Haque Specialized Group's News

Key programmes under the January-June monetary policy statement (MPS) might have missed the mark with performances on almost all estimates falling far below the targets. As of May, by official count, the domestic credits consisting of public and private ones increased just over 11 per cent against the target of 16.4 per cent up to June. The broad money expanded by 11.69 per cent as of May against the target of 15.5 per cent up to June. Net domestic assets increased by 12.24 per cent as of May against the programmed 17.3 per cent until June last. On the other hand, the net foreign assets (NFA) increased much higher than its estimates. In the MPS for the second half of the financial year 2017, NFA had a target of just over 10 per cent. The central bank in its monetary policy had predicted that inflation would remain locked within a range of 5.3 to 5.6 per cent. But, until June, the 12-month average broke the bracket to rise higher by at least 0.62 percentage points. Economists view that this gap between actual performances and the estimates means that the central bank failed to achieve its monetary goals 'due to central bank's own limitations and some global realities'. They all think the targets set in the MPS would remain unmet. Dr Mirza Azizul Islam, an adviser of the caretaker government and now a professor at Brac University, told the FE that the central bank cannot apply all its instruments to get to the goals. "If the government does not borrow from the banking system, then what can the central bank do here?" he asked. He noted the central bank's limitations over reduction in the lending rates, thus squeezing investment in the private sector. The former finance adviser said the country's banks, especially the state-owned banks, do not operate efficiently and, hence, the lending rates remained higher than the deposit rates. Dr Islam said the estimates of inflation and growth are usually prepared by the central bank globally but the country is an exception in this matter. "What a fun here--such vital estimates are prepared by the finance division and the central bank works to accommodate with it," he said. Dr Zahid Hussain, lead economist at the Dhaka office of the World Bank Group, found the private sector having remained stagnant for long. He said credits to the private sector increased due to the rise in imports, "not for new business expansion or growth in the export sector". Imports in terms of the opening of letter of credits (LC) expanded by nearly 15 per cent during the July-May period. It was negative by just over 2.0 per cent in the same period a year before. He said inflation is also higher than target for global and some domestic factors, especially price rises due to the floods in some paddy-growing areas. Food Minister Kamrul Islam in Parliament on June 29 said rice production could drop by around 600,000 tonnes in the haor areas following floods. Dr Hussain noted that government credits in the period under review in actual terms were repayment of its earlier borrowings, leading to low growth in overall domestic credits. As of May last, the credits to the public sector accounted for a negative over 19 per cent. The MPS had a target of 16.1 per cent. The World Bank economist, however, said the central bank should focus reality while they prepare the MPS as such differences will erode importance of such policy-framing exercise. Dr Hussain said the impact of the low broad money growth is not reflected in the economy as the banking system had huge money lying 'idle'. In theory, the slow growth in the broad money supply could have caused cash crisis in the economy.     jasimharoon@yahoo.com....

Published at: 2017-07-15 00:00:06

The International Monetary Fund (IMF) has regretted the delay in enforcement of new VAT law and called into question "the determination to persevere with needed structural reforms" essential for transforming Bangladesh into middle-income status. The government eventually put in abeyance execution of the Value Added Tax (VAT) and Supplementary Duty Act 2012 for two more years amid persistent demand and protest by businesses and many other quarters. "We attach great importance to implementing the new VAT law, a key component of the IMF's Extended Credit Facility (ECF) arrangement with the Government of Bangladesh that remains incomplete," IMF Resident Representative in Dhaka Stella Kaendera said in an e-mail interview. While placing the budget for fiscal year 2017-18 on June 1, finance minister AMA Muhith announced that the VAT law that provides for a uniform 15 VAT would come into force from the new fiscal year. Country's business community opposed the uniform VAT rate for all taxable tooth and nail. In the face of strong protest by businesses the government at the last moment, before passing the budget, postponed the enforcement of the new VAT act for two more years. The government, while taking a US$1.0 billion ECF from the IMF in 2010, had pledged to introduce a new VAT act. Thereafter, the Value Added Tax (VAT) and Supplementary Duty Act 2012 was enacted on IMF prescription. Three weeks after the budget was placed, the World Bank hailed the move to enforce new VAT act. While assessing the budget proposal, World Bank country director for Bangladesh Qimiao Fan said implementation of the new VAT act would be critical to achieving the fiscal targets set in the budget. Ms Kaendera said the IMF wants implementation of the new VAT act for betterment of Bangladesh economy. "Raising public investment and social spending to levels consistent with the government's growth ambitions without compromising fiscal sustainability will require boosting Bangladesh's low budget revenue. Launching the VAT is central to this effort," she noted. "But beyond its direct revenue benefits, the law is a necessary step for modernising Bangladesh's tax system, as implementation will improve compliance and reduce tax evasion across the board and serve as a key building block for future tax policy reforms," the IMF representative added. "For these reasons we find the delay in the VAT launch regrettable, and call into question the determination to persevere with needed structural reforms which are key to transforming the Bangladesh economy into middle-income status, a longstanding aspiration of the government," she noted. To a query regarding possible price hike of essential commodities as a knock-on effect of VAT hike Ms Kaendera said, "…the VAT law shields the consumption basket of low-income households by exempting some commodities from VAT." syful-islam@outlook.com....

Published at: 2017-07-15 00:00:05

Cash withdrawal using the Automated Teller Machine (ATM) reached at Tk 896.34 billion during the first 10 months of the last fiscal year (FY17). Latest statistics of the central bank unveiled the figure which also showed that debit card dominated the transaction of ATM. Some Tk 889.19 billion were withdrawn from different ATMs across the country using debit cards during the period under review. Annual financial transaction through the ATMs stood at Tk 1047.64 billion (or Tk 1.05 trillion) in the fiscal year (FY16) while the value was Tk 832.40 billion in FY15. Number of ATMs across the country stood at 9,172 at the end of April this year, the central bank data showed. - AK....

Published at: 2017-07-15 00:00:05

Members of Rapid Action Battalion (RAB) in a drive arrested an alleged drug pedlar along with 1,800 pieces of Yaba tablets from PTI slum area of the Chapainawabganj district town on Friday afternoon. The arrestee was identified as Jasim Uddin, 28, son of Aynal Haque. On secret information, a team of RAB led by A K M Enamul Karim, additional superintendent of Police (ASP), conducted a drive in the area around 1:15pm and arrested Jasim along with the Yaba pills, said a press release of RAB-5, reports UNB. A case has been filed.....

Published at: 2017-07-15 00:00:05

An old man was killed and 10 other people were injured following a head-on collision between a truck and a bus on Bogra-Rangpur Highway in Sadar upazila on Friday. The deceased could not be identified yet. Sub-inspector of Fulbari Town Police camp Rabiul Islam said the Dhaka-bound bus from Rangpur collided with the truck from the opposite direction at Baghopara around 10:00am, leaving the bus passenger dead on the spot and 10 others injured. The injured were taken to TMSS Medical College & Rofatullah Community Hospital and other clinics.....

Published at: 2017-07-15 00:00:05