Economic analysts, politicians and business leaders on Sunday strongly criticised the budgetary benefits given to commercial banks, saying that it might further aggravate the situation in the struggling local banking sector.
In the budget for 2018-19 fiscal year, Finance Minister AMA Muhith proposed a cut in corporate tax for commercial banks and kept the provision to recapitalise the state-owned banks with taxpayers’ money.In a post-budget dialogue of Centre for Policy Dialogue (CPD), speakers called for reversing the decision and said the proposed benefits are not likely to have any positive impact on the banking sector.
“The dangerous element in the financial sector is that short-term deposits are being invested by the commercial banks in long-term loans even though the long-term financing is supposed to come from the capital market and specialised FIs,” said eminent economist Prof Rehman Sobhan.
“Recapitalising the state-owned banks with taxpayers’ money is an inefficient performance of the government,” said Metropolitan Chamber of Commerce and Industry (MCCI) President Nihad Kabir.
“You are slashing tax for the bank looters and at the same time no actions are being taken against the people responsible for this,” said Amir Khasru Mahmud Chowdhury, former commerce minister and also a BNP leader.
He alleged that cash reserve requirement (CRR) for banks has been lowered after the central bank governor met bank chiefs at a hotel and it is against the spirit of the regulator.
He also suggested scrapping the financial institution division under ministry of finance so that the central bank can perform its duty with freedom.State minister for Finance and Planning MA Mannan defended the budgetary measures, saying that the banking sector is not in jeopardy as feared by some people.
Planning Minister AHM Mustafa Kamal assured all concerned of a massive financial sector reform within next two months so that the banking sector can run independently.
Nihad Kabir said the main concern of the new budget will be its implementation. She noted that the country needs infrastructure, power and energy but those projects should be implemented in a cost-effective manner.
The MCCI president also alleged that good taxpayers would bear the brunt of increased taxes proposed in the new budget.
For stagnating private investment and FDI, she blamed high cost of doing business and absence of regulatory transparency.
She stressed the need for introduction of one-stop service for investors, setting up of economic zones, skill development initiatives, export diversification beyond RMG sector with providing incentives and revamping the capital market as an effective source of financing.
Prof Rawnak Jahan alleged that the poor has been burdened with more taxes despite the fact that the country is heading towards a general elections few months later.
The real income of the bottom 5 percent population has eroded while the top 5 percent witnessed a huge increase in their wealth in recent years, alleged Amir Khasru Mahmud Chowdhury.
He suggested that NBR go to those people to collect more taxes from them instead of burdening poor people with more taxes.
Eminent social worker Dr Zafarullah Chowdhury remarked that increasing health budget manifolds will not pay off if the sector’s pilferage is not stopped.
Instead, he suggested allocating Tk 2,000 crore to introduce general practitioner (GP) system in the country to provide medicare to general people.
The planning minister attributed low private investment to power crisis which he said has been inherited from the previous BNP government.
He hoped to be able to provide loans to neighbouring countries by 2030.
He said the government has a plan to go for export-led growth for more prosperity.