MoF declines commerce ministry plea for providing \\\'working capital\\\' to TCB

The Ministry of Finance (MoF) has turned down a Ministry of Commerce request to provide Tk 3.0 billion to the Trading Corporation of Bangladesh (TCB) as working capital, citing the government's financial constraints, sources said.
The finance division in a letter to the Ministry of Commerce (MoC) Tuesday expressed its inability to make the allocation of the funds sought.
Sources said the MoC on October 10 in a letter to the finance division had requested for the financial support, so that it could continue its market intervention throughout 2013-14 fiscal year (FY) with a view to keeping the prices of essential commodities stable in the market.
A senior MoC official told the FE that the working capital was necessary for the government's market intervention arm as it lacked the required funds to buy commodities for open-market sale at subsidized rate when their prices went up.
"The finance division cited the government's financial constraints as reason and expressed its inability to provide the working capital to TCB," he said.
A senior MoF official said the government's expenditure has increased this year due to the national election as well as increased allocation to different development and non-development sectors.
Besides, increased salary and other benefits for different professional groups and government officials are taking effect in phases, he added.
Recently the government has announced nationalisation of jobs of a good number of school teachers. Moreover, many educational institutions have been included in the monthly payment order (MPO) system. All this has increased government expenditure, he said
The official also said the government's revenue earnings this year saw a declining trend as most of the business houses were incurring losses as their activities were being extremely hampered due to the ongoing political turmoil.
The official has cited the reasons for turning down the MoF request to provide working capital to TCB. In FY 2012-13, TCB was given Tk 8.0 billion as counter-guarantee, against which it had imported commodities and sold those in the market.
TCB chairman Sarwar Jahan Talukdar told the FE earlier that if the government gave it the counter-guarantee instead of working capital, it needed to import commodities by taking loans against trust receipt (LTR) from banks.
In the case of taking LTR from banks, the TCB has to pay interest at a rate between 14-16 per cent, which increases import cost. The cost becomes much lower if the commodities are imported through cash payment.
As the TCB sells commodities at subsidised rates, the organisation incurs huge financial losses every year. In the last three fiscal years, the government had to provide over Tk 2.0 billion as subsidy to TCB.
In FY 2012-13, the government provided TCB with Tk 586.89 million,  Tk 775.88 million in FY 2011-12, and Tk 690.80 million in FY 2010-11 against the losses it had undergone due to selling the essentials at subsidised rates.