TCB turns lame duck for lack of money while traders make hay

Rezaul Karim | Published: June 07, 2015 00:00:00 | Updated: November 30, 2024 06:01:00

The Trading Corporation of Bangladesh (TCB) has long been hamstrung by capital shortages that impeded market-intervention activities of the agency, officials said. Â
Such seeming bankruptcy of the government's trading arm is specially a matter of concern ahead of the holy Ramadan when prices spiral routinely.Â Â Â Â Â Â Â Â
Collection of key essentials by the TCB for the purpose of market intervention when prices go up on the open market is being hampered for severe shortages of working capital, they said.
In fiscal years 2010-11, 2011-12, 2012-13 and 2013-14, the government provided Tk 690.8 million and Tk 775.9 million, Tk 586.8 million and Tk 669.8 million respectively in subsidies, TCB data showed.
In fiscal year (FY) 2012-13, it was given Tk 8.0 billion as counter-guarantee from government, against which it had imported commodities and sold those according to the TCB's plan.
A high official of the ministry of commerce (MoC) said in the case of taking loan against Trust Receipt (LTR) from banks, the TCB has to pay interest at a rate between 12 and16 per cent. Such borrowing increases the import costs.
As a result, the prices of the products increase and the corporation has to take subsidy from government.
But the state-run trading agency could not make any visible impact with regard to keeping the market of essentials stable and at a tolerable level for the common consumers, despite getting a large amount of deficit financing every year, he said.
The cost will become much lower and the consumers will be able to buy the goods at a tolerable price if the commodities are imported through cash payment, he added.
The MoC in a letter recently to the ministry of finance (MoF) sought a working capital of Tk 2.0 billion with a view to keeping the prices of essential commodities stable.
"We have received a MoC letter on TCB's working capital. The MoF is working on the matter," said one finance official, seeking anonymity.
A senior TCB official told the FE that 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 rates.
He said 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.
As the TCB sells commodities at subsidized rates, the organization incurs huge financial losses every year.
No tangible impact could be witnessed in respect of market intervention, despite repeated efforts by the state-run corporation, due to the procedural delays, manpower shortage and lack of necessary warehouse with the agency, sources concerned said.
There are a total of 3051 dealers with the corporation across the country, according to the TCB website, for rationing its goods.
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