BB's stimulus packages need strict monitoring

Bangladesh is a country of immense potential because of its geographical location, vast human resources, strong agricultural base and growing industrial sector. Despite facing multiple constraints, the country can advance on all fronts if all the factors mentioned above are utilized properly. Sadly, though everyone talks about the country’s immense potential, a section of the country's vested groups have turned the idea into a mere slogan while quietly amassing vast wealth and money behind the scenes. The world has witnessed bank robberies in many countries, yet the overnight takeover of bank ownership here is a phenomenon rarely seen elsewhere. 

Banking instability has not only created a crisis in confidence among customers, but also slowed the wheel of our economy down. To speed it up, a promising announcement has recently been made by the country's central bank mentioning a fund of 60 thousand crore taka for the revival of shuttered factories.  Since taking office, Prime Minister Tarique Rahman has on several occasions underscored the need to reopen and rehabilitate closed mills and factories. The BNP's February 12 election manifesto stressed the need for creating employment opportunities for the country’s youth. It also pledged support for startups and entrepreneurs as a means of revitalizing the economy. That is perhaps why Mostaqur Rahman, the central bank governor, has recently made the announcement at a press conference. He stated that the government would provide a 6 percent interest subsidy on this loan from the fund, meaning that the borrowers will pay only 7 percent. He further noted that Tk 41,000 crore of the allocated funds would be sourced from our commercial banks, while Tk 19,000 crore would be through refinancing. 

Banking instability has not only created a crisis in confidence among customers, but also slowed the wheel of our economy down. To speed it up, a promising announcement has recently been made by the country's central bank mentioning a fund of 60 thousand crore taka for the revival of shuttered factories.

In  2020, the Awami League government in its tenure announced 28 stimulus packages worth Tk 1,87,679 crore for various sectors to combat the Covid-19 pandemic. At that time, irregularities in it were discovered during an inspection by Bangladesh Bank itself. Prior to that, a person and his relatives opened a paper institution (which did not exist in reality) and embezzled hundreds of crores of taka from the country's financial institutions in the name of loans.

In addition, a white paper during the interim government revealed that around 3 lakh crore taka was wasted and misused in the name of development projects during the Awami regime alleging that huge amounts of money were looted through political extortion, bribery and excessive expenditure. 

Criminals from outside the country also squeezed the central bank's reserves like an octopus. This heinous incident of reserve theft occurred in 2016. At that time, concerned circles of the country alleged that the money was stolen due to the inefficiency and negligence of Bangladesh Bank. It is true that Bangladesh bank, the regulatory body of banking arena, earns recognition for any stable banking process and also bears accountability for lapses in its governance.

Against the backdrop, the announcement of a stimulus package of 60 thousand crore taka by Bangladesh Bank to revive the financial sector seems good, but there remains apprehension about its success. All kinds of development allocations made in the country in the past have been frowned upon. The avaricious groups have always had a greedy eye on the state's financial resources. They plot to loot money and, if necessary, use the responsible individuals of the state machinery like chess pieces at their sweet will and in some cases they succeed. Therefore, strict policies and cautions are necessary in this loan disbursement. The campaign to revive the economy will see success only when this loan is allocated to the right people and to the right institutions.

If political and administrative nepotism is allowed to influence the lending process, its purpose will be futile. It is learned that the largest part of the stimulus fund will be allocated to closed factories, leading to a substantial increase in employment.

But the question is - what type of closed institutions will be considered in this case or how will the central bank ensure that the owners of the institutions will properly utilize this money? What special measures is the central bank taking to monitor such important issues as whether the loans will be repaid with interest?

According to media reports, the borrowers, the recipients of loans under this stimulus package, will be required to deposit their earnings into escrow account, a process to secure financial arrangement where a neutral third party holds responsibility on behalf of the two transacting parties. Here, too, there is no room for complacency as no side is exactly squeaky clean, which is why the issues must be taken into account before extending stimulus support. 

The country now has hundreds of shuttered factories spanning the sugar, jute and apparel industries, many of which are reportedly being stripped of machinery and equipment for personal gains. Just as it is not wise to consider an industrial institution dead if it remains closed for long, it is not a positive role to sanction loans on large scale treating it as operational merely because it exists on paper. It needs to examine the realistic possibility of the revival of the factory. It is, therefore, necessary to fully assess the feasibility of reviving the closed factories.  Market demand, availability of raw materials, electricity, and labor force- all factors should be taken into account first. The factory's land, building, equipment, license or whether the factory has any prior loans should also be inspected. The reasons for which the factory has faced losses in the past should also be revealed.

Agriculture and industry are two basic foundations of a country's economy where the former provides raw materials and the latter processes those raw materials to produce consumer products. The point is, there is no alternative to these two sectors for the country's sustainable development, employment, food security, and foreign exchange earnings. The BNP, based on realities, has paid more attention to the sectors mentioned above immediately after assuming power.

Just as agricultural cards, family cards, canal excavation or tree plantations are giving importance to the agricultural sector; financial package will also be helpful in the same way to revive our fragile industries. The economy may start to recover if transparency, neutrality and accountability in the stimulus package are maintained. The steering regarding this is now with the central bank, whose far-sighted decisions can make the overall financial scenario sustainable through their endeavor in industrial revival.