The government’s plan to cut oil prices in Bangladesh to boost economic growth is awaiting final approval from Prime Minister Sheikh Hasina, Finance Minister AMA Muhith has said.
“The prime minister’s response is expected shortly.”
Muhith is currently in Washington to attend the spring meetings of the International Monetary Fund (IMF) and the World Bank. His comments came during a media briefing following his meeting with IMF Deputy Managing Director Mitsuhiro Furusawa at the organisation’s headquarters on Thursday.
The low prices of oil on the world market had previously prompted the finance minister to promise cuts in domestic prices, but they did not come to pass.
“I have told IMF officials that we wish to continue our subsidies on electricity and fuel,” said Muhith.
“At the moment we wish to decrease the cost of oil a bit. We have informed the prime minister of our proposal. The price will be decreased once we have her approval.”
“Out economists wish to cut the price of oil to boost the economy,” said the finance minister. “I agree with them. This is why we have sought the prime minister’s permission,” he said.
Muhith said he also discussed Bangladesh’s upcoming VAT plans with the IMF.
“The IMF officials wished to know how we planned to implement the new VAT. We told them it would come into effect in July and be set at 15 per cent for the first two years. Changes to the plan will be considered after that.”
Some concessions may be made after taking the demands of businesses into consideration, but the VAT will be set at 15 per cent, Muhith said.
The IMF is quite pleased with Bangladesh’s economic situation, said the finance minister.
“Aside from remittances, our economic indicators are positive.”
Asked whether Bangladesh would be taking out further loans from the IMF after the end of its Extended Credit Facility period, Muthith said, “We have over $32 billion in reserves and our reserve position is good. At the moment we do not need any IMF loans. We will borrow more when our Balance of Payments is poorer.”
Bangladesh Bank Governor Fazle Kabir, Finance Division’s Senior Secretary Hedayetullah Al Mamoon, Economic Relations Division’s Acting Secretary Kazi Shofiqul Azam and Bangladesh’s Alternate Executive Director to World Bank Muhammad Musharraf Hossain Bhuiyan accompanied the finance minister as part of Bangladesh’s delegation to the IMF-World Bank meeting.