The Financial Express
Finance Minister AMA Muhith announced Sunday the much-talked-about interim package of fiscal and policy supports for the country's agiculture, power and export sectors to help ward off immediate effects of the ongoing global recession.
An additional allocation Tk 34.24 billion will be required in the revised budget for the current fiscal year (FY) to finance the package.
Under the fiscal support part of the package for the April-June period of the FY 2008-09, the rates of export subsidy have been raised for three sectors, namely, jute, leather and frozen food.
With the enhancement, the rate of cash subsidy on jute and jute goods has been fixed at 10 per cent from the existing 7.5 per cent while the same has been raised to 17.5 per cent for leather and leather goods and 12.5 per cent for frozen foods from the exiting rates of 15 per cent and 10 per cent respectively.
Cash support rates for other export items will, however, will remain unchanged, the finance minister said while unveiling the government's special stimulus package before the media at his ministry's conference room.
Giving the break-up of the package, Mr Muhith said the government will need to allocate an additional amount of Tk 4.50 billion because of the increase in export subsidy to three sectors.
As a result, the total amount of export subsidy will increase to Tk 15 billion in the revised budget for the FY 2008-09 against the existing allocation of Tk 10.50 billion, he mentioned.
Besides, an extra allocation of Tk 15 billion will be required for agriculture, Tk 6.0 billion for electricity, he said, without elaborating details about the distribution criteria and the ultimate beneficiaries of such increased allocations.
On the other hand, a sum of Tk 5.0 billion will be needed in addition to the existing allocation of Tk 10 billion for re-financing facilities. The government will also require to enhance its allocation by Tk 3.74 billion to Tk 45.69 billion for expanding its social safety-net schemes, the minister added.
The stimulus package that has been prepared for the last quarter of the FY 2008-09 will also be continued and necessary allocations would be made on the basis of regular evaluation, the minister said.
The budget for FY 2009-10 will include appropriate programme prepared in accordance with the outcomes of the interim allocation and recommendations by the taskforce.
Mr Muhith said the government has finalised the interim incentive package in line with recommendations made by the recently formed official taskforce and a technical committee on the global meltdown fallout.
"The stimulus package may not satisfy all… the sectors that have not come under the special fiscal package will get necessary policy support," said the finance minister.
About the policy supports, Mr Muhith said a series of measures will be taken for the release of export subsidy through amending the existing policy, relaxation of loan-rescheduling conditions for exporters and yarn manufactures and providing adequate re-financing facilities by banks against the backdrop of the ongoing global recession.
He said, 70 per cent of cash subsidy will be disbursed immediately after receiving preliminary documents while the rest amount will be cleared after the final inspections.
Necessary support will be provided to the exporters and manufactures of yarn on a case-to-case basis depending on their stock position and loan situation, he said, adding Bangladesh Bank will issue a circular, directing the concerned banks to this effect.
Besides, the facility of reduced rate (7 per cent) of interest on export credit will be expanded to all the sectors and its timeframe will also be extended up to 120 days, said the minister.
Necessary steps have already been taken to rationalise the existing licence/renewal fees on captive power generators, he said.
He also said the Ministry of Civil Aviation and Tourism has been requested to take steps for withdrawal of the surcharge, imposed earlier by all the airlines including Biman on carrying vegetables and fruits following the last year's price spiral of fuel oil in the international market.
The government has also initiated measures to help the local shrimp operators boost their productivity through achieving quality standard specified by the European Union, he said, adding steps will also be taken to find out the reasons behind the failure of the local pharmaceutical and ceramic industries to achieve their respective export targets.
About remittance, the finance minister said the government has already strengthened its diplomatic efforts in the countries, especially where large numbers of Bangladeshi people are working, to help protect their employments and also explore new job markets.
The government has issued necessary directives to all the ministers and the planning commission to expedite the implementation process of the annual development programme (ADP).
It has also started reviewing whether or not the ADP execution is being hampered due to complexities in procurement system, he added.
Stressing on the need for boosting investment in the country's rural development, agriculture, energy, and industries, the minister said a Tk 15 billion worth of 're-capitalisation' fund will be allocated for Krishi Bank, RAKUB, Karmosangstahn Bank etc.
Schemes such as Investment Promotion and Financing Fund (IPFF) and SME Fund have been strengthened by raising their operating funds, Mr Muhith said.
He said the government will consider reducing rate of existing value added tax (VAT) on exports in the next budget.
Besides, necessary budgetary allocations will be made in next budget for launching special training programmers under different textile institutes, Bangladesh Institute of Fashion Training (BIFT) and Youth Development Directorate, aiming to develop skilled human resources for the local textile and garment sectors.
Responding to query as to why the local readymade garment (RMG) sector has been excluded from the government's interim fiscal incentive support, the minister said: "Although no direct export subsidy has been provided to them, they will get necessary policy supports."
When his attention was drawn to the World Bank's projection on Bangladesh' GDP (gross domestic product), the minister said, "We are not accepting the WB growth forecast.
Responding to a query about an inordinate delay in the floatation of Grammeenphone's share in the capital market, he said it is expected to take place soon as their problems relating to ownership have recently been resolved.
About the proposed 'National Coal Policy', he said," Until it is done, will have to go for coal import for meeting our growing energy need for generating electricity."
Responding to another query, Mr Muhith said the government will fix the procurement prices of boro crop at a level that would protect the interest of the farmers.
Prime Minster's Finance Adviser Dr Moshiur Rahman, finance and commerce secretaries, among others, were present on the occasion.
Finance Minister AMA Muhith announced Sunday the much-talked-about interim package of fiscal and policy supports for the country's agiculture, power and export sectors to help ward off immediate effects of the ongoing global recession.
An additional allocation Tk 34.24 billion will be required in the revised budget for the current fiscal year (FY) to finance the package.
Under the fiscal support part of the package for the April-June period of the FY 2008-09, the rates of export subsidy have been raised for three sectors, namely, jute, leather and frozen food.
With the enhancement, the rate of cash subsidy on jute and jute goods has been fixed at 10 per cent from the existing 7.5 per cent while the same has been raised to 17.5 per cent for leather and leather goods and 12.5 per cent for frozen foods from the exiting rates of 15 per cent and 10 per cent respectively.
Cash support rates for other export items will, however, will remain unchanged, the finance minister said while unveiling the government's special stimulus package before the media at his ministry's conference room.
Giving the break-up of the package, Mr Muhith said the government will need to allocate an additional amount of Tk 4.50 billion because of the increase in export subsidy to three sectors.
As a result, the total amount of export subsidy will increase to Tk 15 billion in the revised budget for the FY 2008-09 against the existing allocation of Tk 10.50 billion, he mentioned.
Besides, an extra allocation of Tk 15 billion will be required for agriculture, Tk 6.0 billion for electricity, he said, without elaborating details about the distribution criteria and the ultimate beneficiaries of such increased allocations.
On the other hand, a sum of Tk 5.0 billion will be needed in addition to the existing allocation of Tk 10 billion for re-financing facilities. The government will also require to enhance its allocation by Tk 3.74 billion to Tk 45.69 billion for expanding its social safety-net schemes, the minister added.
The stimulus package that has been prepared for the last quarter of the FY 2008-09 will also be continued and necessary allocations would be made on the basis of regular evaluation, the minister said.
The budget for FY 2009-10 will include appropriate programme prepared in accordance with the outcomes of the interim allocation and recommendations by the taskforce.
Mr Muhith said the government has finalised the interim incentive package in line with recommendations made by the recently formed official taskforce and a technical committee on the global meltdown fallout.
"The stimulus package may not satisfy all… the sectors that have not come under the special fiscal package will get necessary policy support," said the finance minister.
About the policy supports, Mr Muhith said a series of measures will be taken for the release of export subsidy through amending the existing policy, relaxation of loan-rescheduling conditions for exporters and yarn manufactures and providing adequate re-financing facilities by banks against the backdrop of the ongoing global recession.
He said, 70 per cent of cash subsidy will be disbursed immediately after receiving preliminary documents while the rest amount will be cleared after the final inspections.
Necessary support will be provided to the exporters and manufactures of yarn on a case-to-case basis depending on their stock position and loan situation, he said, adding Bangladesh Bank will issue a circular, directing the concerned banks to this effect.
Besides, the facility of reduced rate (7 per cent) of interest on export credit will be expanded to all the sectors and its timeframe will also be extended up to 120 days, said the minister.
Necessary steps have already been taken to rationalise the existing licence/renewal fees on captive power generators, he said.
He also said the Ministry of Civil Aviation and Tourism has been requested to take steps for withdrawal of the surcharge, imposed earlier by all the airlines including Biman on carrying vegetables and fruits following the last year's price spiral of fuel oil in the international market.
The government has also initiated measures to help the local shrimp operators boost their productivity through achieving quality standard specified by the European Union, he said, adding steps will also be taken to find out the reasons behind the failure of the local pharmaceutical and ceramic industries to achieve their respective export targets.
About remittance, the finance minister said the government has already strengthened its diplomatic efforts in the countries, especially where large numbers of Bangladeshi people are working, to help protect their employments and also explore new job markets.
The government has issued necessary directives to all the ministers and the planning commission to expedite the implementation process of the annual development programme (ADP).
It has also started reviewing whether or not the ADP execution is being hampered due to complexities in procurement system, he added.
Stressing on the need for boosting investment in the country's rural development, agriculture, energy, and industries, the minister said a Tk 15 billion worth of 're-capitalisation' fund will be allocated for Krishi Bank, RAKUB, Karmosangstahn Bank etc.
Schemes such as Investment Promotion and Financing Fund (IPFF) and SME Fund have been strengthened by raising their operating funds, Mr Muhith said.
He said the government will consider reducing rate of existing value added tax (VAT) on exports in the next budget.
Besides, necessary budgetary allocations will be made in next budget for launching special training programmers under different textile institutes, Bangladesh Institute of Fashion Training (BIFT) and Youth Development Directorate, aiming to develop skilled human resources for the local textile and garment sectors.
Responding to query as to why the local readymade garment (RMG) sector has been excluded from the government's interim fiscal incentive support, the minister said: "Although no direct export subsidy has been provided to them, they will get necessary policy supports."
When his attention was drawn to the World Bank's projection on Bangladesh' GDP (gross domestic product), the minister said, "We are not accepting the WB growth forecast.
Responding to a query about an inordinate delay in the floatation of Grammeenphone's share in the capital market, he said it is expected to take place soon as their problems relating to ownership have recently been resolved.
About the proposed 'National Coal Policy', he said," Until it is done, will have to go for coal import for meeting our growing energy need for generating electricity."
Responding to another query, Mr Muhith said the government will fix the procurement prices of boro crop at a level that would protect the interest of the farmers.
Prime Minster's Finance Adviser Dr Moshiur Rahman, finance and commerce secretaries, among others, were present on the occasion.
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