For the last few years TV channels are routinely treating us to a spectacular animated view of what could have been our fancied Dream Bridge across the Padma. The dream, however, remained only a dream. What we were instead treated to was a whodunit mystery soap opera in which the real villain remained as obscure as it had been to start with. As the events unfolded, the story line, based on the encrypted names doodled in the mysterious diary by one Ramesh appears to be rather weak to serve as evidence of crime to be. It was possibly written hurriedly to fit into the stance of the World Bank and its other sibling -- the IMF, to enlarge and consolidate the sphere of influence of its principal founders. Whether the issue this time was Dr. Yunus, caretaker government, the article of a former prime minister in the Washington Times or anything else, we would never know.
To be honest, we have a slew of detractors too across political divides even in our own midst. To preserve their narrow vested interest, they would not like a bridge to be built over the Padma or turning Mongla into a viable sea port. It is due to sheer grit and the determination of the Prime Minister that the antagonists have not succeeded to bury the Padma Bridge project forever. However, precious time has been wasted on hopping from one offer to another, probably to delay the real thing. The latest declaration of the Finance Minister to use the country's own resources to finance the project, we hope, will also not fizzle out into nothingness.
The importance and economic viability of the bridge have been told and retold many times over. It holds the prospect of favourably impacting the country's landscape stretching from Sylhet to Satkhira. Most importantly, the people of the entire south-western region, west of Padma, where poverty level is estimated to be at least 7.0 per cent higher in comparison to that of the rest of the country, will find an opportunity to catch up with their peer elsewhere. Drawing on from the experience of multipurpose bridge over the Jamuna, it can be predicted that the Padma bridge will see manifold increase of traffic across the river and set the tone for vibrancy in interregional economic and social interaction and bilateral trade with our big neighbour.
Following the rise of the foreign exchange reserve to a record level of $18 billion, I wrote an article last week in the Financial Express on its judicious use for productive purposes. While doing so I also suggested cutting down wasteful expenditure of hard-earned foreign exchange for maintaining high-profile missions in obscure countries, foreign trips of the foreign minister every other day, import of super luxury goods, etc. In my reckoning, the Padma Bridge project qualifies as one of the most important productive projects. Since the foreign financiers have turned their back, we no longer need to drag our feet. Foreign exchange reserve may not be anywhere near the China's staggering $3,627 billion or our neighbour India's $295 billion, but it can safely accommodate the foreign exchange costs of the bridge.
To say that 'finance is no problem', as did an overambitious soldier-turned-president more than three decades ago, is an obvious understatement. The government will need to generate plenty of local money to buy the foreign exchange. Unfortunately, instead of tightening the belt or raising the money through taxation, the government -- any government for that matter - has an unhealthy habit of borrowing money from the central bank, commercial banks and the general public (through savings instruments) to quench their all consuming appetite for relatively unimportant projects and maintaining a mammoth-size bureaucracy including a phalanx of ubiquitous OSDs (officers on special duty). The fallouts, including the inflationary impacts, are too obvious to need an elaboration. Tightening the belt through increased tax is an obvious and favourite choice of the Finance Minister but the belt has already cut deep into the muscle of the common man due to increased tax burden and multiple hikes of utility prices.
To reduce the amount and the cost of borrowing, the following are some of the options:
n The Padma Bridge project may be converted into a limited company with provision for 49 per cent shareholding by the public with preferential allotment for migrant workers who will send their subscription in foreign exchange. It will give the people of the country a sense of pride for participation in the nation-building process.
n Dollar-denominated bonds may be issued for subscription by the non-residents, including migrant workers, with interest at say 5.0 per cent per annum which would be quite attractive in comparison to the current level of low deposit rates in the euro-currency markets. The principal and interest could be made convertible into taka or dollar on maturity. This option is expected to keep the cost of borrowing low. The exchange rate of taka is likely to remain relatively stable for the coming years. In any case, the savings on interest is expected to offset the exchange risks.
n Local currency taka bonds may be issued for subscription by the public with provision for payment of interest at a little higher than that for comparable government obligations.
I visualise that there would be lots of financial experts eager to put too many 'ifs' and 'buts' to the suggested or any other financing arrangement. Regardless of whichever is chosen by the government, it is important that the work must start before the onset of monsoon.
The writer is a former central banker. [email protected]
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