Financial discipline imperative for banking sector

The recent incident of fund heist from Bangladesh Bank account with US Federal Reserve Bank has become a matter of growing concern. What is being termed as "treasury loot" through cyber-heist epitomizes the drainage of public money by means of bank burglaries and forgeries.
It was pointed out by the discussants at a pre-budget meeting held on April 24, 2016 in Dhaka that there are legalised ways too. Indemnity on public purchase and project contracts through unsolicited bids, recurrent extension of mega project periods and cost escalations, large loan rescheduling, interest waivers and recapitalisation are listed as the legal instruments of siphoning funds from the public exchequer. The State Minister for Finance agreed with the media representatives that banks' continuous loss is hurting the country's economy and he underscored the need for carrying out reforms in the public sector banks. It is true that incremental bigger budget is an imperative for realising Bangladesh's development potentials, but the calculations must be matched by proper policy support on fund raising and spending.
It became clear from an officially sponsored talk at the Bangladesh Institute of Development Studies (BIDS) the same day on April 24, 2016 that there are gaps between fixing of figures in budget outlay and revenue collection, priorities of the day and project proposals, targets of project execution and capacity constraints in achieving the ends. Such jumble of paradoxes inflicts a two-way damage on the nation: firstly, lack of development in real terms and secondly, drainage of public money raised through taxing almost everything common people eat, drink and do.
At the pre-budget consultations the question of endemic taxation on a limited number of taxpayers on the net at high rates came up. This is seen as one of the fiscal paradoxes. The quality of public investment from the revenues being raised and the service people are receiving in exchange were also called to question.
Meanwhile, the Finance Minister predicted that he is going to present to the nation a taka-three-trillion-plus i.e. about Tk. 3.4 trillion budget outlay for the upcoming financial year 2016-17, in a major shift from the current financial year's Tk.2951 billion outlay.
Lack of supervision, maladministration, weakening of basic institutions, lack of accountability, and venality replacing morality are cited as cardinal factors responsible for the happenings on the financial front. As pointed out by analysts at the just-concluded national policy conversation arranged by the official think-tank BIDS, an irreparable damage being done through such malpractices is jeopardizing the social equilibrium through huge accumulation of wealth in the hands of a few plutocrats.
Income inequality is the vicious economic parlance. Such polarisation of the privileged bodes bad omens. Very dangerous are such social fissures. Dangerous crimes are taking place and analysts are unanimous in predicting that worse things are waiting in their wings unless the authorities rises to the occasion. They point out that political divisions are a phenomenon that may turn into the detonator to the powder-keg we all are sitting on. National unity, at least a semblance of political amity can save help avert the lurking perils.
Laudably, the country's economy is moving, albeit by virtue of its inner dynamics. And the government's statistical bureau BBS hopes to break the six-plus jinx in the current fiscal year 2015-16. But the overwhelming opinion is that "Growth without participation and involvement of people does not mean anything to development as there is lack of feeling of sovereignty, gender equality and human rights".
So, development should have a human face in a caring and humane society. Budget has to be conceived from the standpoint of a political economy geared towards a welfare state.
The writer is a retired Professor of Economics, BCS General Education Cadre.
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