It’s to stop money laundering: PM

The new budget has offered scope for legalising undisclosed income to bring that money to formal channel and allow it to be invested, Prime Minister Sheikh Hasina said yesterday.

"Nobody knows where black money holders have hidden their undisclosed earnings. Their money needs to be streamlined. Steps have been taken to legalise it lest rats eat it away," she said at a post-budget press conference at the capital's Bangabandhu International Conference Centre yesterday.

If no scope is there for legalising undisclosed money, possibility of money laundering or tax dodging will arise, the PM mentioned.

She addressed the post-budget press conference as Finance Minister AHM Mustafa Kamal is ill. On Thursday, the PM also read out a major portion of Kamal's budget speech after he unveiled it in parliament. 

Hasina said sometimes some money remains undisclosed or someone gets cash at his disposal, which cannot be used. "At that time, attempts are made to launder the money through various ways and use it by other means."

To stop money laundering, scopes are being given to invest that money. "We extended the scope in the past. In fact, all governments extended it."

The aim is to stop accumulation of undisclosed money. "At least, the money should be disclosed and invested."

Undisclosed money now can be invested in real estate, economic zones and hi-tech parks by paying a certain amount of tax.

"Honest taxpayers should not feel discouraged because of the scope for legalising black money, as the government is taking steps for them."

Describing the new budget as a welfare one, she said, "The budget has been prepared in such a way that it helps all. All will work sincerely so that the budget is implemented properly."

Issuing warning to wilful loan defaulters, she said, "We will take stern action against the wilful defaulters.

"We will give them [defaulters] opportunity so that they can pay back loans."

A central database on large credit has been set up to closely monitor large loans and strengthen the credit monitoring system of banks and financial institutions.

On the interest rate, she said the government has always tried to limit it to a single digit.

"We have also extended some benefits to keep it in a single digit. But many private banks have not obliged.

"The budget has also spelled out that stern action will be taken in this regard. They [banks] will have to comply [with government directives] so that the interest rate remains in a single digit."

If the interest rate remains in a single digit, it will attract investment, she said, adding that if interest rate goes up at a compound rate, people cannot do business.

"We will amend laws to that end."

She further said there is nothing to worry about the state-run banks, and that they are not under too much pressure.

On defaulted loans, Hasina said the interest rate is very high, and because of the compound interest rate, the total amount of defaulted loans looks bigger.

"If the actual loan amounts are taken into account, the total sum of defaulted loans will not look that big." 

Responding to a query on rising non-performing loans, she urged the reporters to find out how much the owners of their media houses borrowed from banks and whether they have paid back.

Hasina noted that there is an urgent need to bring reforms to the financial sector and the stock market.

As part of reforms in the financial sector, a vibrant bond market and use of other financial tools such as wage earners bond, venture capital, and treasury bond will be encouraged.

"We want to see good governance in the stock market." 

Responding to a think-tank's statement that the budget will go in favour of the rich and the beneficiaries of economic misrule, the PM said, "There are some people in Bangladesh who are mentally sick and they feel comfortable at nothing. No matter how many good things you do, they never see them."

On ensuring fair prices for paddy growers, Hasina said, "We have decided to procure paddy. We will procure additional four lakh tonnes."

She also said a lot of incentives are being given to produce paddy, which allow farmers to spend less on farming. And the majority of the funds come from the government coffers.

It is the government's responsibility to look after farmers, and it is doing that.

The PM mentioned that the government is implementing many large projects, and more revenue needs to be collected from domestic sources to implement those.

"We want to collect revenue not by inflicting pain on people, but by involving all in the process, providing incentives to businesses and accelerating economic activities."

"We think if there is new investment in the country and businesses run smoothly, more revenue can be collected through the usual process."

Former finance minister AMA Muhith, Planning Minister MA Mannan, Commerce Minister Tipu Munshi, Agriculture Minister Md Abdur Razzaque, Finance Secretary Abdur Rouf Talukder, National Board of Revenue Chairman Md Mosharraf Hossain Bhuiyan, and Bangladesh Bank Governor Fazle Kabir were present.