Govt to follow low int'l fuel oil prices

Bangladesh will take up the opportunity of low fuel oil prices in international markets to adjust prices at home, said Finance Minister AMA Muhith without giving details yesterday.

Addressing a discussion on the budget, to be announced next month, in the capital's Sonargaon hotel, he also said savings interest rates would be cut to make funds inexpensive for the private sector.

"The issue has been reviewed, and a decision to this effect will come on Sunday," he told the programme jointly organised by NTV and the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI).

The comments came in response to the business community's strong demand on cutting bank lending rates which, they said, were major obstacles to raising the investment rate.

Interest rates of savings certificate are high, said Muhith, adding, "We raised the rates in the current fiscal year to instil life into the savings instruments, but it was a mistake."

He also said the government plans to use at least 20 percent of the expected foreign aid stuck in the pipeline in the next fiscal year.

"It will allow the government to borrow less from domestic sources which will ultimately contribute to the reduction of banks' lending rates," he said.

He also said the government may further extend the tax-holiday facility for the ICT sector.

He said the government also plans to relax intervention in the manpower sector. "We intervened to curb corruption, but our intervention can not be permanent."

Muhith said the government has to go for large scale reforms in the administration and decentralise it. 

The budget size for 2015-16 will be around Tk 300,000 crore, he added.

Debapriya Bhattacharya, distinguished fellow at the Centre for Policy Dialogue, said revenue generation would face a major challenge in the coming fiscal year.

He also called for adequate budgetary allocation from the annual development programme so that for major projects were completed on time.

Syed Manzur Elahi, a former president of the Metropolitan Chamber of Commerce and Industry, Dhaka, said special economic zones needed to be set up quickly for thousands of foreign companies were being unable to invest for a lack of adequate land, energy and power.

Attracting investment will not be a problem if political stability, good governance and a decentralised administration can be ensured, said Inam Ahmed Chowdhury, an adviser to the BNP chairperson.

Water Resources Minister Anisul Islam Mahmud said fair prices must be ensured to farmers.

AB Mirza Azizul Islam, former finance adviser to a caretaker government, said the government was in a better position to cut the oil prices.

"It will cut subsidies. But if the government increases salaries of civil servants in line with the Pay and Service Commission's recommendation, revenue expenditure would go up," he said

There is also scope for reducing corporate as well as value added taxes, he said.

FBCCI President Kazi Akram Uddin Ahmed moderated the discussion.