The Trading Corporation of Bangladesh (TCB) has long been hamstrung by capital shortfall, making it difficult for the agency to carry out timely market intervention, officials said.
Supply of key essentials by the government's trading arm when prices go up on the open market, especially during holy Ramadan, is seriously hampered for the shortage of working capital, they said.
The government has provided subsidy amounting to about Tk 3.75 billion to the TCB from fiscal year (FY) 2010-11 to FY 2015-16, according to the annual report of TCB.
In the case of taking loans against trust receipt (LTR) from banks, the TCB has to pay interest at a rate between 12 and 13 per cent. Such borrowing increases the import costs, said a high official of the ministry of commerce (MoC).
As a result, the prices of essential items go up and the corporation has to take subsidy from the 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 common consumers despite getting a large amount of deficit financing every year, said the official.
The cost would become much lower and the consumers would be able to buy the goods at an affordable rate if the commodities are imported through cash payment, he added.
TCB spokesperson Md Humayun Kabir told the FE that sufficient working capital is required for the agency to buy commodities for open-market sale at subsidised rates.
Market-intervention activities of the state entity could be carried out smoothly if TCB had adequate working capital, he added.
A senior TCB official said that in FY 2012-13, TCB was given Tk 8.0 billion as counter-guarantee from the government, against which it imported different commodities.
As the TCB sells commodities at subsidised rates, the organisation counts huge financial losses every year.
Despite repeated efforts by the state-run corporation, no tangible impact could be seen in respect of market intervention due to procedural delays, manpower shortage and lack of necessary warehouse, sources concerned said.
There are a total of 2814 dealers registered with the corporation across the country, according to the TCB website, for rationing its goods.
