The government is likely to pump up Tk5,000 crore into the four state-owned banks in the new fiscal year to bridge their capital shortfalls.

The figure is almost 22% higher than the outgoing fiscal year’s Tk4,100 crore, which was allocated in the first phase as a bailout package against the banks capital deficits.

With an allocation for bridging the capital shortfalls of the state-owned banks, the government’s non-development capital expenditure may now stand at Tk26,600 crore in the new fiscal year, beginning from next month.

The figure is more than 37% higher than the revised allocation of Tk18,909 crore and 24% higher than the original outlay of Tk20,978 crore in the outgoing fiscal year.

“The government will allocate fund for the state-owned banks to convert their goodwill to capital,’’ Finance Minister AMA Muhith had earlier told the Dhaka Tribune.

Non-development capital expenditure means that the government will invest the amount in asset collection, land acquisition, construction and public works, share and equity in the new budget.

Of the total outlay of non-development capital expenditures, for revitalising the moribund capital market, the government might allocate Tk1,600 crore, a sharp increase of almost 78% over the outgoing fiscal year’s allocation of Tk9,00 crore.

The government had revised down the allocation to Tk300 crore from Tk900 crore during the outgoing fiscal as the fund was not utilised due to the tougher disbursement conditions imposed upon the small investors, who were badly affected in the share market debacle in late 2010. 

However, the country’s twine bourses demanded to allocate Tk5,000 crore for the upcoming fiscal to stabilise the market.

Referring to Bangladesh Fund of Tk5,000 crore that was formed after the share market debacle in late 2010, former advisor to the caretaker government Mirza Azizul Islam had earlier said, “As this fund is yet to be utilised, I don’t think any market stabilised fund is needed right at this moment.”

“Some South Asian countries have already formed such market stabilisation funds in 1996-98 but in most cases such kind of fund eventually had become losing concern,” he, however, added.