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Finance minister AMA Muhith has said he prefers subsidies over cash incentives, and also backs the idea of a special public-private ''crisis fund'', for recession-hit exporters, reports bdnews24.com.
UNB adds: Muhith Saturday called upon the development partners, particularly the multilateral donor agencies, to substantially increase foreign aid in the next fiscal year when the country might face a serious crisis due to the impact of global recession, reports UNB.
"I''m worried about the next fiscal year when the impact of the recession will be very serious," he told a conference, making his call for the first time after the global economic downswing started hitting the domestic economy.
In early February, he recognised that the recession started taking its toll on the economy.
The minister was addressing a conference titled ''Development with Equity and Justice: Immediate Tasks for the Newly Elected Government'' organised by Centre for Policy Dialogue (CPD) at Bangladesh China Friendship Conference Centre in the city.
He said he would go for measures in the next budget to create domestic demand and employment opportunities in an effort to face the challenges of the recession impact. "This will require investment at a very high level," he said, calling upon the donors to scale up both budgetary and trade support. "Bangladesh should be rewarded for a very good husbandry of foreign aid."
Muhith called upon the private sector -- both from home and abroad -- to come forward with their investment along with the government in the infrastructure and human development projects. Prof Rehman Sobhan supplemented that the government could make an effort to bring the citizens of the proposed Padma Bridge area to become the subscribers of the equity of the bridge.
The finance minister urged the participants of the conference to evolve a formula to facilitate Public-Private Participation (PPP) in implementing development projects. "I''m wondering whether we should have another budget of PPP."
The scope of providing tax-incentives is very limited, as the export sector already enjoys huge tax rebates, he said calling for sacrifice by the commercial banks to help businesses withstand the crisis emerging out of the recession. "Banks could treat the businesses with delays in payment of obligations, as they would not be able to meet the calls for repayment."
BNP vice-chairperson MK Anwar suggested looking for some ways on how the export sector could be supported and at the same time he was in favour of going for some unpopular decisions. "We need to take some unpopular decisions sometimes."
He said the recession has also created an opportunity for the country through bringing down the prices of essentials, giving some more space on the subsidy.
The senior opposition lawmaker encountered an opinion that the savings from the reduced oil price should be used for BPC''s repayment of huge past liability. "We should not think about the past liability for now (crisis period). We should consider whether the benefit of the global meltdown can be passed on to the people," he said, adding that the fuel oil price has an impact on all the sectors, including exports.
Former Finance Adviser Dr Aziz recommended enacting a law to force banks to maintain a mandatory spread between deposit and lending rates.
He said the exporters could have been facilitated with lower lending rates, but there is a cartel among the commercial banks and they have a tacit agreement on the maximum limit of lending rates.
Dr Aziz also suggested creating an Export Destabilization Fund to be financed by the government and the private sector, which will have to be administered strictly by an independent body. The affected export sectors will avail themselves of the fund at lower interest rates (proposed to be 5 percent) for a maximum period of two years, he said.
But, he said, it must be ensured that the borrowers would not be able to go to court - a typical scenario in Bangladesh to go to court after becoming a defaulter. The former adviser cautioned the government not to go for credit expansion beyond 20 percent, considering a GDP growth of 6 percent and inflation at a range between 8.5-8.8 percent.
He further warned against going to widen the budget deficit much for meeting the domestic demands and suggested considering the reactions of the donor agencies.
Appreciating Dr Aziz''s recommendation, Prime Minister''s Adviser Dr Masihur said the commercial banks should take part in the Export Destabilization Fund.
He said the subsidy would not work when the demands in the export destination contracted. "We should not follow what other countries did," he added. He also suggested shifting some resources from RMG to other emerging sectors. |
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