008-09. The data also revealed that the volume of interest paid by the government in the last fiscal surpassed its net borrowing through savings tools by Tk 34.28 billion during the same period. The government borrowed a net amount of Tk 36.33 billion through its existing savings certificates and other investment bonds during the last fiscal. “Such an abnormal increase in the payment of interest had raised worries among the authorities concerned,” the official said. Admitting the government’s concern over big increase in the payment of interest, official sources said the National Savings Directorate (NSD) has already found some reasons behind the unusual rise in the payment of interest. The NSD has identified the encashment of a large number of mature ‘defence savings certificates’, which are not in operation now, by their respective investors as the key reason behind the hike in interest payment, officials said. “Since the closure of the defence savings certificate in July 2008, the respective investors had encashed their certificates after their maturity,” an official said. As a result, the government had to pay a huge amount of interest against its borrowing through the defence savings certificate, interest rate of which was 17.75 per cent after an eight-year period for maturity. Referring to figures, officials said the government had to count Tk 25.82 billion as interest on account of servicing its debt through the defence savings certificate alone. They predicted a further rise in the volume of interest payment in the current fiscal as the defence savings certificates, which were sold earlier, would expire on June 30, 2010. According to the officials, withdrawal of an increased volume of investment through the savings tools following deduction of 10 per cent tax at source imposed earlier by the government on Tk 25,000 or more interest gains from savings instruments also contributed to the government’s interest payment. The overall investment under state-run savings tools continued to increase again after the government raised the tax-exemption ceiling to Tk 150,000, they mentioned. Official figures also showed that the government’s interest payment for servicing its debt through the savings tools continued to rise over the recent years. The government paid Tk 56.31 billion as interest against its net borrowing of Tk 25.18 billion in the FY 2007-08 while the figures were Tk 41.78 billion and Tk 49.24 billion respectively in the FY 2006-07.

Source: Financial Express