New budget will target to achieve 7.2pc GDP growth, says Muhith
FE Report
The budget for the next fiscal year will aim at boosting growth, curbing inflation and creating more jobs, Finance Minister AMA Muhith said Sunday at a pre-budget discussion with the editors of the national dailies and the electronic media.
The next budget will have its target to achieve 7.2 per cent rate of growth of the country's gross domestic product (GDP) and to rein in inflation within the limit of 7.5 per cent, the finance minister added.
Mr Muhith expressed his dissatisfaction over the poor level of disbursement of foreign aid and held incompetence and negative mentality of a section of the officials in development administration as being responsible for the dismal situation that resulted in low investment in the country.
"The share of foreign aid to GDP for the current fiscal will be around 0.6 per cent, which should be, at least, 3.0 per cent of GDP," Mr Muhith observed.
"We are not capable enough to utilise external aid, in a situation where we are faced with the problem of institutional inefficiency amid a negative mindset about getting release of foreign fund from the pipeline," the minister said.
The next budget will relatively be free of stresses and strains unlike the case in the current fiscal, Mr Muhith said, adding, "We expect a robust domestic resource mobilisation next fiscal."
Mr Muhith said the economy would see some positive macro-economic developments in the next fiscal as the borrowing of the government from the banking system would be at the minimum level and the subsidy bill on account of energy sector would also be significantly lower than that of the current fiscal, in order to help strengthen the country's economic fundamentals.
"There will be higher growth, lower inflation, increased exports and higher employment opportunities in the next fiscal, mainly due to shift in policies on subsidy and borrowing," Mr Muhith told the pre-budget meeting, in response to a query.
He stated that the subsidy bill on account of petroleum products, power sector, and state-owned enterprises would decline to a marked extent in the next budget.
"We want to reduce the budgetary burden of state-owned textile mills and jute mills as we have decided to divest all the government-owned textile mills and to continue management and operation of only 22 jute under public-private partnership," he said.
About adjustment of prices of petroleum products, he said the government is going to chalk out a formula on price adjustment of petroleum products.
"We will take decision on this issue early next year, but its implementation will begin in course of time, but certainly not in this June and July," the minister stated.
Responding to a question, Muhith said the government is yet to decide on providing facility for whitening of undisclosed or black money in the next budget.
The amount of transfer or allowances under different social safety net programmes will not be increased in the next budget; rather, the focus will be on increasing the number of beneficiaries, he observed.
In response to another query, the minister said microcredit is a programme of the government and it is not Grameen Bank (GB) alone which is involved in micro credit.
Responding to a question, the finance minister said that he was in favour of issuance of sovereign bond to have an international exposure of the country and also to have proper benchmarks for borrowing from the overseas, by both public and private sectors.
He said the government is still examining the issue before taking a concrete decision to this effect.
He, however, evaded a direct answer relating to the possibility of lowering corporate tax rate in the next budget as the existing corporate tax rate in Bangladesh is considered to be one of the highest among the comparable countries which is having a negative impact on flourishment of private sector and creating employment opportunities and is also considered to be one of the reasons for tax evasion, to some extent.
Mr. Muhith said he was quite happy over the outcome of PPP initiative as a good number of development projects have so far been implemented or are being implemented under it.
In response to a question on the Padma Bridge, he said final decision on funding the project will be taken in July next.
He said there would be also an allocation of fund for the project in the next budget and expressed the hope that the donors would stand by the government.
Answering a question, he said the government would consider in details the alternative specific Malaysian offer for construction of the bridge. "We will have to pursue the existing offers. If these are not available, then we will have to look for other options," the Finance Minister added.
Mr. Muhith asserted that there was no corruption in the Padma Bridge project as no real development fund was spent.
When asked whether it would be prudent to go for financing the Padma Bridge with hard-term loans or bonds rather than with concessional external assistance, Mr Muhith said he is otherwise in favour of funding the project with concessional assistance.
Among others, the Editor of The Financial Express Moazzem Hossain, Masranga TV CEO Syed Fahim Munaim, Director and head of news of Channel i Shykh Seraj, Boishakhi TV CEO and head of news Monjurul Ahsan Bulbul, News Today editor Reazuddin Ahmed, joint editor of Prothom Alo Abdul Kaiyum, acting editor of the Daily Star Shah Hossain Imam, Contributing editor of bdnews24.com Baby Moudud, acting Editor of Sangbad Khandoker Moniruzzaman and eminent journalist Rahat Khan attended the meeting.
Agencies added: Finance Minister AMA Muhith said Sunday the budget for the fiscal year, 2012-13, will allocate resources for the Padma Bridge project as the government will like to begin its construction work next year.
"There would be a clear allocation of fund for the Padma Bridge in the next budget and we hope that development partners would stand by the government for the construction of 6.17-kilometre long Padma Bridge," said the finance minister while talking to reporters after a pre-budget meeting with editors of print and electronic media at his office.
"We've to reach a solution .. there is no scope to waste time. We'll take a final decision on funding the mega project in July next," he added.
"I want to make it clear that there was no corruption in the Padma Bridge project as no development fund was spent, except for land acquisition and rehabilitation of the people," said the finance minister.
He said the Padma Bridge project has already delayed by one and a half years on suspicions about corruption.
"The Anti-Corruption Commission (ACC) has carried out a preliminary investigation and it found nothing wrong," he said while replying to a question about the World Bank's allegation of corruption involving the project.
About the World Bank's report on corruption, the finance minister said the development partner gave the government a report on the Canadian investigation on alleged corruption last April in which it was stated that there might be some possibility for corruption.
Replying to yet another query about Malaysia's proposal, Muhith said the government would also consider any alternative to the Malaysian offer, if it is available, for the construction of the bridge.
The construction of the Padma Bridge suffered a setback when the Washington-based multilateral lending agency suspended its loan disbursement decision in September last, following some allegations of corruption in the project's bidding process.
In April last year, the World Bank signed an agreement with the government to provide $1.2 billion for the $ 2.9 billion mega Padma bridge project. Other co-financiers, ADB signed deals with the government to give $615 million, JICA, $400 million and IDB, $140 million for its construction.
Earlier addressing a pre-budget meeting with the editors of different print and electronic media held at the Ministry of Finance, the minister said: "The next budget won't be an election budget. It'll be the budget for the sake of the country, for the welfare of the public and for the sake of development," he said.
The economic condition will improve further next fiscal, he stated while noting that there would be higher growth, lower inflation and higher export.
The rate of inflation will decline the way as it has already come down, if there are good supplies and reasonable income growth.
He also hinted at the amount of subsidies decreasing in energy and power sector next fiscal.
As the petroleum products are mostly import-based, he said, the government often faces the problem as its domestic prices have not been in conformity with international prices for past several years, unlike the case in neighbouring Pakistan, India, Sri Lanka, Nepal and the Maldives except Bhutan.
Mr Muhith said microcredit is a programme of the government and it is not confined to Grameen Bank (GB) also as it embraces a wide spectrum of areas, going much beyond the operations of GB.
He said around 3,000 different institutions, including some big ones like Brac, Asa, Proshika etc., are operating with their microcredit programmes and their recovery rate is also very high.
Replying a question relating to the possibility of raising the ceiling of tax-exempted income, the Finance Minister said the decision is yet to be taken on this. "Decisions will be taken within the next 10 days."
About issuing sovereign bond, he said the government is examining its pros and cons.
Mr Muhith, however, did not give any hint at reducing different corporate tax rates though he admitted that such rates, in a differentiated way, are high in Bangladesh.
On reducing the country's dependence on foreign aid, Mr Muhith observed that the actual availability of foreign aid in the current fiscal is less than 1.0 per cent of gross domestic product (GDP) but it should have been 3.0 per cent of GDP.
He also held the incompetence of the development administration as well as lack of supportive mindset on the part of those who matter most in such administration as being partly responsible for low level of foreign aid disbursement.
The Finance Minister also observed that the foreign direct investment (FDI) should also increase to enable the country's economy grow at a faster pace.
Citing that there are many projects that are being implemented under the public private partnership (PPP) initiatives, the Finance Minister said PPP would soon become a source of important development support for the country as all the basics for operationalising the concept meaningfully has now been put in place.
The Finance Minister did not agree with the contention that income inequality was on the rise, despite a good rate of the country's economic growth in past several years. "The income distribution scenario is much better in Bangladesh than most other countries in Asia," he added.
FE Report
The budget for the next fiscal year will aim at boosting growth, curbing inflation and creating more jobs, Finance Minister AMA Muhith said Sunday at a pre-budget discussion with the editors of the national dailies and the electronic media.
The next budget will have its target to achieve 7.2 per cent rate of growth of the country's gross domestic product (GDP) and to rein in inflation within the limit of 7.5 per cent, the finance minister added.
Mr Muhith expressed his dissatisfaction over the poor level of disbursement of foreign aid and held incompetence and negative mentality of a section of the officials in development administration as being responsible for the dismal situation that resulted in low investment in the country.
"The share of foreign aid to GDP for the current fiscal will be around 0.6 per cent, which should be, at least, 3.0 per cent of GDP," Mr Muhith observed.
"We are not capable enough to utilise external aid, in a situation where we are faced with the problem of institutional inefficiency amid a negative mindset about getting release of foreign fund from the pipeline," the minister said.
The next budget will relatively be free of stresses and strains unlike the case in the current fiscal, Mr Muhith said, adding, "We expect a robust domestic resource mobilisation next fiscal."
Mr Muhith said the economy would see some positive macro-economic developments in the next fiscal as the borrowing of the government from the banking system would be at the minimum level and the subsidy bill on account of energy sector would also be significantly lower than that of the current fiscal, in order to help strengthen the country's economic fundamentals.
"There will be higher growth, lower inflation, increased exports and higher employment opportunities in the next fiscal, mainly due to shift in policies on subsidy and borrowing," Mr Muhith told the pre-budget meeting, in response to a query.
He stated that the subsidy bill on account of petroleum products, power sector, and state-owned enterprises would decline to a marked extent in the next budget.
"We want to reduce the budgetary burden of state-owned textile mills and jute mills as we have decided to divest all the government-owned textile mills and to continue management and operation of only 22 jute under public-private partnership," he said.
About adjustment of prices of petroleum products, he said the government is going to chalk out a formula on price adjustment of petroleum products.
"We will take decision on this issue early next year, but its implementation will begin in course of time, but certainly not in this June and July," the minister stated.
Responding to a question, Muhith said the government is yet to decide on providing facility for whitening of undisclosed or black money in the next budget.
The amount of transfer or allowances under different social safety net programmes will not be increased in the next budget; rather, the focus will be on increasing the number of beneficiaries, he observed.
In response to another query, the minister said microcredit is a programme of the government and it is not Grameen Bank (GB) alone which is involved in micro credit.
Responding to a question, the finance minister said that he was in favour of issuance of sovereign bond to have an international exposure of the country and also to have proper benchmarks for borrowing from the overseas, by both public and private sectors.
He said the government is still examining the issue before taking a concrete decision to this effect.
He, however, evaded a direct answer relating to the possibility of lowering corporate tax rate in the next budget as the existing corporate tax rate in Bangladesh is considered to be one of the highest among the comparable countries which is having a negative impact on flourishment of private sector and creating employment opportunities and is also considered to be one of the reasons for tax evasion, to some extent.
Mr. Muhith said he was quite happy over the outcome of PPP initiative as a good number of development projects have so far been implemented or are being implemented under it.
In response to a question on the Padma Bridge, he said final decision on funding the project will be taken in July next.
He said there would be also an allocation of fund for the project in the next budget and expressed the hope that the donors would stand by the government.
Answering a question, he said the government would consider in details the alternative specific Malaysian offer for construction of the bridge. "We will have to pursue the existing offers. If these are not available, then we will have to look for other options," the Finance Minister added.
Mr. Muhith asserted that there was no corruption in the Padma Bridge project as no real development fund was spent.
When asked whether it would be prudent to go for financing the Padma Bridge with hard-term loans or bonds rather than with concessional external assistance, Mr Muhith said he is otherwise in favour of funding the project with concessional assistance.
Among others, the Editor of The Financial Express Moazzem Hossain, Masranga TV CEO Syed Fahim Munaim, Director and head of news of Channel i Shykh Seraj, Boishakhi TV CEO and head of news Monjurul Ahsan Bulbul, News Today editor Reazuddin Ahmed, joint editor of Prothom Alo Abdul Kaiyum, acting editor of the Daily Star Shah Hossain Imam, Contributing editor of bdnews24.com Baby Moudud, acting Editor of Sangbad Khandoker Moniruzzaman and eminent journalist Rahat Khan attended the meeting.
Agencies added: Finance Minister AMA Muhith said Sunday the budget for the fiscal year, 2012-13, will allocate resources for the Padma Bridge project as the government will like to begin its construction work next year.
"There would be a clear allocation of fund for the Padma Bridge in the next budget and we hope that development partners would stand by the government for the construction of 6.17-kilometre long Padma Bridge," said the finance minister while talking to reporters after a pre-budget meeting with editors of print and electronic media at his office.
"We've to reach a solution .. there is no scope to waste time. We'll take a final decision on funding the mega project in July next," he added.
"I want to make it clear that there was no corruption in the Padma Bridge project as no development fund was spent, except for land acquisition and rehabilitation of the people," said the finance minister.
He said the Padma Bridge project has already delayed by one and a half years on suspicions about corruption.
"The Anti-Corruption Commission (ACC) has carried out a preliminary investigation and it found nothing wrong," he said while replying to a question about the World Bank's allegation of corruption involving the project.
About the World Bank's report on corruption, the finance minister said the development partner gave the government a report on the Canadian investigation on alleged corruption last April in which it was stated that there might be some possibility for corruption.
Replying to yet another query about Malaysia's proposal, Muhith said the government would also consider any alternative to the Malaysian offer, if it is available, for the construction of the bridge.
The construction of the Padma Bridge suffered a setback when the Washington-based multilateral lending agency suspended its loan disbursement decision in September last, following some allegations of corruption in the project's bidding process.
In April last year, the World Bank signed an agreement with the government to provide $1.2 billion for the $ 2.9 billion mega Padma bridge project. Other co-financiers, ADB signed deals with the government to give $615 million, JICA, $400 million and IDB, $140 million for its construction.
Earlier addressing a pre-budget meeting with the editors of different print and electronic media held at the Ministry of Finance, the minister said: "The next budget won't be an election budget. It'll be the budget for the sake of the country, for the welfare of the public and for the sake of development," he said.
The economic condition will improve further next fiscal, he stated while noting that there would be higher growth, lower inflation and higher export.
The rate of inflation will decline the way as it has already come down, if there are good supplies and reasonable income growth.
He also hinted at the amount of subsidies decreasing in energy and power sector next fiscal.
As the petroleum products are mostly import-based, he said, the government often faces the problem as its domestic prices have not been in conformity with international prices for past several years, unlike the case in neighbouring Pakistan, India, Sri Lanka, Nepal and the Maldives except Bhutan.
Mr Muhith said microcredit is a programme of the government and it is not confined to Grameen Bank (GB) also as it embraces a wide spectrum of areas, going much beyond the operations of GB.
He said around 3,000 different institutions, including some big ones like Brac, Asa, Proshika etc., are operating with their microcredit programmes and their recovery rate is also very high.
Replying a question relating to the possibility of raising the ceiling of tax-exempted income, the Finance Minister said the decision is yet to be taken on this. "Decisions will be taken within the next 10 days."
About issuing sovereign bond, he said the government is examining its pros and cons.
Mr Muhith, however, did not give any hint at reducing different corporate tax rates though he admitted that such rates, in a differentiated way, are high in Bangladesh.
On reducing the country's dependence on foreign aid, Mr Muhith observed that the actual availability of foreign aid in the current fiscal is less than 1.0 per cent of gross domestic product (GDP) but it should have been 3.0 per cent of GDP.
He also held the incompetence of the development administration as well as lack of supportive mindset on the part of those who matter most in such administration as being partly responsible for low level of foreign aid disbursement.
The Finance Minister also observed that the foreign direct investment (FDI) should also increase to enable the country's economy grow at a faster pace.
Citing that there are many projects that are being implemented under the public private partnership (PPP) initiatives, the Finance Minister said PPP would soon become a source of important development support for the country as all the basics for operationalising the concept meaningfully has now been put in place.
The Finance Minister did not agree with the contention that income inequality was on the rise, despite a good rate of the country's economic growth in past several years. "The income distribution scenario is much better in Bangladesh than most other countries in Asia," he added.
