The interest rates of banks might increase further in the coming days, fears Prime Minister's Private Industry and Investment Adviser Salman F Rahman.

"The government had controlled the bank interest rate for a long time, but now due to rising interest rates on deposits, it will not be possible to keep it under control in the future", he said at a discussion meeting with the newly elected committee of the Federation of Bangladesh Chambers of Commerce & Industries (FBCCI) at the Bangladesh Investment Development Authority (BIDA) conference room in Agargaon of the capital on 7 September 2023.

Business leaders highlighted various challenges of the country's trade and various harassments of the revenue department. In response, Salman F Rahman advised the FBCCI to work closely with the revenue department to resolve the crisis.

"It is the government's job to ensure a competitive business environment. It is not the government's responsibility to ensure profit for traders," he said.

He urged the businessmen present to be ready to face the challenge of increased interest as the government has challenges in collecting revenue.

Tough tax was reduced in the face of trader's demands but revenue has not increased at the desired rate. So, he urged businessmen to pay taxes regularly to maintain the continuity of development.

He pointed out that in the past, the interest rates in the country were as high as 17-18% even though international interest rates were quite low during that period. 

He went on to say, "The Libor rate was less than 1%. Moreover, neighbouring countries also maintained lower interest rates. Consequently, there was a perception that the country's banks were earning excessive profits, and it became challenging for businesses to thrive with interest rates as high as 16-17%.

"To address this issue, the prime minister later imposed a limit on interest rates, capping them at 9%. This naturally led to a decrease in deposits. This practice has been successfully maintained for an extended period, with the government effectively controlling bank interest rates for a considerable duration."

Mentioning that interest rates are now high in major economies worldwide, he said, "With the absence of Libor, the prevailing SOFR [Secured Overnight Financing Rate] stands at around 5%. The interest rate for borrowing in dollars is now between 8-9%, whereas private sector institutions used to borrow dollars at 2-3% interest in the past. As a result, this shift in global interest rates is expected to impact the interest rates within the country."

Salman F Rahman stated that Bangladesh Bank has already made the 9% cap flexible by providing a formula, which created a band in treasury bonds. 

"As a result, the rates started to rise. However, the cap has not been fully lifted to prevent the rates from rising to previous levels of 16-17%. Consequently, if the treasury bill rates increase in the auction, the commercial rate will also rise," he added.

Businesses not concerned about political instability before elections

The prime minister's private industry and investment adviser has expressed that businessmen are not worried about any political instability ahead of the forthcoming national elections. 

He pointed out that the country has enjoyed political stability in the past 15 years, and many business leaders are confident that this stability will persist throughout the upcoming elections.

Mentioning that all the national elections were held as per the constitution, he affirmed that the upcoming parliament election will also be conducted in accordance with the constitutional framework.

Commonwealth Trade & Investment Forum to be held in Dhaka on 13-14 Sept

Salman F Rahman informed that the two-day 'Commonwealth Trade & Investment Forum' will be held in Dhaka on 13-14 September.

The forum is going to be organised by Commonwealth Enterprise and Investment Council (CWEIC) in partnership with the Bangladesh Investment Development Authority (BIDA), Ministry of Foreign Affairs and ZI Foundation.

Speaking about the event, Salman said the Forum will offer a platform for promoting trade, investment, and economic growth.

"Bangladesh will be able to showcase its trade and investment opportunities before the Commonwealth countries during the forum. It will be a win-win situation for everybody," he said.

Salman informed that this is the 1st ever 'Commonwealth Trade & Investment Forum' going to be organized in Bangladesh.