Unprofitable loan should be discouraged
LOANS are taken to be utilised ultimately for benefit. Such loans as ultimately bring benefits are infact tools of development. But such loans as can not be utilised beneficially are just burdens. These eat away the benefits of development.
The world Bank has proposed to finance an additional railway bridge next to the Bangabandhu Bridge on the river Jamuna ( The Daily Star 18 Mar., 2008) . Cost of the new railway bridge has been estimated at USD 300 million or Taka 2100 crore. As one of the steps of implementation of the twenty-year long strategic transport plan , the World Bank has proposed this loan for construction of the bridge .
The Bangabandhu Bridge over the Jamuna was completed in 1998 with a cost of about Taka 4,000 croe. Due to appreciation of the exchange rate of US Dollar against Taka the present value of this sum would be almost double. The life of the bridge is 100 years. The cracks which have appeared in bridge are, according to the opinion of the engineers, repairable and these cracks have not appeared due to use of the railway track . Thus it transpires that the railway track is useable ,the disadvantage may be that speed of the trains may not exceed say 20 KM per hour. Even then a train might take only 18 minutes to cross the bridge and 75 trains may cross the bridge during the whole day. In this situation construction of a second railway bridge on the river Jamuna may be unnecessary and wastage of money.
In our country there are more important and urgent projects which need to be implemented. These are Padma bridge with railway track, many flyovers, underground trains in Dhaka city, Dhaka- Chittagong electric or magnetic trains ,Dhaka-Cox's Bazar railway, Conversion of 2 lanes highway of Dhaka-Sylhet, Dhaka- Cox's Bazar into 4 lanes highway. Purchase of aeroplanes for national airline etc. With a view to reducing traffic jams and expediting economic development all these projects should be included in the 20 year long strategic transport plan. It is praiseworthy that the World Bank has promised a 300 million dollar loan for construction a bridge . It would more praiseworthy if the WB provides the 300 million dollar to finance the Padma bridge instead of financing another railway bridge over the Jamuna.. Because a country like ours cannot afford to digest loans for financing unnecessary projects when more urgent projects have been lying unimplemented for years.
Another agreement of loan for Tk 1242 crore with WB has been executed on 28th February 2008 (Prothom Alo 27 Mar., 2008) by the ERD for advancement of agriculture. . According to opinion of the agriculturists an agreement which failed a decade ago has been transformed into a new package with old material . The objective of the project is to arrange exhibitions of seeds, acquaint the farmers with new seeds, and motivate them to use the seeds. The WB experts consider that this project would expedite advancement and expansion of agriculture. This version of the WB is questioned by the agriculturists since mere exhibitions ,seminars, counseling would not be enough unless the seeds are supplied. Moreover major portion of the fund would be spent in salaries, allowances, housing, airconditioning, transports etc for the consultants. Such project was in force from 1996 to 2001 when the WB itself withdrew the remnant Tk9.5 core of the fund because of its failure .
According to the terms of financing by the WB the task of selling the state-owned Rupali Bank was undertaken. To determine the method of selling, the British consultant firm GBRW was appointed and their advices had to be procured at cost of TK 17 crore whereas had a local consultant firm been appointed to revalue the assets and liabilities and privatize the bank through auction or the Dhaka Stock Exchange, only a few lacs of Taka would have been paid. In privatization of Desco, Power Grid Co, Jamuna Oil, Meghna Petroleum etc crores of Taka was not spent for hiring consultants. Then again another 17 crore Taka was spent by the Privatization Board for making Road Shows abroad. It is necessary to determine the justification and genuineness of this big sum expenditure which was incurred from public exchequer. An audit may be carried out on the expenses.
The sick Oriental Bank was privatized through the efforts of Bangladesh Bank without appointment of consultants and without road shows. It is therefore imperative to justify the profitability of the loans from WB and IMF before making decision to avail them of Sonali, Janata, Agrani Banks, Bangladesh Biman. Sonrgaon Hotel, Sheraton Hotel are going to be partly privatized soon . It is necessary to see that the costly consultancy services of the WB, IMF, or foreign firms are not procured for accomplishing these jobs.
Many countries in the world including India have almost stopped availing the loans of WB, IMF. It is high time for our country as well to explore alternative sources of long term loans. Fortunately now 60 lacs of expatriate Bangladeshis abroad remit almost 50,000 crores Taka every year most of which is spent out for unproductive purposes in the rural areas for procurement of land , building of luxurious houses , purchase of car, etc . Had there been riskless investment sources administered by the government, then the wage earners abroad would have invested their savings in those ventures. There are wage earners development bonds, Dollar bonds, Non-resident foreign currency accounts wherein the expatriates and NRBs are putting their savings. But since these are short term savings schemes the government cannot utilize these in long term projects.
It is therefore proposed that The government establishes an NRB Bank which will have share capital of say 100,000 crore Taka subscribed by the expatriates and NRBs who will be 100 percent owners of the Bank. The government will extend a sovereign guarantee to make the liabilities of the shareholders limited. In consideration, the government will have a right to borrow long term loans from the Bank in order to finance the productive mega projects viz. Padma bridge, long flyovers, underground trains in the city, long highways, big housing projects, electric or magnetic inter city trains and so on. The shareholders will have 50 percent voting and the government 50 percent voting right in the Board. There will be advisors like Bangladesh Bank, BSRS, BSB, FBCCI, ICB, ICAB, ICMAB, etc .The terms of borrowing will be determined between and by the shareholders and the representatives of the GOB and any disagreement will be settled by the majority votes of the advisors.
If this Bank is established a big capital market for the GOB will be created from where the GOB can take loans and thus shall seek it down any longer from WB,IMF, IDB etc The Bangladeshis abroad will be benefited ,the country's dignity will go up and economic development of the country will be expedited.
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