A rationing system, according to a recent announcement by the Food Minister, is being contemplated by the government for 40% of the population who subsist below the poverty line. The ramification of this is significant in that this represents about 50 million people. It is a food bill that is huge and will need to be funded from somewhere. He did not address nor was he asked about the issue of this "somewhere".
On the other hand, Finance Minister A M A Muhith has clearly indicated that a support package is being worked on by the government-not for any particular sector but all sections. The answer to the earlier asked "somewhere" could be in this package, though nothing is quite clear as of now.
Muhith was asked and responded to the question of where the money will come from. He was categorically clear. Some of it will come from the government partly from slush funds, partly from adjusting export incentive costs and, as he emphasized a part will have to come from banks. "Banks need to give up some of their profits", said Muhith -- a proposition that will not be graciously received by the equity holders of banks and their Chief Executive Officers (CEOs). As one banker said, "It is impractical and a not rational choice and will be a bad precedent, unheard of anywhere in the world".
That said, the other options among the limited ones available are even scarier: hiking tax rates, a further amnesty to rope in 'black' money or further trim development funds. There is another option that can only come with conditions: A bailout loan from the International Monetary Fund (IMF) -- similar to that requested by India, Pakistan and Iceland. This too would have significant political ramifications for the government.
While it is easy to criticize the Finance Minister's statement, the enormity of the issue at hand also needs to be taken cognizance of. The effect of the global meltdown is now being felt. Sectors of the economy are feeling the pinch. There are election pledges that have to be addressed and implemented. In the meantime, there is also everyday life to be attended to in terms of purchasing power, prices of essentials, the farmers, the readymade garments (RMG) sector and much needed development especially in the energy sector.
As of now the Finance Minister's portfolio is a much unenvied one. (The writer is a former Head of Corporate and Regulatory Affairs, BAT Bangladesh and former CEO of Bangladesh Cricket Board. He can be reached at mahmudurrahman@gmail.com)
Bailout package: A local view
Mahmudur Rahman | Published: March 14, 2009 00:00:00 | Updated: February 01, 2018 00:00:00
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