Petroleum prices raised with immediate effect

Inflation rises to 7 per cent

Drastic duty cuts on import of essentials

Saifur fails to stop whitening black money

Tax Ombudsman to start functioning from next month

Defence budget increases by Tk 418 crore in new budget

Tk 1,200 crore proposed for agriculture subsidy and rehabilitation

Budget propose duty-cut on raw material imports to promote local industry

Budget to reduce the mobile connection charge from Tk 900 to Tk 800

Finance Minister M Saifur Rahman Thursday placed in Parliament Tk 69,740 crore national budget for 2006-07 fiscal year with a clarion call to conflicting political parties to unite for the sake of people and country.

Urging for tolerance and mutual respect among the politicians Saifur told the House, “let us unlock the potential of this country … let us unite… let us establish peace and stability and let us create conditions conducive to economic welfare.”

Leader of the opposition Sheikh Hasina was conspicuous by her absence when the Finance Minister presented the budget. But her party members and other opposition groups were present in the House.

The national budget, the 12th of Saifur Rahman as Finance Minister in his long political career, took extreme care in avoiding proposing fresh tax keeping in view the general election in about six or seven months from now.

“I was in no way influenced by narrow party politics,” said the Finance Minister and added he exchanged views with both sides of the House, ex-finance ministers, renowned economists and the business community. “Their valuable suggestions have been reflected in the proposed budget.”

Saifur, now 79 and ailing, was apparently tired while making the 53-page budget speech. Acting Speaker Akter Hamid Siddiqui asked him in the midway to take his seat and complete the speech.

He proposed substantial reduction in duty on import of certain essentials including sugar, onion, pulse, ginger, garlic, turmeric and chilly. The measure is expected to make the consumers happy.

The Finance Minister expressed the hope that the budget provisions will help poverty alleviation, develop agriculture, human resource, industrial growth, expansion of trade and commerce.

“The sole objective of the budget is to build a happy, self-reliant, vibrant and prosperous Bangladesh,” he said and added he was guided by nothing but realities and economic compulsions.

Saifur has taken enough care that his budget does not come under severe scrutiny. For, the budget will be implemented by three governments - the present government, caretaker government that takes over in late October and the government elected early next year.

The budget proposed the revenue target at Tk 52,542 which is 11.3 percent of GDP and 17 percent higher than that of current year’s revised income.

The total budget of Tk 69,740 crore includes non-development outlay of Tk 42,286 crore and annual development programme (ADP) of Tk 26,000 crore.

The budget deficit of Tk 14,690 crore will be met out of foreign loans Tk 5,856 crore and domestic borrowings of Tk 8,834 crore.

It proposed an allocation of Tk 481 crore for Food-for-Work and Tk 1,982 crore from revenue budget for employment generation.

“In effect, the total developmental expenditure will stand at Tk 28,463 crore,” said the Finance Minister.

Saifur proposed to enhance subsidy to agriculture to Tk 1,200 crore from Tk 1,100 crore current year and an allocation of Tk 244 crore for agricultural research. He also set a target of distribution of agricultural credit at Tk 6,000 crore.

The combined allocation to the Agriculture Ministry comes to Tk 3,149 crore, up from Tk 2,213 this year and an increase of 42 percent.

In social sector, the Finance Minister proposed raising of elderly allowance to Tk 200 per month and increase the number of beneficiaries to 16 lakh.

Similarly, destitute and widowed women will get enhanced allowance of Tk 200 and the number of beneficiaries increased to 6.50 lakh.

On the critical power sector, the Finance Minister said an investment of Tk 22,000 crore would be needed to build an appropriate power infrastructure. The government has, therefore, involved private sector in it.

He however proposed creation of an Energy Development Fund to promote use of solar power and other renewable sources of energy for inaccessible areas with an allocation of Tk 100 crore.

The Finance Minister carefully avoided the much-talked about corruption in the administration. But he said Tax Ombudsman is being appointed and his office will start functioning from next month to ensure transparency and accountability in tax administration.

He lamented that revenue collection, implementation of development projects and other economic activities were seriously jeopardized by a spurt of court cases, delay in disposal and inability to recruit officials because of cumbersome legal processes.

Urging the House for immediate reforms in existing laws Saifur said development projects and revenue in billions of taka will remain stuck up in the cobweb of procrastination and legal complexities.

Saifur Rahman was proud to say that the government has successfully faced and weathered global recession, globalization of economy, natural disasters and unprecedented high oil prices.

He referred to the research study by US-based Goldman Sachs that predicted emergence of 11 countries as stronger economies including Bangladesh by 2050.

Acting President Jamiruddin Sircar listened to the budget speech from his chamber in parliament. Former finance ministers, members of the diplomatic corps, business leaders, Chiefs of three services and senior officials were present in the present in the House.

Petroleum prices raised with immediate effect

The increase ranges from 20 to 30 percent

The government Thursday raised the prices of fuel oils with immediate effect, ranging from 20 to 30 percent.

According to the new decision, the price of both diesel and kerosene has been fixed at Tk 33 per litre, up from Tk 30.

The price of per-litre petrol has been hiked to Tk 56 from earlier Tk 42 while that of octane raised to Tk 58 from its previous rate of Tk 45. This is eight time, the present BNP-led alliance government increased the prices of gasoline. The last gasoline price increased in September 4, 2005.

The fuel-price hike came shortly after the government placed in parliament the new budget for the forthcoming financial year.

Foreign donor agencies had continued making a strong plea in recent times for adjusting the petroleum tariffs to international market rates.

About the gasoline-price hike, Finance Minister M Saifur Rahman in his budget speech Thursday said, “We have no other alternative but to adjust domestic petroleum prices realistically.”

The Finance Minister told the lawmakers that, recently, the price of petroleum and petroleum products spiralled upwards abnormally. Other countries, including the neighbours, have increased their oil prices.

He noted that the liabilities of the state-owned Bangladesh Petroleum Corporation (BPC) to different banks rose to Tk 10,500 crore by this year, largely for footing the bill for growing gasoline prices.

This hangover of liabilities on BPC, the lone importer of petroleum products, has created liquidity crisis in the banking system in a cascading effect.

The Finance and Planning Minister mentioned that due to selling petroleum products on the domestic market at lower rates than the import costs, the liability load on the BPC has been increasing rapidly to an unsustainable level.

“The macroeconomic stability is threatened because of pursuing the policy of not aligning the domestic petroleum prices with international market price,” he told the House.

Saifur said while formulating the budget, he has extensively consulted renowned economists, leading businessmen and members of the civil society on this issue--and all of them “unanimously agreed that raising the price of oil is necessary and unavoidable”.

Inflation rises to 7 per cent

Inflation in the first half of the current fiscal year reached 7 percent.

Mentioning this, Finance Minister M Saifur Rahman in his budget speech said this happened due to price hike of consumer goods including food items and oil in the international market.

He noted that the broad money supply had grown to 17 percent in the terminal year of the previous government.

He said that consistent with the country’s macroeconomic environment, the government adopted a growth-supportive accommodative monetary policy.

“In fact, we imported inflation concurrently with the import of commodities at higher price”, he added.

He pointed out that due to adoption of a prudent and contractionary monetary policy, inflationary pressure largely eased up.

In March 2006, he the Finance Minister said, price inflation came down to 6.2 percent and interest rate increased a bit.

This reduced unproductive private sector borrowings, mitigating the pressure on exchange rate.

Meanwhile, Bangladesh Economic Review 2006, prepared by the Finance Ministry, said the rate of inflation in the current fiscal rose at 6.17 per cent on a point-to-point basis calculation as of March 2006.

According to BER, the average general rate of inflation in last nine months ending in March reached at 6.17 per cent.

On point-to-point basis the rate of inflation at national level is 7.35 percent and inflation rates of food and non-food items are 8.73 percent and 5.32 percent respectively.

The BER said that the upward trend of inflation is mainly attributable to devastating flood and surge in prices of imported commodities like oil and fertilizer.

Bangladesh Bureau of Statistics (BBS) using 1995-96 as the base year has computed National Consumer Price Index (CPI). The rate of inflation was 6.49 per cent in fiscal 2004-05.

Drastic duty cuts on import of essentials

The budget for 2006-07 has proposed reduced duty on import of essential items like garlic, turmeric, chilly, ginger, onion, rice, pulses, lentils and sugar to keep their prices within the reach of common people.

“This is my considered view that we should keep the prices of some of the basic commodities within the reach of common people,” Finance and Planning Minister M Saifur Rahman told the House, placing the new budget.

He proposed to reduce the tax incidence to 5 percent on garlic, turmeric, chilly, ginger and onion and also on import of rice, pulse and lentils.

At present the total tax incidence of garlic, turmeric, chilly and ginger is 20 percent and that of onion, pulses is 13 percent.

Saifur proposed imposing specific import duty on sugar instead of existing total tax incidence of 43.75 percent to keep the price of sugar stable in the domestic market in view of the abnormal escalation of price in the international market.

Having considered the interest of the consumers, the sugarcane growers, sugar industry as well as its workers, he proposed imposition of specific duty of Tk. 5,000/- on sugar per MT at the import stage.

“This will bring down the price of sugar by nearly Tk. 6,000/- per MT,” he said, expecting that the price of sugar in the domestic market would become stable.

He also hoped that the new duty structure would protect the interests of the domestic sugar industry and sugarcane growers.

“May I also add in this connection that tariff mechanism is not the only way to ensure price stability in the market,” he said.

Unless we shun rent-seeking, corruption and toll collection in the transport sector and bring in improvement in management of stock and regulatory supervision, reduction of duties and taxes would have no significant impact on the prices of essential commodities, said the Minister.

Saifur fails to stop whitening black money

Finance and Planning Minister M Saifur Rahman failed to stop the provision made for whitening black money although he has restricted its use to purchase of flats, land and cars at high interest rates.

Saifur proposed a refixation of the tax rate under Sections 19B, 19BB and 19BBB of the Income Tax Ordinance (ITO), 1984 that allow investment of untaxed money without any explanation.

He proposed Tk 300 per square metre for a plinth area up to 200 square metre and Tk 500 for a plinth area over 200 square metre in case of purchase or construction of building under the 19B of the ITO.

But, the purchase or construction must be in Baridhara, Bashundhara, Dhanmondi, DOHS etc of Dhaka and Panchlaish, Khulshi of Chittagong, Saifur said in his budget speech.

However, the prevailing tax rates under 19B of ITO would remain unchanged for other areas.

For purchase of land under Section 19BB of the ITO, the budget proposed an increase of tax rate at 7.5 percent from 5.0 percent.

Under Section 19BBB of the ITO for purchase of motor cars, the finance minister proposed an enhancement of tax to 10 percent and 15 percent from 5 percent and 7.5 percent respectively.

The government will lack moral courage if it continues such unethical provisions like keeping the provision in force to turn black money into white, economists said.

The provision of whitening black money was first introduced in the national budget for the fiscal year 1975-76.

The facility was again offered for three consecutive fiscal years from 1987-88 to 1989-90, and Tk 200 crore, Tk. 250 crore, and Tk. 400 crore, respectively, were whitened during the period. The government again revived the facility in 2000-01 and Tk 1,000 crore was whitened.

The BNP-led coalition government introduced the provision for whitening black money in the budgetary policy initially for two years, beginning from 2003-04, with a view to bring the bulk of black money into the formal economy. Black money amounting to a total of Tk 1,775 crore, came into the economy through the process. Some 1,000 people legalized the untaxed money they had in their possession during the period. Tk 800 crore has been whitened during the nine months of the on-going fiscal year.

Defence budget increases by Tk 418 crore in new budget

The government has proposed to increase the country’s defence allocation by Tk 418 crore compared to the revised budget of outgoing fiscal year.

The Ministry of Defence has been allocated Tk 4,904 crore for fiscal 2006-07 for non-development and development sectors.

The original allocation for the Ministry in 2005-06 fiscal was Tk 4320 crore but it was increased to Tk 4486 crore in the revised budget.

Of the proposed total allocation in the new budget, Tk 4659 crore is earmarked for non-development sector while only Tk 245 crore for development sector.

Tk 1,200 crore proposed for agriculture subsidy and rehabilitation

The government has proposed to allocate Tk 1,200 crore for agriculture subsidy and rehabilitation

for fiscal 2006-07, which is Tk 100 crore higher than the previous financial year.

Finance Minister M Saifur Rahman, placing the budget for fiscal 2006-07 THursday, also promised to allocate Tk 244 crore for research on agriculture.

In total, the Ministry of Agriculture is to receive Tk 3,149 crore in fiscal 2006-07 for non-development and development together, which is 42 per cent higher than the allocation of the revised budget for fiscal 2005-06. In the 2005-06 fiscal year, the combined allocation for the ministry was Tk 2213 crore.

“With increase of budgetary allocation for expansion and development of agriculture and agro-based industries, the government is also increasing the quantum of agricultural credit and subsidies,” he told the House.

Saifur said the government has increased allocation for agricultural research and provided various incentives.

He said, “In the last budget of the previous government, the allocation for agricultural subsidy was merely Tk 100 crore. In the 2005-06 fiscal year, the government allocated Tk 1,100 crore for agricultural subsidy and rehabilitation.”

Up to March 2006, the total disbursed agricultural credit stood at Tk 4,000 crore, up 13 per cent than the corresponding period of the last fiscal year, Saifur said adding that in FY 2006-07 the target of agricultural credit distribution is Tk 6,000 crore.

Agriculture inputs exempted from duties and taxes

Agriculture inputs have been exempted from the duties and taxes at the import stage considering the contribution of the farm sector to the economy.

The inputs proposed to be exempted from duties are fertilizer, seeds, capital machinery, drum-seeder and other agricultural materials.

Placing the budget, Finance and Planning Minister M Saifur Rahman proposed to withdraw Infrastructure Development Surcharge (IDSC) from all kinds of hybrid rice seeds.

Budget to reduce the mobile connection charge from Tk 900 to Tk 800

The government proposed to reduce mobile phone connection charge from Tk 900 to Tk 800 in the next fiscal year, as part of tax-rebate measures for a number of commodities and services.

“I propose to reduce tax from Taka 900 to Taka 800 for each cellular mobile phone connection to ensure availability of telecommunications facilities to the masses at affordable prices,” Finance Minister Saifur Rahman said while presenting the proposed new budget.

The government also proposed to cut duties on cellular mobile telephone sets from Tk 300 to Tk 200 per set.

However, the finance minister proposed to impose Tk 800 as tax on per connection of cellular fixed-wireless telephone.

He proposed to impose same duty of Tk 200 on cellular fixed-wireless telephone set.

“We have been consistently pursuing a policy of making telecommunications facilities available at the doorsteps of the people. In pursuance of this policy, I propose reduction of duties on cellular mobile telephone sets from Tk 300/- to Tk 200/- per set,” he said.

The rebates, however, would make little impact on the fast-growing mobile market as the mobile companies are already giving subsidy on each connection and most of the mobile sets enter into the country through smuggling.

A Subscriber Information Module (SIM) card now cost as low as Tk 150 thanks to growing competition among the companies.

Withdrawal of duties and taxes from capital machinery and accessories for poultry and livestock sectors

To encourage the development of local poultry and livestock sectors the government proposed withdrawal of all duties and taxes from capital machinery and accessories in the next year’s budget.

Finance and Planning Minister M Saifur Rahman in his budget speech came up with the proposal of withdrawal of all duties and taxes from capital machinery and accessories used in the poultry and livestock sectors.

He also proposed withdrawal of all duties and taxes from other inputs for poultry industry and machinery for manufacture of poultry feed at the import stage.

These will also be exempted from Advance Income Tax, the Minister said.

On the other hand, the budget proposed to withdraw 2.5 percent supplementary duty from local production of powder milk in packs of 2.5 kg and over.

Tax Ombudsman to start functioning from next month

The Tax Ombudsman and his office will start functioning from the first of July, when the new financial year commences, Finance Minister M Saifur Rahman told parliament in his budget speech Thursday.

The Minister said the Tax Ombudsman Act 2005 has been enacted in Parliament to ensure transparency in tax administration and accountability. “The process of appointing an Ombudsman and establishing his office is in progress.”

At the initiative of the present Government, the “Public Procurement Regulation” was framed in 2003 to ensure competition, transparency and accountability in government procurement system, he said. “To bring our procurement practice in alignment with international best practices, a bill has been placed before Parliament to convert the Regulation into an Act.”

The Minister also said that two manuals titled “Public Expenditure Management Manual” and “Internal Control Manual” were being implemented to achieve appropriate value for money from each taka spent by the government.

“Within the main government account, arrangement has been made for separate preparation of monthly accounts and Annual Financial Statement by each ministry,” he told the lawmakers.

“The Government, meanwhile, has taken steps to separate cash management from public debt management.”

Budget propose duty-cut on raw material imports to promote local industry

The budget for fiscal 2006-07 proposed duty reduction on import of raw materials to promote local industries, including plastic, melamine, electronics, textile, and paper and printing industries.

“Plastics and melamine industries have made their mark in the domestic and international markets,” Saifur said in his budget speech and stressed the need for making them more competitive.

He proposed reduction of import duties of certain basic raw materials of these industries from 13 to 5 percent.

As a measure of providing further incentives to the local plastic industries, the Finance Minister proposed enhancement of import duties of some plastic products like stopper, lid, cap etc from 13 percent to 25 percent.

Motivated by the same consideration, he proposed rationalization of supplementary duty levied on certain printed plastic materials, including printed plastic sheet.

Saifur said the country’s local electronics industries are coming up by leaps and bounds. With a view to encouraging this promising sector, he proposed that import duty on diodes, transistors, semi-conductor device and compressors be reduced from 13 to 5 percent.

With the same objective, he proposed withdrawal of special rebate facilities from UPS/IPS of capacity not exceeding 2000 VA.

The minister proposed withdrawal of all duties and taxes from certain spares required for readymade garments, textiles, hosiery, label, and terry towel industries and affluent treating plant.

Besides, he proposed that duties and taxes except IDSC be withdrawn from synthetic filament tow, one of the basic raw materials of hosiery industry.

To make paper and printing industry more competitive, Saifur proposed imposition of supplementary duty at 15 percent on advertising materials, commercial catalogues etc.

Tariff-cut by 1pct on raw material, capital machinery and intermediate goods

The budget for fiscal 2006-07 proposed customs duty on raw materials and capital machinery as well as intermediate goods by 1 percent each, keeping the existing tariff structure unchanged in 4-tiers.

Finance and Planning Minister M Saifur Rahman proposed to reduce the duty on import of raw materials and capital machinery from 6 percent 5 percent while intermediate goods from 13 percent to 12 percent.

“Over the past few years, we have been trying to reform and rationalize our tariff structure consistently,” he told the house.

At present, the four-tier customs duty is zero and 6 percent for basic raw materials and capital machinery for industry, 13 percent for intermediate goods and 25 percent for finished goods.

The minister also proposed to take a fresh look at the existing structure of supplementary duty. Whereas the tier may remain intact, the two rates of 35 percent and 25 percent be brought down to 20 percent and 15 percent respectively.

“I trust and hope that this reform will help the growth of domestic industries and have salutary impact on economic progress and prosperity,” he said.

Saifur said the entrepreneurs sometimes complain about the issues of dumping and under valuation of imports. “I would like to take this opportunity of making our stand on the subject crystal clear.”

He said the government has made amendments in the Customs Act to deal with the issues of Anti-dumping duty and Countervailing duty in consonance with the principles laid down by the World Trade Organization (WTO).

“I want to reiterate that the Government will not hesitate to take appropriate measures as and when our entrepreneurs come forward with necessary information and documents,” he said.

He put unflinching faith on the business community and industrial entrepreneurs that they would spare no pains to protect the domestic industries using all the instruments made available to them.

Reconditioned imported vehicles to be cheaper for higher rebate

Govt to enhance allowable depreciation from 15 per cent to 20 per cent in assessment

Reconditioned imported vehicles should be cheaper as the government Thursday proposed in the new budget to enhance the allowable depreciation from 15 to 20 per cent in value assessment.

Bangladesh Reconditioned Vehicle Importers and Dealers Association (BARVIDA) wasted no time to hail the proposal, as the measure is expected to give a boost to the domestic car market.

In the budget speech, Finance and Planning Minister M Saifur Rahman said, “I propose enhancement of allowable depreciation from 15% to 20% in assessing reconditioned motor vehicles.”

According to the existing system the prices of imported reconditioned vehicles are fixed upon 15 per cent of depreciation each year over the price stated in the yellow book.

The system also does not allow the import of any reconditioned car that is more than four years old. That means a reconditioned car that was manufactured in 2001 will not be allowed in the country in 2006.

On the other hand, if the price of a vehicle is stated US$ 100,000 in its yellow book, each year it will lose US$ 15, 000 as depreciation.

But, as per the proposed budget, it would lose US$ 20,000. It means, the consumers from now on could buy reconditioned cars at cheaper prices.

Commenting in this context, BARVIDA president Abdul Mannan Chowdhury Khasru said this is a good initiative and middle class of the country would be benefited by this measure.

“Although we demanded 50 percent depreciation, but we are happy that at least the government realised the matter,” the business leader said.

He also said that with this new rate of depreciation, “the import of rotten Indian old vehicles would be stopped--and the environment-friendly reconditioned vehicles would spread widely”.

Tk 15 crore proposed for ACC

The government in its new budget has promised to allocate Tk 15 crore for Anti-Corruption Commission (ACC), the country’s lone anti-graft body.

The allocation is Tk 10 crore higher than the revised budget of the outgoing 2005-06 fiscal year. The original allocation for the Commission in the previous budget was Tk 10 crore, but the revised budget stood at Tk 5 crore.

Tk 578 crore proposed for Fisheries and Livestock

The government in its new budget has proposed to allocate Tk 578 crore, development and non-development together, for the Ministry of Fisheries and Livestock.

“This allocation is 36 per cent higher than the revised allocation of 2005-06 fiscal year,” Finance Minister M Saifur Rahman said in his budget speech in Parliament Thursday.

Saifur said pisciculture and animal husbandry are fast transforming from traditional non-farm based production.

Import of solar machinery gets duty exemption

Import of machinery and spares for solar energy has been exempted from all duties and taxes in the proposed budget for fiscal 2006-07.

Making the proposal, Finance Minister M Saifur Rahman in his budget speech in Parliament today (Thursday) said solar energy is environment friendly and this can be conveniently used for generation and transmission of power to the rural areas.

“We did not lose sight of this special feature of solar energy and, therefore, we exempted the machinery and spares of this industry from all duties and taxes”, he said.

The minister said solar energy has become very popular with the people, in the rural areas in particular.

To further extend and expand this facility, he said he has proposed withdrawal of the conditions so far imposed.

Ten ministries prepare their budgets under MTBF for FY 2007

Ten ministries, including previous four, prepared their budgets framework for the fiscal 2006-07 under the medium term budget framework (MTBF) of the government.

The new six ministries are: ministry of communication, ministry of fisheries and livestock, ministry of primary and mass education, ministry of health and family welfare, local government division and ministry of water resources.

In the FY06, the ministry of education, ministry of social welfare, ministry of women and children affairs and ministry of agriculture prepared their budgets.

"These indicative ceilings can be revised later on the basis of the availability of resources and affectivity of the relevant ministry in utilising the fund," the government said in its MTBF for FY 07 to FY09.

These ministries also made projections for the FY08 and FY09 which according the proposed budget for FY 07 will be treated as indicative.

According to the National Strategy for Accelerated Poverty Reduction (NSAPR), these ministries would have to formulate medium term expenditure framework, which will be consistent with the ceiling provided to them and the expenditures are also to be consistent with the strategic goals; policies and priorities.

All the ministries will be brought under the MTBF system in phases.

Govt to rely 79.2 per cent on indirect finance

The government shall have to rely mostly on indirect sources of finance in the coming fiscal year.

The budget summary said, in the fiscal 2006-2007, the government is expecting 35.9 per cent finance from value added tax (VAT), 23.1 per cent from import duty, 18.8 per cent from supplementary duty and 1.4 per cent from other sources. In total, 79.2 per cent of the total finance is expected to come from indirect sources.

Only 20.7 per cent finance is expected from the income tax which is a direct source.

Tax exemption facility for 3 industrial sectors till June 30, 2008

Finance and Planning minister M Saifur Rahman Thursday proposed extension of tax exemption facility for the agro-processing, jute and textile industries till 30th June, 2008.

"With a view to developing agro-processing, jute and textile industries, benefit of tax exemption was allowed up to June 30 2006. I propose these benefits be extended till June 30, 2008,," Saifur said proposing the budget for FY 2006-07 in the parliament.

He also proposed reduction of tax rate at 15 percent for the diamond cutting and polishing industry, which he said, 'is an emerging as a promising export industry in Bangladesh'.

To encourage the poultry and livestock sectors, all duties and taxes from capital machinery and their accessories, and other inputs as well as machinery for manufacture of poultry feed at the import stage were proposed to withdraw.

These will also be exempted from Advance Income Tax.

Meanwhile, the reduction of import duties of certain basic raw materials for plastics and melamine industries was also proposed.

To encourage solar energy, all the duties and taxes for importing its machinery and spares would be exempted.

He also proposed zero duty for synthetic staple filament tow and effluent treatment plants.

Underscoring the potential of the local electronics industry, Saifur also recommended bringing down of the import duty on the diodes, transistors, semi-conductor device and compressors from existing 13 percent to 5 percent for FY 2007.

The minister, noting the contribution of agriculture to the economy said, "Fertilizer, seeds, capital machinery, drum-seeder and other agricultural inputs have been exempted from duties and taxes at the import stage."

"To continue with this facility and to further expand its nature and scope, I propose to withdraw Infrastructure Development Surcharge (IDSC) from all kinds of hybrid rice seeds," he said.

Saifur proposes to allocate Tk 1466 crore for Water Resources Ministry

An amount of Tk 1466 crore, development and non-development together, has been earmarked in the budget for 2006-07 for the Ministry of Water Resources, which is Tk 332 crore higher than the revised allocation of 2005-06 fiscal year.

“We’ve continued our efforts to ensure poverty reduction, employment generation and environment-friendly development by ensuring appropriate use of water through efficient water resources management of water resources,” Finance Minister M Saifur Rahman said proposing the allocation in parliament Thursday.

Tk. 314 crore allocated for Youth and Sports Ministry

The government has allocated Tk 314 crore for the Youth and Sports Ministry in the proposed budget for fiscal 2006-07, placed by Finance Minister M Saifur Rahman in Parliament Thursday.

The proposed allocation for the ministry is Tk 3 crore less than the revised budget of Tk 317 crore in FY 2005-06. The original allocation for the Ministry of Youth and Sports in fiscal 2005-06 was Tk 306 crore.

Of the Tk 314 crore proposed in the new budget, Tk. 184 crore has been allocated for the development sector and Tk 130 crore for the non-development sector.

44 SOEs incur Tk 4,450 crore loss, BPC alone Tk 3705 crore

Forty-four state-owned enterprises (SOE) of seven sectors have incurred a loss of Tk 4,450 crore in the current fiscal although the projected loss by one of the SOEs, Bangladesh Petroleum Corporation (BPC), is Tk 3705 crore.

The loss of SOEs was increased by Tk 1768 crore more than previous fiscal. However, overall situation of the SOEs, except BPC, has improved compared to previous years.

Finance minister Saifur Rahman said in his budget speech that country's renowned economists advocated increase of oil price due to international price hike at a pre-budget discussion. The government already declared new oil price from Thursday afternoon.

According to Bangladesh Economic Survey 2006, the rise in oil price in the international market and the devaluation of taka against the dollar are the reasons behind the loss in the SOEs.

SOEs increased their loan from four commercial banks to Tk 14,489 crore out of which Tk 5,127 crore is default loan, which is 35% of the total loan. Among the total loan, BPC shares Tk 8,285 crore, nearly half of the loan is default.

The government will provide Tk 514 crore as subsidy to 14 SOEs. The figure last year was Tk 421 crore.

Bangladesh Jute Mills Corporation, Sugar and Food Industries Corporation, Dhaka Wasa, Bangladesh Shipping Corporation and other SOEs have managed to decrease their loss or increased their profit in the current fiscal compared to previous fiscal.

BTTB refixes charges for telecom services

Bangladesh Telegraph & Telephone Board (BTTB) have fixed/re-fixed charges for its different telecommunication services and put those in effect.

BTTB have taken the action for the benefit of its subscribers and other subscribers of government and non-government institutions and to ensure proper use of submarine cable, said a press release Thursday.

Interested subscribers have been requested to visit the website -- www.bttb.gov.bd -- for necessary information, including charges for different services and prescribed forms for taking the services.

Cabinet approves amended budget for 2005-06, proposed budget for 2006-07

The Cabinet at a special meeting Thursday approved the amended budget for fiscal 2005-06 and the proposed budget for 2006-07.

The meeting held at the Cabinet room of the Sangsad Bhaban with Prime Minister Khaleda Zia in the chair also approved the programme of collection and management of excise duty, tax and other revenues under the National Board of Revenue for FY 2006-07.

Cabinet members and state ministers of the ministries concerned attended the meeting.

Cabinet secretary and secretaries of the concerned ministries were present.

--UNB, BDNEWS

Budget Reaction

Economists doubt budgetary benefits for the poor

Budget has no guidelines to address risks to growth, says Wahiuddin Mahmud

Terming the proposed budget for the FY 2006-07 as 'pro-election one,' leading economists of the country Thursday expressed mixed reaction over it.

They explained the budget proposal from different points of views but had a consensus doubt whether it would be able to ensure benefits for the poor.

Veteran economist Dr Mozaffar Ahmed criticised the budget for not having transparency in distribution of wealth. He said, "The situation is not good in development sector. Industrial sector is also left instable."

Former advisor to the caretaker government Dr Wahiduddin Mahmud said that the government made an effort to coordinate the electoral politics with public welfare in the budget.

"But the questions are, how the required finance will be managed and whether the benefits would reach to the target people or not," Dr Mahmud questioned.

Eminent economist Dr Devpriya Bhattachariya expressed his disappointment over the proposed budget for what he said the budget had no specific direction for policy management and economic reforms.

Bhattachariya slated the government saying: It's a failure of a political government to introduce such a pro-election budget at the last year of its tenure.

He was also critical as there was no action plan against corruption despite several references on the issue.

"The finance minister mentioned of corruption at least thrice in his speech...but there was no strategy or no course of action mentioned to curb corruption."

Regarding the allocations for different ministries, he said: We have witnessed in the past that several allocations were sent back from some ministries as they failed to utilise those.

He, however, appreciated the decision to increase fuel price as CPD, the research organisation, he is attached with, also opined the same views earlier. He also welcomed the comparatively low hike of diesel price in comparison with octane or petrol.

Left leaning economist Dr Anu Muhammad opined that elimination of poverty was not possible through this budget. He said, "It may contribute some midterm benefits in production sector."

"But no fundamental change can be ensured in investment and employment situation that can reduce poverty," he commented.

Budget has no guidelines to address risks to growth, says Wahiuddin Mahmud

Renowned economist Prof Wahiuddin Mahmud has said the budget proposal does not provide any clear guidelines regarding how to address the risks to economic growth and stabilisation.

“There is apparently some effort to find common ground between election politics and public welfare; but the Finance Minister still faces the challenge of providing enough safeguards to prevent wasteful or low-priority development spending ahead of the elections,” he told UNB in his instant reaction to the budget.

Mahmud, former Advisor to caretaker government, said despite the large downsizing of the development budget, the closing year’s revised budget still shows a substantial increase in the government’s bank borrowing.

“This also happened in the previous fiscal 2004-05 when the government had to resort to large-scale bank borrowing at the fag end of the year because of a sudden flurry in development spending.”

He said the situation this time is different. The bank borrowing by the Bangladesh Petroleum Corporation for meeting fuel subsidies is outside the budgetary accounts.

Mahmud said Bangladesh Bank has already taken a cautious stance regarding credit expansion in the private sector and there is a liquidity crunch in the banking system, even then the new financial year is poised to start with an overhang of excessive credit expansion and inflationary pressure.

He said the proposed budget for the coming fiscal is for practical purpose an interim budget, subject to revision by the next elected government.

“One could thus view the projections of revenue earnings and development spending as ambitious and even wishful thinking, but these could alternatively taken as a blue-print of what is needed to support social development and higher economic growth.”

He said the justification for providing such a blueprint at the end of the government’s tenure may still be questioned.

“However, what matters for the time-being is how the government proposes to implement the budget during the rest of its tenure in view of the prevailing economic strains arising from the inflationary trends, pressure on the exchange rate and the huge burden of fuel subsidies. It would have been better if this could be spelled out in the budget proposal.”

Mahmud said it is quite expected that politics will dominate over economics in this year’s budget proposal, but even the political options are not easy.

He said the government would like to delay any upward adjustment in fuel prices. A vigorous revenue drive is also unlikely.

He said there will be pressure for election-oriented development spending that may further increase the public sector’s bank borrowing.

“This in turn may create further inflationary pressure, or, alternatively, may require a further squeeze on credit to the private sector - neither of which is a desirable option.”

Mahmud said the disbursements of foreign aid will depend on how far the donors’ conditionalities can be met. “There is thus a great deal of uncertainty about how the emerging budget deficits can be financed consistent with the overall monetary policy.”

He said even if the Finance Minister has been able to “scramble some figures” to work out the budgetary balances, this should be no relief to the worries of the Bangladesh Bank’s Governor.

“Much will depend on how the government goes about disbursing funds for development projects in the remaining period of its tenure,” Mahmud noted.

Mahmud said the proposed development budget for the next fiscal has included a large number of new unapproved projects - presumably under political pressure.

“This can undo the hard work of the Finance Minister over the past few years in bringing down the number of projects with a view to facilitating their timely implementation and reducing low-priority development spending,” he noted.

He said a saving grace is that no funds have been allocated against these new projects. There are, however, large block grants, which are a matter of concern.

Mahmud said import taxes have been reduced to some extent - partly to meet aid conditionality, partly to provide production incentives, and partly to lower the prices of imported essentials.

“So these tax measures will be generally popular. Yet the challenge remains in mobilising higher revenue by collecting more taxes from domestic sources.”

He said some reforms in tax administration have been proposed including the appointment of a tax ombudsman and other on-going reforms are to be strengthened- again mostly as part of meeting aid conditionality.

Mahmud said the key to dealing with tax evasion lies not so much in reforming the tax administration as in gathering the necessary political will.

“The rather belated decision to withdraw the opportunity of whitening black money is most welcome,” he said, adding “But what is the rationale for still keeping this tax concession in the case of the purchase of cars, houses and land in posh urban areas?

“These are precisely the uses of black money that are relatively easy to detect - hence the rationale of continuing with the tax concessions is doubtful.”

However, Mahmud said the proposed concession for tax on additional declared income over that of the previous year may have some justification on ground of providing incentive to taxpayers.

He said in increasing the allocations for agricultural subsidy, poverty reduction and social security, there is an effort in the budget to combine populism with public welfare.

He said apart from the problem of finding enough resources, there is also the problem of ensuring that the assistance reaches the intended beneficiaries.

Mahmud said it is alleged that the benefit of fertiliser subsidy at the import stage, which was provided in the last year’s budget, did not actually reach the farmers. This is a likely outcome where the import trade is not competitive enough.

He said the Finance Minister has already indicated that this mechanism of providing subsidy might be discontinued and has discussed about other alternatives.

The idea of distributing fertilisers at subsidised prices through some government agencies like BADC is also fraught with risks, he observed.

Mahmud said the middlemen will reap most of the benefits if the marketing system is not competitive, or if the dealers are appointed politically, or adequate uninterrupted supply cannot be ensured.

He said if agricultural inputs like fertilisers and diesel are to be distributed directly among farmers through some mechanism like the VGD card, then the system needs to be efficient and accountable.

Mahmud said the food distribution through VGD card has a self-screening mechanism, because the relatively well-off people do not like to participate in such a programme out of a sense of self-esteem; even then there are leakages.

In the case of distribution of fertiliser or diesel, he said there is no such psychological inhibition against an elite capture of the system.

--BDNEWS, UNB

Prices of products that will go up and some will go down

The proposed budget for FY 2007 placed by Finance and Planning Minister M Saifur Rahman Thursday may lead to changes of the price levels of many commodities for measures like custom and supplementary duties and VAT.

Prices to go down:

Consumer Items: Rice, garlic, turmeric, chilly, ginger, onion and lentil, sugar, cell phone and its connection charge, locally manufactured dairy products, especially powder milk, reconditioned vehicles.

Industrial Goods: Machinery & spares of solar energy, hybrid seeds, primary plastic products, lead waste and scraps, compressors of refrigerating equipment, effluent treatment plant and synthetic filament tow along with miscellaneous other importable raw materials for various industries.

Prices to go up:

Consumer Items: Buildings, apartments in Gulshan, Banani, Baridhara, Bashundhara, Dhanmondi, DOHS etc of Dhaka and Panchlaish, Khulshi of Chittagong, land, canned beverages, juice, credit cards, glucose and glucose syrup, cigarette, sanitary towels, napkins, and napkin liners for babies and similar articles, tampered and laminated safety glass and motorcar.

Industry and service sector: charge for hotels, decorators and caterers, community centres, beauty parlours, shipping agents, air-conditioned bus and railway service, and transmitting advertisement in satellite channels is proposed to bring under Value Added Tax (VAT).

Advertising equipment, pictures, designs and photographs costs may also rise.

Prices of essentials & cell phone to go down while land prices to go up

The prices of various essential consumer items like sugar, rice, onion, garlic and cell phone are expected to decline while the prices of land and apartments in certain areas are expected to rise in the proposed budget presented by Finance minister M Saifur Rahman in Jatiya Sangsad Thursday.

"We should keep the prices of some of the basic commodities within the reach of common people... I propose reduction of tax incidence of all these items to 5 percent as is the case with rice, pulse and lentils," said Saifur in his budget speech at the parliament.

He proposed reduction of tax incidence to 5 percent for rice, garlic, turmeric, chilly, ginger, onion and lentils,.

The price of sugar is also expected to decline with the imposition of specific duty of Tk. 5,000 on sugar per MT at the importation stage.

"This will bring down the price of sugar by nearly Tk. 6,000 per metric ton. I hope, as a result of this measure, price of sugar in the domestic market will become stable," he said.

The price of cellular mobile telephone sets is also expected to decline while its connection charge might reduce a bit.

The price of local dairy products may also fall due to withdrawal of 2.5 percent supplementary duty from locally manufactured packet powder milk in packs of 2.5 kg and over.

The price of reconditioned motor vehicles is also expected to reduce by nearly 5 percent due to increase in its allowable depreciation from 15 percent to 20 percent.

To encourage solar energy, all the duties and taxes for importing its machinery & spares would be exempted.

Import costs of fertilizer, seeds, capital machinery and, drum are also expected to steady in the next fiscal and help expand agro-processing industry.

The prices of primary plastic products, lead waste and scraps, compressors of refrigerating equipment, effluent treatment plants are also expected to reduce due to reduction in customs duty for these products.

Meanwhile ,the costs of canned beverages, credit cards, glucose and glucose syrup, cigarette, advertising equipment, pictures, designs and photographs, sanitary towels, napkins, and napkin liners for babies and similar articles, tampered and laminated safety glass are also expected to rise due to increase in their customs and supplementary duties.

The costs of procuring construction building, apartments in Gulshan, Banani, Baridhara, Bashundhara, Dhanmondi, DOHS etc. of Dhaka and Panchlaish, Khulshi of Chittagong are also expected to rise due to imposition of tax from present five per cent tax to at 7.5 percent while the rates for other areas were kept unchanged.

The purchasing prices of land and motorcar may also go up.

Imposition of Value Added Tax (VAT) on the land developers, hotels, decorators and caterers, community centres, beauty parlours, shipping agents, air-conditioned bus and railway service and transmitting advertisement satellite channels will also increase the costs of urban dwellers.

--BDNEWS, UNB

Reaction Trade Bodies

Budgetary allocation on power disappoints business community

No incentive for garment and textile sector in budget: BTMA president

Mixed reaction of BCI president to budget

Mintoo hail new national budget, says it will reduce prices of essentials

The allocation in the power sector proposed in the national budget for fiscal 2006-07 does not match the expectation of the business community and would hardly help the industrialization process in the country.

The business community had been expecting vigorous initiative in the power sector, Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) president Mir Nasir Hossain Thursday told UNB in an instant reaction on the proposed budget.

“The allocation in the power sector is not significant… we had urged the government to give importance on the sector for facilitating industrial growth,” he said.

An allocation of Tk 4286 crore for the power sector has been proposed in the budget for FY 2006-07, which is 14 percent more than the revised budget of Tk 3769 crore for the current fiscal year.

The original allocation in the budget for FY 2005-06 was about Tk 4293 crore for the power and energy sector.

Referring to the government call to the private sector entrepreneurs for investing in power sector, the FBCCI president underscored the need for ensuring transparency in the government policy.

He was also critical about imposition of taxes on the cash subsidy on import and turnover irrespective of profit or loss.

“Imposition of taxes on incentive is not rational… incentive is no income at all; this is assistance. The imposition of taxes on the subsidy and turnover is quite regressive,” Mir Nasir Hossain said.

Finance and Planning M Minister Saifur Rahman in his new budget proposed to deduct tax at source at the rate of 5 percent on the amount of cash subsidy for it being a nett receipt to the exporter and treat the deduction as final settlement of tax liability.

On the other hand, he proposed introduction of the provision of minimum income tax of Tk 5,000 or 0.50 percent of turnover whichever is higher for companies irrespective of profit or loss.

The FBCCI chief apprehended that the tax imposition on import subsidy and turnover might discourage the export business, thereby hampering to flourish local industry.

He, however, found some positive things in the proposed budget placed in the Parliament Thursday.

“There are some good things in the budget such as reduction of import duty on some daily necessities,” the veteran businessman said adding that this measure would help arrest the skyrocketing prices of essentials.

“Strengthening the government monitoring and adjusting the transportation system will help to bring down the prices of essentials,” he said.

The Finance Minister in his budget speech proposed to reduce custom duty to 5 percent from 13 percent on garlic, dry chilli and ginger.

No incentive for garment and textile sector in budget: BTMA president

In a reaction president of Bangladesh Textile Mills Association (BTMA) MA Awal Thursday said the proposed budget for 2006-07 has some unclear issues.

"To make the budget a complete one" Awal said, "the hazy issues must be considered before being passed".

Terming, the budget speech "awfully brief", in an instant response to BDNEWS query, Awal-expressing discontent said, " though, five percent of cash assistance was provided till June of 2006, there is no indication of cash assistance for primary sectors of different industries".

He mentioned, the cash assistance stood at 15 percent and 5 percent respectively in 2004 and 2005.

"If the condition persists even in this competitive global market" president of BTMA apprehended "garment and textile industries will sure be lagged behind."

He added, BTMA's recommendations were put together with the task force formed by the Prime Minister and sent to the Finance and Planning Minister M Saifur Rahman.

'Though the budget speech has been placed already, there is room for amendments yet, BTMA president observed, adding " or else the fresh entrepreneurs will be discouraged."

Mixed reaction of BCI president to budget

Bangladesh Chamber of Industries (BCI) president AK Azad expressed his mixed reaction to the proposed budget for FY2006-07 placed in the Jaitya Sangsad (JS) by Finance Minister M Saifur Rahman on Thursday.

He said, "Gas, power and energy are inevitable for the industry and industrialisation but the budget has offered no solution to the problems of gas, power and energy sectors."

The allocation given in the budget for different projects are not adequate to mitigate the problems in those sectors, he said.

Plenty of projects were incorporated into the Annual Development Programme (ADP) to satisfy the electorates, which is unnecessary, he noted.

Block allocations for the ministers and lawmakers for the developments of their localities will not come in handy for the economic development, he observed.

He, however, welcomed the largest allocation for the education sector, increase in the allowances of elderly citizens, widows and insolvent freedom fighters, reallocation of Tk 100 crore as loan disbursement in the small and medium industries and tax waiver for RMG, textile, hosiery, label and accessories used in the Teri towel industry.

Mintoo hail new national budget, says it will reduce prices of essentials

The national budget for fiscal 2006-07 will arrest the prices of daily necessities as it proposes to reduce customs duty on essentials as well as raw materials and capital machinery, said Abdul Awal Mintoo, former president of FBCCI.

Hailing the proposed budget as better than the last two years’ budget, the veteran businessman in an immediate reaction told the news agency that the duty rebate on machinery will reduce the product cost, thereby pushing down the commodity prices.

The budget proposed reduced duty on import of essential items like garlic, turmeric, dry chilli, ginger, onion, rice, pulses, lentils and sugar to “keep their prices within the reach of common people.”

Commenting on the allocation made on the social safety net programme, Mintoo said: “This will benefit thousands of poor people although some may call it as election budget.”

He, however, pointed out that the allowance to the senior citizen should have been increased to Tk 300, but the government raised it to Tk 200 from Tk 180.

Referring to the Finance Minister’s expectation to keep the revenue deficit at 3.7 percent, the former FBCCI president said the percentage would be very much acceptable for a developing country like Bangladesh.

He found nothing bad in the imposition of 5 percent income tax on export subsidy and minimum Tk 5,000 or 0.50 percent income tax on turnover whichever is higher for companies irrespective of profit or loss.

“Cash subsidy is also a kind of income. So, imposition of income tax on it is nothing unwarranted,” he said.

--BDNEWS, UNB

Reaction Parties

Opposition terms proposed budget full of bluffs while BNP hails it

Awami League rejects new budget as 'full of bluffs'

Ershad ridicules new budget

Different political parties Thursday brought out protest-processions in the city terming the proposed budget as anti-people while BNP processions welcomed it terming as pro-people.

Mofazzal Hossain Chowdhury Maya, general secretary of the Dhaka City Awami League, while leading the AL procession, rejected the proposed budget for 2006-07 terming it as 'deceptive' and saying it would not contribute to the entire development of the country.

The budget was made to protect the interest of the four-party alliance government for getting votes from the people through deception.

Among other leaders, Advocate Kamrul Islam, Haji Mohammad Selim and Abdul Huq Sabuj took part in the procession that started from AL central office at Bangabandhu Avenue and paraded through Paltan crossing and Muktangon.

Jatiya Sramik League at its executive committee meeting Thursday termed the budget as "a mockery" to the vulnerable workers of the country.

Sramik League leaders said that no allocation was given in the budget for protecting the jute and garment industries and their development. There is also no specific proposal for the national minimum wages, electricity supply, and implementing wage board and pay scale.

The protest procession was followed by a rally.

Demanding at least 25 per cent of budget allocation in the education sector reducing budget allocation for defence, Bangladesh Chhatra Maitri also brought out a procession.

Rejecting the budget some other protest processions were brought out in the city by Paribahan Malik Sramik Oikkya Parisad, Dhaka Sarak Paribahan Samity, Bangladesh Hawkers League, Shecchasebak League, Bangladesh Tanti League, Bangladesh Krishak League and Bangladesh Awami Juba League.

According to their separate voices, the budget, a traditional one, has been prepared keeping in view the next general election. It will not play any role to create employment opportunities to reduce poverty, they added.

BNP Dhaka City Ramna Thana unit, however, brought out a procession welcoming the budget terming it as pro-people.

Awami League rejects new budget as 'full of bluffs'

Main opposition Awami League has rejected the proposed budget for fiscal 2006-07, saying the alliance government placed a budget, which is “full of bluff and a ploy to plunder the economy.”

“The budget has no guidelines to move forward. This is not an investment friendly budget… rather, the alliance government proposed block allocations to plunder the money,” former Finance Minister AMA Muhit told a press conference at the Dhanmondi office of Awami League Thursday.

Muhit, a member of the AL Advisory Council, said since the Finance Minister stated that his budget would be implemented by three successive governments - present, caretaker and next elected government, it should have been a pro-people budget. “But it appears more to be an election budget.”

People who will buy houses, cars and lands would enjoy tax exemption, a ploy to whiten the black money, he alleged.

Muhit said 70 percent of the proposed budget would never be implemented.

Although the gas sector is vital for the people, the Finance Minister has proposed reduced allocation for this sector, he said.

The former Finance Minister alleged that the coalition government has no capability of utilizing the foreign aid.

“The government is now on a journey without any destination. There is lack of coordination within this government, none listen to this government,” he said.

Muhit said although the Finance Minister had earlier pleaded for austerity, but his budget speech did not mention anything about it.

On fiscal measures, he admitted that though some proposals were made to reduce taxes on some items, but once price increases, it never comes down. However, this measure would be enjoyed by certain quarters, he said, adding: “People will continue to suffer due to increased prices of essentials.”

Awami League general secretary Abdul Jalil pointed out that there is no allocation for construction of the Padma Bridge, a commitment the Prime Minister made to the people of the southern region.

Party leaders Abdur Razzak, Sheikh Fazlul Karim Selim, Begum Motia Chowdhury, Obaidul Kader, Syed Ashraful Islam, Dr Mostafa Jalal Mohiuddin, Akhtaruzzaman and Abdur Rahman were present at the press conference.

Big budget proposed to deceive people ahead of election: Hasina

Leader of the opposition in parliament Sheikh Hasina said the failed government had proposed the budget ahead of the next election in a bid to deceive the people.

Hasina, also the president of Awami League (AL) said, "Two thirds of the big size budget made to confound the people will not be implemented."

She also observed that the next government would fall into crisis due to the huge loan of the immoral coalition government.

She was speaking with the grassroots level party leaders and workers from Faridpur, Rajbari, Shariatpur, Madaripur and Gopalganj of the Dhaka Division and top leaders of first class Pourashavas on Thursday on the fourth day of a series of view-exchange meetings.

She alleged that the alliance government politicized the administration and the armed forces and transferred officials en masse. Government employees are now subject to harassment.

Harshly criticizing the campaign for honest and commendable candidates for the next general election, AL chief posed question, "Why aren't they going for the financial source of corrupt BNP leaders"?

Hasina further accused the premier; "she is escalating the price of essentials through Hawa Bhaban-run syndicates, adding, "the ruling four party alliance let the rein of widespread plunder loose and threw the common people in utter misery."

The opposition leader observed, the ruling party has lost people's confidence and surely would fail, that is why they are weaving the webs of conspiracy.

"Conspiracy is their sole means to assume power".

She asked all the leaders and workers of the party to make the Dhaka Siege programme on June 11 an all out success and strengthen the ongoing movement for reforms in caretaker government and election systems.

The AL president also asked the present party leaders to inform her about the organisational, political and law and order situation, oppression by the government in their respective areas.

She also told them to let her know about the probable candidates in their respective constituencies.

The present AL leaders informed the opposition leader about the organisational, political and law and order situation and also the intra-party conflicts in their respective areas.

Sheikh Hasina gave directives and advices following the statements and recommendations of the grassroots level leaders.

The AL president, in her guiding speech said all the party activists have to work unitedly to make the party well organised and dynamic.

She also gave directives to resolve all the misunderstanding and intra-party feuds immediately.

Sheikh Hasina directed the grassroots level leaders to move forward the ongoing anti-government movement and take necessary preparations for the next general election.

She said all the party activists have to work with the people who would be nominated by the party in the next election.

"You have to talk to the people and uphold the real picture of corruption and misrule of the BNP-Jamaat coalition," said Sheikh Hasina pointing at the present grassroots level leaders.

She also placed demands of taking necessary steps to hold a free, fair and neutral election through implementation of the reform proposals, placed by 14-party combine.

The AL president will hold meeting with the leaders of Chittagong and Barisal region in the second phase of her continuous organisational programme.

As per the announced programme, she will exchange views with the grassroots level leaders of Barisal town, Barisal, Jhalakahti and Bhola on June 14 and Patuakhali, Pirojepur and Borguna on June 15.

Besides, she will exchange views with leaders of North Chittagong, South Chittagong, Chittagong city and Cox's Bazar on June 16 while with leaders of Noakhali, Feni and Chandpur on June 17 and Rangamati, Bandarban and Khagrachhari on June 19.

Ershad ridicules new budget