July 14, 2024, 8:30 pm

GDP growth, inflation targets to be challenging: FBCCI

  • Update Time : Monday, June 10, 2024
  • 16 Time View

TDS DESK:

Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said achieving the targets of curbing inflation from 9.89% in May to 6.5% and gross domestic product (GDP) growth 6.75% in the fiscal year 2024-25 will be challenging due to several economic headwinds.

FBCCI President Mahbubul Alam made the remarks at a press conference on Saturday at the FBCCI auditorium in the capital. The remarks were made in response to the FY 2024-25 budget.

On Thursday, Finance Minister Abul Hassan Mahmood Ali placed a Tk7,97,000 crore national budget for the upcoming fiscal year at the Jatiya Sangsad in presence of Prime Minister Sheikh Hasina.

He set a target to ease inflation to 6.5% and achieve GDP growth of 6.75% in the upcoming fiscal year, which is 18.75% and 15.98% up compared to the outgoing year.

“The rise in inflation must be curbed. If not, the suffering of common people will increase,” FBCCI President Mahbubul Alam stressed.

He stated, “Geo-political and other factors are already having an adverse effect on our economy. All-out efforts should be taken to implement the budget especially by facing the challenges of high exchange rate of foreign currency, interest rate of loans, inflation, and foreign exchange reserves.”

FBCCI President Mahbubul Alam commented that the excessive borrowing by the government from banks may hinder the credit flow of the private sector, and it may “negatively affect investment and employment.”

He said, “The deficit in the proposed budget is Tk2,56,000 crore, which is 4.6% of the GDP. The budget deficit for the current financial year was 5.2%. The government will have to take Tk1,60,900 crore from internal sources to meet the deficit.”

The FBCCI chief said, “Out of this, 1,37,500 crore should be taken from the banking sector. Along with that, the government has to bear the burden of interest.”

He also said, “Excessive borrowing by the government from the banking system hinders the flow of credit to the private sector. As a result, investment and employment may be adversely affected.”

Mahbubul Alam opined that the government could go for seeking long-term financing from the capital market since the cost of funds has increased mostly due to the devaluation of the exchange rate.

He informed that the central bank governor had recently assured him that the bank interest rate would not go beyond 12-13%.

The FBCCI president suggested providing special tax exemptions for those companies and industries which would enlist themselves in the capital market.

Replying to comments on non-performing loans (NPLs) and the willful loan defaulters, Mahbubul Alam said, “FBCCI always advocates for the honest businesses not for the dishonest businesses.”

He said that the businesses and entrepreneurs could often become defaulters while doing their business, but the authorities of the banks could beef up their vigilance so that the loans could not turn into bad loans and thus create loan defaulters.

The FBCCI president also demanded of the government to make the tax-free income ceiling of the individual taxpayers Tk4.50 lakh instead of the existing Tk3.50 lakh considering the current trend of inflation as well as making the tax at source against exports at 0.5% instead of the existing 1%.

He proposed making the import duty at zero percent instead of the proposed 1% for importing capital machinery and construction materials at the economic zones and hi-tech parks.

“Otherwise, the investors would be disinterested while a wrong message would go to the foreign investors.”

Responding to a question, he said such zero percent import duty facility should be in place for at least five to 10 years or at least the present tenure of the government.

Asked whether the scope for legalising undisclosed money in the proposed budget by paying 15% tax would motivate the corrupt, Mahbubul Alam said through this provision, many people including small businesses would be able to show their undisclosed money and wealth in their return files.

The FBCCI president said that they would suggest the government so that the money earned through criminal offences could not have such tax amnesty.

Besides, he urged the government to undertake projects considering the public demand and necessity instead of taking mega projects.

Mahbubul Alam said the public and private partnership should have to be beefed up to ensure successful implementation of the budget alongside ensuring good governance and strict monitoring to face the challenges of budget implementation.

 

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