News Published: Wednesday, Jun 17, 2015
Posted : 17 Jun, 2015 00:00:00
Put cap on savings instruments sales
Meet suggests anatomising budgetary targets
Photo: State Minister for Finance and Planning M A Mannan MP speaking
State Minister for Finance and Planning M A Mannan MP speaking at a discussion on 'Budget 2015-2016: Views of the Business Community' on Tuesday. Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) and Policy Research Institute of Bangladesh (PRI) jointly organised the programme at MCCI conference hall. — FE Photo
Former caretaker government adviser Dr Mirza Azizul Islam said on Tuesday the government should put a ceiling on sales of savings tools to stay safe from falling far deep in debt.
"Since the government as a captive lender cannot resist people from buying state-run savings instruments, it should put a cap on sales of savings instruments," he said.
The former finance adviser was speaking at a discussion on the proposed budget for fiscal year (FY) 2015-16 which he thinks is quite impossible to execute unless an investment-friendly environment is created with improved infrastructure and good governance.
He said to achieve the 7.0 per cent growth investments have to rise from the present state of 28.9 per cent of GDP (gross domestic product) to 33 per cent--an increase of over 4.0 per cent, which the country did not experience before.
Pointing out that the NBR revenue target is nearly 30 per cent higher than that of the revised budget for the outgoing fiscal year, the economist said the country had never in its history achieved such a higher year-on-year growth.
He apprehends the government's target on sale of savings instruments to manage deficit financing might overshoot the mark in the next fiscal year, as it happened in the outgoing fiscal.
And such big borrowing, he said, would put pressure on the government in repaying interest thereon and curb the budget's ability to spend more for productive sectors.
The net sales of savings tools stood at Tk 211.84 billion (21,184 crore) during the July-March period of the FY 2014-15 while the figure was Tk 74.60 billion in the corresponding period of last fiscal.
During the nine-month period of FY 2014-15 the government paid Tk 70.51 billion as profit compared to Tk 56.55 billion paid during the corresponding period of last fiscal, the Department of National Savings (DNS) data showed.
Because of the surge in demand for the savings tools, the government revised the sales target to Tk 210 billion from the original figure of Tk 90.56 billion in the current fiscal year.
The Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) organised the discussion at the MCCI office at Motijheel in the city. Economists, researchers, businessmen, academics and officials from government and non-government organisations attended the meet.
State Minister for Finance MA Mannan, who attended the programme as the chief guest, however, said the budget is big as the government has to fulfill the people's aspirations and expectations.
"It is big but realistic, especially in line with the development needs of the country," he told his audience.
He pointed out that the government reformed the NBR and measures had been taken to automate the revenue administration with increased manpower to chase such lofty targets of netting funds for financing the budget.
The new budget size is over Tk 2.95 trillion (2,95,000 crore).
"We hope NBR would be able to mobilise the revenue," said the minister, urging all to help the government implement its development agenda.
National Board of Revenue chairman Md. Nojibur Rahman also expressed his optimism about the revenue collection, saying that the NBR would put all-out efforts to collect the targeted revenue.
"The target is achievable. Let us work together," said the NBR chairman, echoing the minister.
Earlier, Policy Research Institute of Bangladesh (PRI) Executive Director Dr Ahsan H. Mansur presented a keynote paper on the subject, discussing the major objectives and challenges of the proposed budget in the context of the existing economic and political situation.
Although Dr Mansur did not term the budget a big one, considering the overall GDP size, he found it very challenging to implement it, especially in the context of overall revenue performances.
"Achieving the 7.0 per cent growth will require private investment to reach 23.7 per cent of GDP, including 1.2 per cent from FDI, which will be a challenging test, given past performance," he said.
PRI Chairman Zaidi Sattar in his speech highlighted the urgency of striking a balance between the tariff protection for domestic industries and incentives for export-oriented industries.
He pointed out that tariff protection given to safeguard industries catering for the domestic market acts as an impediment to export diversification. He stressed the need for bringing a balance between the two.
Exports, according to the PRI chairman, fetch fewer profit margins compared to profit margins of domestic sales. If firms that export and also produce for the domestic market find domestic sales to be far more profitable, they will naturally be lukewarm about export-oriented production.
Moderated by MCCI director Anis A Khan, also managing director and CEO of Mutual Trust Bank Ltd, the programme was also addressed by a good number of businessmen and entrepreneurs.
MCCI committee member Adeeb H. Khan FCA also presented a keynote paper on Finance Bill 2015 and Income Tax and VAT proposition.
Speakers at the discussion criticised the government for imposing tax on higher education and urged it to withdraw the tax and increase the allocations for health, education and social safety-net programmes.
Mr Anis A Khan in his speech urged the government to limit its borrowing from the banking system within the target set in the budget, without crossing the mark.
The chamber leader strongly felt that the government should continue its efforts to explore alternative sources of finance, including PPP (public-private partnership) arrangements in carrying out development work.