PPP initiatives to be launched this month, says Muhith
Tuesday, 15 September 2009
FE Report
The government will launch public private partnership (PPP) initiatives this month to bring back vibrancy in the economy, said finance minister AMA Muhith in parliament on Monday.
In reply to a supplementary question of Abdul Mannan, he said the government has taken a number of measures, including PPP, to reinvigorate the economy.
The amount of excess liquidity shot up to Tk 347 billion at the end of June 2009, which was Tk 129 billion at the end of June last year, he said.
"It indicates that the economy is not performing well as global recession has affected the country," he added.
Shortage of power and gas, the two basic inputs of investment, is another reason behind sluggish investment, he added.
Mr Muhith said the latest monetary policy statement declared by Bangladesh Bank wants to keep inflation at a tolerable level and achieve maximum production growth.
"The central bank has reduced interest rate on repo and reverse repo by 25 basis points to 8.5 percent and 6.5 percent respectively to boost credit demand," he said.
In response to a supplementary of Golam Dastagir Gazi, the finance minister said it will not be acceptable to people if deposit rate is cut through executive order.
Mr Gazi, also a director of a bank, proposed that lending rate would be lowered if the government orders the banks to cut deposit rate to help improve the business environment.
"Many people live on the income they get from deposit and any downward movement may push them into trouble," the finance minister explained.
The banks can reduce their lending rate by increasing efficiency and by reducing management cost, he suggested.
"Management cost is a significant part of the total expenditure of a bank and it recovers the costs from clients by charging them higher," he said.
The minister said people in the country are reluctant to pay taxes, he said adding: "The government wants to increase the tax net to reduce dependency on the foreign aid."
"Only 2.3 million out of 150 million people pay taxes and meager 0.7 million file tax return on a regular basis," he said.
The tax net needs to be broadened and for that the government needs to conduct survey, he added.
"In some cases, people may consider it as harassment, but the government cannot help it as it has to continue with survey to find out new taxpayers," Mr Muhith said.
The government will launch public private partnership (PPP) initiatives this month to bring back vibrancy in the economy, said finance minister AMA Muhith in parliament on Monday.
In reply to a supplementary question of Abdul Mannan, he said the government has taken a number of measures, including PPP, to reinvigorate the economy.
The amount of excess liquidity shot up to Tk 347 billion at the end of June 2009, which was Tk 129 billion at the end of June last year, he said.
"It indicates that the economy is not performing well as global recession has affected the country," he added.
Shortage of power and gas, the two basic inputs of investment, is another reason behind sluggish investment, he added.
Mr Muhith said the latest monetary policy statement declared by Bangladesh Bank wants to keep inflation at a tolerable level and achieve maximum production growth.
"The central bank has reduced interest rate on repo and reverse repo by 25 basis points to 8.5 percent and 6.5 percent respectively to boost credit demand," he said.
In response to a supplementary of Golam Dastagir Gazi, the finance minister said it will not be acceptable to people if deposit rate is cut through executive order.
Mr Gazi, also a director of a bank, proposed that lending rate would be lowered if the government orders the banks to cut deposit rate to help improve the business environment.
"Many people live on the income they get from deposit and any downward movement may push them into trouble," the finance minister explained.
The banks can reduce their lending rate by increasing efficiency and by reducing management cost, he suggested.
"Management cost is a significant part of the total expenditure of a bank and it recovers the costs from clients by charging them higher," he said.
The minister said people in the country are reluctant to pay taxes, he said adding: "The government wants to increase the tax net to reduce dependency on the foreign aid."
"Only 2.3 million out of 150 million people pay taxes and meager 0.7 million file tax return on a regular basis," he said.
The tax net needs to be broadened and for that the government needs to conduct survey, he added.
"In some cases, people may consider it as harassment, but the government cannot help it as it has to continue with survey to find out new taxpayers," Mr Muhith said.