IMF Loan will not respite people from their plight

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Dhaka, 13th April 2012. Today Equity and Justice Working Group (EquityBD) an alliance of right based civil society organization has urged government to ensure open public and parliamentary debate in case of having any foreign loan under the name of assistance and development. EquityBD also opined that the latest $1 bln loan form IMF (International Monetary Fund) would not respite people form their livelihood plight as the loan is tied with lot of string which is globally proved anti-poor conditionality that has been pledged by our government to IMF and going impose in the name of so called macro finance stability.

According to the latest information, having IMF loan, our government has pledged to IMF to increase the VAT, automatic adjustment of fuel price and reducing the subsidies & deregulation imports. Those are being treated a major anti-poor policies in Bangladesh and also in other so called developing country.

EquityBD think that automatic adjustment of fuel price and imposing the VAT will increase the livelihood burden to poor people and their economic plight. The increased rate of VAT also would be harmful for our small entrepreneurs those are now life-line of our economy and treating a major sector for employment creation in Bangladesh. The IMF has been playing a duel role in this case to advising to the rich & developing countries and in case of developing, their hidden objective to condition of VAT impose actually to facilitate the MNCs (Multi National Corporations) market expansion, there will be hampering growth of local entrepreneurs and thus creating space for MNCs market expansions. Moreover IMF only emphasize on VAT in respect of local resource mobilization, they do not advice government to impose property tax, personal tax which is related to rich and elite people and taxing on MNCs, most of the time MNCs evade taxes in national level. IMF tried this advice in most of the African countries, which has failed to generate expected revenue augmentation; moreover it has hampered growth of local small entrepreneurs.

This is also reported that, at present, Bangladesh has been exercise and implementing highest rate of VAT comparing the other developing countries. According to the study, New Zeeland’s VAT rate is 12 % where the IMF insisting Bangladesh to impose VAT as a single rate of 15 %. In case of other developing countries like in Singapore, VAT is 5 %, Thailand 7 %, in Indonesia, Myanmar and in Vietnam it is 10 %, and in Nepal 13 %.

The implementation of automatic fuel adjustment policy will increase the all sort of commodity price those will go to the shoulder of poor people ultimately. EquityBD also think that the existing fuel subsidy is a result of government planning failure and it should not shift to shoulder on the poor people. In the same way deregulation of import market would be a dangerous for our government to stabilize the BoP (Balance of Payment) that is cried for.

EquityBD opined that, $1 billion is not any significant support considering the three years period maintaining BoP, because government existing BoP is not in crisis (as latest reserve is 9.87 billion US$) and it is manageable if government take the appropriate measure especially impose restriction on importing unnecessary, luxurious or lavish goods import, controlling capital flight etc are major setback maintaining BoP.

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