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Government mulls extension of counter-guarantees for BSFIC

FE Report | January 11, 2019 00:00:00


The government is considering extension of counter-guarantees involving over Tk 18.56 billion for state-run Bangladesh Sugar and Food Industries Corporation (BSFIC), officials said.

Contacted, a deputy secretary of the Finance Division said, "We're working on the issue. The government usually provides counter-guarantees every year."

The BSFIC recently wrote to the industries ministry, seeking extension of the tenure of the counter-guarantees by one year to December 31, 2019 so that BSFIC mills can continue their activities smoothly.

The counter-guarantees were issued in favour of three state-owned banks (SoBs)

The industries ministry forwarded the letter to the Finance Division under the finance ministry.

The counter-guarantees were issued against the loans provided by Sonali Bank (Tk 13.29 billion), Janata Bank (Tk 2.90 billion) and Agrani Bank (Tk 2.36 billion) and the tenure of the guarantees expired on December 31, 2018, according to the BSFIC.

The Finance Division stipulates that the banks keep the liabilities at a fixed level. The trade deficit of the BSFIC stood at Tk 4.89 billion in financial years 2010-12, according to the BSFIC data.

The losses incurred by state-run sugar mills are gradually increasing as they are not adjusting production costs.

On the other hand, the cash-strapped sugar mills are still struggling to meet regular expenses, a source said.

The annual domestic demand for refined sugar is 1.6 million tonnes, bulk of which comes through imports. On an average, 0.11 million (1.1 lakh) tonnes of sugar are required a month, according to official data.

About 1.4-1.5 million tonnes of crude sugar are imported a year, which are supplied to the market after refining, an importer said. There are 15 sugar mills under the BSFIC across the country.

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