Economics
Savings certificates interest rates reduction: To add insult to injury
A kind of panic and adverse reaction have been created among the country’s ordinary savers after the government decided to reduce the profit rates on savings certificates on June 30.
Budget could have been more inclusive for expansion of SME sector
The VAT on all types of plastic products at the production stage has been increased from 7.5 percent to 15 percent. The tax on cotton yarn at the production stage has been raised from Tk 3 to Tk 5 per kg, and the same applies to yarn made from artificial fibres or blends. Additionally, VAT on blade production has also been increased.
FY2025-26: Budget Highlights
The government plans to borrow BDT 1200 billion in new long-term debt from the domestic banking system and repay BDT 160 billion in short-term loans. Thus, the net borrowings from the banking system will increase by BDT 1040 billion.
Budget 2025–26: Question of sustainability for private investment
The Budget for the fiscal 2025–26, estimated at Tk 7.9 trillion is a contractionary one targeting realistic GDP growth and lower inflation at 8%. The floating exchange rate has been announced considering high foreign exchange reserve at USD 27.4 billion. Budget has given long term projection, sometimes up to 2030 showing optimism for future economic growth. However, the country at the moment is in a transition towards LDC graduation, declining growth in agriculture (from 3.30% to 1.79%), lower investment to GDP ratio (29.38%), SDGs, uncertainty because of Reciprocal tariff by USA, also non-tariff barriers by neighboughring country.
Controlling high inflation biggest challenge of budget
The size of the proposed budget for the upcoming fiscal year (2025–26) has been set at Tk 7.90 trillion. The size of the ongoing fiscal year’s budget under implementation was Tk 7.98 trillion. Accordingly, the budget size will decrease by Tk 80 billion. For the upcoming fiscal year, an allocation of Tk 2.30 trillion has been made for the Annual Development Programme (ADP) which is Tk 350 billion less than the current fiscal year’s ADP allocation. In the new ADP, the target for foreign loans has been reduced by Tk 150 billion. In the upcoming fiscal year, Tk 850 billion will be taken in foreign loans.
Discrimination-reducing budget expected from interim govt
In the face of a challenging global economy, creating a budget in a densely populated country like ours is a difficult task. It cannot be confined within the conventional rules of economics. Among the sectors essential for the social, economic, moral, and intellectual development of a nation, education is one of the most important.
What impact market-based USD exchange rate will have
The International Monetary Fund (IMF) and Bangladesh Bank have finally decided to adopt a market-based exchange rate for the US dollar. From May 15, scheduled banks are now setting the US dollar exchange rate themselves.
Close all loopholes for tax evaders despite their ability to pay
At the current stage of our country's economy, achieving revenue targets necessitates the introduction of a "push factor." No matter the cost, there must be a strong effort to elevate revenue collection to the desired level. A significant number of people who are eligible to pay taxes have yet to be included in the tax network. On the other hand, efforts are being made to bring into the tax and customs framework sectors that should be taxed but currently aren't. In both cases, there is a need to move forward with a refined and reformed plan to create or implement a taxpayer-friendly and automated incentive-based system. In other words, for those who are capable of paying taxes but aren't, we must encourage them while simultaneously closing all loopholes that allow tax evasion. Effective measures must be taken to remove any obstacles or complexities that exist in the tax payment and collection processes.
Irresponsible statements about banks
The Governor of Bangladesh Bank, Dr. Ahsan H. Mansur, made a straightforward statement: despite strong efforts, some banks cannot be saved. Why can’t they be saved? Because in some banks, 87% of the loans were taken by a single family, and this money will never be recovered. This kind of statement is not new. As soon as he took office as Governor, he started declaring that several banks were bankrupt. Panic ensued, and depositors rushed to withdraw their money. Branch managers had to shut their doors to control the chaos. Those with softer hearts tried to calm customers by consoling them.
Second half-yearly monetary policy faces challenges
Five months have passed since the interim government took office, but there has been little sign of success in the economic sphere during this period. The interim government has been focusing more on addressing political crises rather than economic issues. The formulation of the new monetary policy is nearing completion. The Bangladesh Bank has started discussions on the proposed monetary policy with stakeholders. If everything goes as planned, this policy will be approved in the Bangladesh Bank board meeting on January 22, and then it will be published. This will be the second monetary policy of the current fiscal year and the first of the interim government. This will also be the first monetary policy under the new governor of Bangladesh Bank, Dr. Ahsan H Monsur. Since taking office, the new governor has taken several practical steps, including initiatives to make the foreign exchange rate and bank lending interest rates market-based. However, these steps should have been taken earlier. The previous governor failed to take effective actions in these areas, which led to a sluggish and downward-moving economy. Among all the recent monetary policies issued by Bangladesh Bank, none has been as challenging as the proposed policy.