The decreasing `idle’ funds from state-owned and autonomous bodies has exacerbated the government›s current fund crisis, economists said.
Finance division officials said that around Tk 35,000 crore was collected in FY20 and FY21 after the enactment of the Surplus Fund Act in 2020.
The law made it mandatory for autonomous, semi-autonomous, and statutory government authorities and public non-financial corporations to deposit their idle and surplus funds with the national exchequer.
The fund helped the government meet the growing development costs amid less-than-expected revenue generation by the National Revenue Board during a period when the country’s tax-to-GDP ratio slipped to less than 8 per cent.
Finance division officials said that the collection of surplus funds has remained suspended since FY22 because most of the 61 autonomous, semi-autonomous, and statutory governments have been unwilling to contribute.
The Centre for Policy Dialogue distinguished fellow Mustafizur Rahman noted that the surplus funds proved to be handy for the government to meet the budget deficit.
But the new-found source became almost exhausted, he said.
Amid such a situation, the finance division has been facing difficulties maintaining fiscal balance and is forced to borrow $4.7 billion from the International Fund over the three years ending in May 2026.
Mustafizur Rahman said the drying up of idle funds might be one of the reasons contributing to the government’s current fund crunch.
The ongoing financial crisis forced finance minister Abul Hassan Mahmood Ali to sanction only around 4.5 per cent higher funds for the annual development programme in the upcoming FY25.
Finance division officials said that key entities such as Bangladesh Petroleum Corporation, Chittagong Port Authority, Power Development Board, and Rural Electrification Board, which were the main contributors of idle money to the exchequer, had taken measures to utilise idle money.
BPC, which deposited the highest idle money of around Tk 9,000 crore to the exchequer in FY20, FY21, and FY22, has invested its surplus funds in development projects in recent months.
Its finance director, Md Abdul Matin, said on Monday that he was not aware of the BPC having any surplus funds.
BPC has taken around a dozen projects with its funds, he said.
The projects include the construction of the head office building of Padma Oil Company Ltd, the construction of the 20-storey Jamuna Office Building at Kawran Bazar in Dhaka, the construction of the 19-storey Meghna Office Bhaban at Agrabad in Chattogram, and fuel oil transportation in the pipeline from Chittagong to Dhaka.
In the Medium-Term Macroeconomic Policy Statement issued on June 6, the finance division said non-tax revenue grew by a whopping 69.5 per cent in FY20 and 34.7 per cent in FY21.
It attributed the dramatic rise to the submission of idle funds from some SOEs to the government exchequer.
However, NTR declined by 38.9 per cent in FY22 and posted only 7.6 per cent growth in FY23 as submissions of idle funds stopped, according to the MTMPS.
Policy Research Institute executive director Ahsan H Masnur blamed the revenue board’s failure more than the sharp decline in funds from NTR for the current government fund crisis.
Tax revenue accounts for over 85 per cent of the government›s income, he said, pointing out how the overall revenue shortfall forced the government to rely heavily on bank borrowing in recent years to meet its budget deficit.
In FY23, the government’s bank borrowing hit Tk 1.24 lakh crore while a revenue shortfall was recorded to the tune of Tk 38,500 crore.
In the outgoing FY24, the government borrowed Tk 65,431 crore from the banking system in the first 10 months against a revenue shortfall of Tk 21,930 crore between July and March.
While introducing the surplus fund bill in parliament, the then finance minister said that they wanted the utilisation of a part of about Tk 2.12 lakh crore ‘idle money’ with the SOEs for development activities.
Petrobangla had surplus funds to the tune of Tk 18,204 crore, PDB Tk 13,454 crore, CPA Tk 9,913 crore, and Rajuk Tk 4,030 crore, said finance division officials.
The officials said they did not pressurise the CPA, one of the richest bodies with surplus money, out of fears that it would draw protests from CPA workers and trade unionists.
Besides, a High Court directive on September 7, 2022, asking law and finance secretaries to explain the legality of the Surplus Funds Act following a writ petition has discouraged authorities from mopping up idle funds, said finance ministry officials.
