Economy
Price Surge on Select Products Following Budget Changes
Finance Minister AH Mahmood Ali presented the national budget for the fiscal year 2024-25, amounting to Tk 797,000 crore, in the Jatiya Sangsad today. The presentation took place under the chairmanship of Speaker Dr. Shirin Sharmin Chaudhury and in the presence of Prime Minister Sheikh Hasina.
This marks the 53rd budget of independent Bangladesh, the first for the current government’s fourth consecutive term, the 16th continuous budget, and the 21st under the Awami League-led administration. Notably, this is the inaugural budget presented by Finance Minister AH Mahmood Ali.
The proposed budget includes increased taxes and duties on various products, leading to higher prices for items such as cigarettes, water filters, cashews, refrigerators, air conditioners, ice cream, beverages, bricks, LED bulbs, tobacco products, unrefined edible oil, tube lubricating gel, synthetic corundum, aluminum oxide, fluorescent lamp parts, glass, plastic, medical equipment, capital machinery, construction materials, SIM cards, auctioneers, security services, and lottery tickets. Consequently, household expenses and travel costs are expected to rise.
Increased Costs Due to Tax Changes:
- Cigarettes: The budget proposes increasing the supplementary duty on all types of cigarettes, with a suggested 65.5% supplementary duty on three tiers of cigarettes, raising their prices. The maximum retail price for 10 grams of jorda is set at Tk 48, and for guli, Tk 25.
- Water Filters: Import duty on water filters, now produced domestically, is raised from 10% to 15%.
- LED Bulbs: Import duties on LED and energy-saving bulb components are increased by 10%, likely raising their prices.
- Cashews: Import duty on shelled cashews is raised from 5% to 10% to protect domestic cultivation.
- Refrigerators and Air Conditioners: VAT and duties on components used in the production of refrigerators and air conditioners are increased, leading to higher prices.
- Construction Costs: Import duties on LRPC wire are increased, impacting construction expenses.
- Vehicle Conversion Kits: Import duties on CNG-LPG conversion kits and related components are raised from 3% to 5%, increasing conversion costs.
- Generators: A 1% import duty is introduced on components used in assembling and producing generators, affecting prices.
- Imported Mackerel: VAT and advance income tax on imported mackerel are set at 15% and 5%, respectively, increasing their cost.
- Industrial Raw Materials: A 1% import duty is imposed on 33 types of raw materials used in industries, such as unrefined edible oil, aluminum ingots, and components for
- LED bulbs and fluorescent lamps.
- Economic Zones: Concessions on capital machinery and construction materials for industrial establishments in economic zones and high-tech parks are withdrawn, introducing a 1% import duty.
Sectoral and Service Tax Changes:
- Tour Operators: The existing VAT exemption for tour operator services is withdrawn.
- Entertainment: VAT for amusement parks and theme parks is increased from 7.5% to 15%, affecting leisure costs.
- Auction Houses and Security Services: VAT is raised from 10% to 15% on auction houses, security services, and lottery tickets.
- Bricks: Specific taxes on bricks are proposed to increase from 10% to 20%, impacting construction costs.
- Ice Cream and Beverages: VAT increases on ice cream and carbonated beverages are proposed, raising their prices.
- SIM Cards: Supplementary duty on mobile phone SIM usage is raised from 5% to 20%, increasing the cost of mobile communication and internet usage. VAT on e-SIM provision is increased from Tk 200 to Tk 300.
The proposed budget’s theme is “Commitment to Building a Happy, Prosperous, Developed, and Smart Bangladesh.” The overall budget size is set at Tk 797,000 crore, a 4.60% increase from the current budget of Tk 761,785 crore. The Annual Development Programme (ADP) is fixed at Tk 265,000 crore, up from Tk 263,000 crore in the previous fiscal year. The total deficit is projected at Tk 256,000 crore, down from Tk 283,785 crore in the revised budget for the current fiscal year.
Revenue targets are set at Tk 545,400 crore, compared to Tk 500,000 crore in the previous year. GDP growth is targeted at 6.75%, with inflation expected to be 6.5%.
To cover the budget deficit, loans of approximately Tk 300,000 crore are anticipated from domestic and foreign sources. The budget also includes allocations to prepare the youth for a “Smart Bangladesh” and measures to enhance social safety programs to mitigate inflation’s impact. Climate change’s effects on the economy are also analyzed in this budget, and efforts to broaden the tax base will include introducing taxes in new areas.
Referring to the countrywide recent havoc and atrocities, Prime Minister Sheikh Hasina today said that she had an apprehension there might be a strike like this by the BNP-Jamaat clique to pull down the country’s prosperity.
“. . . they (BNP-Jamaat) had wanted not to hold the elections, but we had arranged the elections. After election they thought it wouldn’t be accepted by all, but we’ve also made it acceptable to all and we’ve formed the government. It was an apprehension to me that there would be a strike like this,” she said.
The Premier made this remarks while exchanging views with editors, senior journalists and head of news of various media outlets, organised by Editors’ Guild at her office (PMO).
She mentioned that before and after the election in 2013-14, the BNP-Jmaat clique unleashed arson attacks and killings that left hundreds of people killed and thousands injured.
“It was little bit understandable that this (the activities and movement of the students) was a grave conspiracy,” she said.
Sheikh Hasina said that she didn’t want any incident which might invite any unwanted situation that will invite instability in the country. “It was the target to destroy country’s economy,” she said.
She questioned about the understanding level of the people who supported these mayhem aiming to cripple the country’s advancement and prosperity.
Sheikh Hasina, also the chief of Awami League, said that vested quarter is highly interested to destroy country’s independence and the continuation of the democracy that is going on for long 15 years.
She again said that she never wanted to deploy army personnel in the field while the students were there for the sake of their security.
“While they (students) declared that they are not involved in the on going subversive activities then we called for army,” she said.
The premiers also said that she also didn’t want to impose curfew as the country is going through a democratic environment for 15 years.
She requested the people to resist those who have done this bane for the country. “They have destroyed all the structures have been built for their welfare and livelihood. They have struck all those structures. Who will be the worst sufferer? Of course, mass people. Now it is the responsibility of the mass people to resist these terrorism and militancy,” she said.
The premier called for creating mass awareness against the militancy that has opened in the destructive activities.”If the people don’t become aware then what could we do or how much we could do alone,” she said.
She also mentioned that the targets of the recent mayhem was Awami League, Freedom Fighters and pro-liberation forces.
The Prime Minister said that when all demands of the quota-free movement students were accepted why they gave scope to the militants for doing such heinous activities.
“One day the quota-free movement activists have to answer to the nation, why they gave such opportunity to them for this destruction to the country,” she said.
PM’s Press Secretary Md Nayeemul Islam Khan moderated the programme, while Editors’ Guild president Mozammel Huq Babu delivered welcome address.
Senior journalist Abed Khan, Bangladesh Pratidin editor Nayeem Nizam, DBC Editor-in-Chief and CEO Monzurul Islam, Bhorer Kagoj Editor and Jatiya Press Club general secretary Shyamol Dutta, Daily Jugantor Editor Saiful Alam, Jatiya Press Club president Farida Yasmin, Dhaka Journal chief editor Syed Istiaque Reza, Head of News Nagorik TV Dip Azad, Amader Somoy Editor Mainul Alam, Bangladesh Journal editor Shajahan Sarder, DBC news editor Zayedul Ahsan Pintu, Ashish Saikat of Independent TV, Bangla Tribune editor Zulfiquer Russell, head of News of 71 TV Shakil Ahmed, Energy and Power Editor Mollah Amzad, Head of News of Kings News Nazmul Huq Saikat and Mamunur Rahman Khan of RTV also spoke.
Britain’s inflation rate held steady in June after returning to the Bank of England’s target the previous month, official data showed Wednesday, confounding expectations for another modest slowdown.
The Consumer Prices Index was unchanged at 2.0 percent in June from the same level in May, the Office for National Statistics said in a statement, compared with market forecasts of 1.9 percent.
“Hotel prices rose strongly, while second-hand car costs fell but by less than this time last year,” said ONS chief executive Grant Fitzner.
“However, these were offset by falling clothing prices, with widespread sales driving down their cost.
“Meanwhile, the cost of both raw materials and goods leaving factories fell on the month, though factory gate prices remain above where they were a year ago.”
Analysts said the data could cause the Bank of England to sit tight for a while longer before starting to cut interest rates.
“The chances of an interest rate cut in August have diminished a bit more,” said Paul Dales, chief UK economist at research consultancy Capital Economics.
Last month, the BoE kept its key interest rate at a 16-year high of 5.25 percent, despite slowing inflation in May.
Britain’s newly elected Labour government welcomed news that inflation remained at the BoE’s target level.
“It is welcome that inflation is at target,” said Darren Jones, Chief Secretary to the Treasury, in a statement.
“But we know that for families across Britain prices remain high… (which) is why this government is taking the tough decisions now to fix the foundations” of the UK economy, he said.
Labour, led by new Prime Minister Keir Starmer, has pledged immediate action to grow the economy after the centre-left party won a landslide general election victory to end 14 years of Conservative rule.
Later on Wednesday, King Charles III will read out Labour’s first programme for government in a decade and a half, when the UK parliament formally reopens following the July 4 election.
Elevated interest rates have worsened a UK cost-of-living squeeze because they increase borrowing repayments, thereby cutting disposable incomes and crimping economic activity.
The BoE began a series of rate hikes in late 2021 to combat inflation, which rose after countries emerged from Covid lockdowns and accelerated after the invasion of Ukraine by key oil and gas producer Russia.
China’s economy grew 4.7 percent year-on-year in the second quarter of 2024, official data showed Monday, less than analysts had expected.
“By quarter, the GDP for the first quarter increased by 5.3 percent year on year and for the second quarter 4.7 percent,” Beijing’s National Bureau of Statistics (NBS) said in a statement.
The figures were much lower than the 5.1 percent predicted by analysts polled by Bloomberg.
Retail sales — a key gauge of consumption — also slowed to just two percent in June, the NBS said, down from 3.7 percent in May.
The world’s second-largest economy is grappling with a real estate debt crisis, weakening consumption, an ageing population and trade tensions with Western rivals.
Top officials are meeting in Beijing on Monday for a key plenum, with all eyes on how they might kickstart lacklustre growth.
