Govt considering reforms in tariff structures and gradual reduction of cash assistance

The government is considering reforms in tariff structures and a gradual reduction of cash assistance for of Bangladesh's sustainable graduation from the least developed country (LDC) status, said Finance Minister AHM Mustafa Kamal during budget 2023-24 speech today. 

"At the same time, we are trying to explore alternatives to cash assistance (incentive) to ensure that the growth of the export sector is not hampered," the minister said presenting the FY2024 budget on Thursday (1 June). 

''The government is providing policy support in exports by identifying the highest priority sectors, special development sectors, as well as special development service sectors. However, in the post-LDC graduation era after 2026, measures such as the rationalisation of tariff structures and gradual phasing out of cash assistance in export accounts have to be undertaken in compliance with the prescribed criteria of the World Trade Organisation rules. Therefore, we need to keep in mind the realities of post-graduation and take necessary preparations," he added. 

The Bangladesh Bank has already reduced lending to exporters from reserves through the Export Development Fund (EDF). The $7 billion fund has been brought down to $5 billion.

Besides, exporters have been discouraged from taking loans by increasing the interest rate on EDF loans.

Apart from this, the central bank has set up a local currency fund called the Export Facilitation Pre-finance Fund (EFPF) of Tk10,000 crore for exporters.