S M Jahangir

The Ministry of Finance (MoF) has recommended restructuring of outstanding debt of jute mills worth over Tk 21.35 billion with two and a half years of moratorium to help them cope with financial crisis.

It also suggested that the Bangladesh Bank and four state-owned commercial banks should settle the matter relating to fixation of a 7.0 per cent interest on credit for export of jute goods in accordance with previous official guidelines.

The MoF has sent its recommendations to the Ministry of Textile and Jute following the proposals made earlier by the Advisory Committee on Jute to boost the exports of jute goods through addressing the problems of local jute mills, official sources said.

But MoF's recommendations have frustrated the private sector jute-goods exporters, who allege that 'identical' policies are not followed for state-run and private jute mills.

In its recommendations, the finance ministry has agreed to provide 'counter guarantee' against restricting nearly Tk 6.39 billion debt that some 16 state-run mills under the Bangladesh Jute Mills Corporation (BJMC) owe to banks until June 30, 2009.

But, the MoF has declined to issue such counter guarantee in favour of restructuring the private jute mills' debt, the sector insiders said, adding the total bank liability of private jute mills was over Tk 14.96 billion as on June 30 last.

The finance ministry has also suggested that the banks concerned should consider enhancing cash credit (CC) limit for private jute mills, taking the prices of raw jute, energy tariff, workers wages and other factors into consideration.

Moreover, it has also advised the banks to reschedule the outdating debt with private jute millers on the basis of 'bank-client' relations.

But such the suggestions remain void in respect of restructuring the BJMC mills debts, they mentioned.

On the other hand, the MoF has given its opinion in favour of recovering the outstanding debt of both state-owned and private jute mills in 10 years transferring it to 'block accounts' except for a Tk 14.96-billion long-term bank liability of the BJMC mills.

Regarding a proposal from the Advisory Committee on Jute, the finance ministry mentioned that it had already implemented an official decision to release 70 per cent of total cash subsidy immediately after the exports take place.

About the mandatory use of jute bags for packaging purpose, the MoF said it has already requested the textile and jute ministry for placing a proposal to this effect before the cabinet.