SINGAPORE: Three interest rate hikes this year by the US Federal Reserve makes sense given the strong labour market in the US, and an economy that is doing well, said John Williams, president and CEO of the Federal Reserve Bank of San Francisco.

"The US economy is about as close to the Fed's dual mandate goals as we've ever been," Mr Williams said in Singapore on Monday.

Mr Williams said that with US unemployment at 4.4 per cent and inflation on track to reach the Fed's 2 per cent goal next year, the data indicates that the US economy has fully recovered from the recession.

To meet the deficit, the government will borrow Tk48,960 crore from the banking sector

New law provides for refund of VAT

The Value Added Tax (VAT) Wing of the NRB has requested Power Division to declare the current electricity tariff plus 5% VAT as supply price following enforcement of the new VAT law from July 01 next.

VAT policy member Jahangir Hossain sent a letter to the power division secretary on Tuesday to consider the present power tariff at the consumers' level as MRP (maximum retail price).

VAT Wing has taken the move to dispel fear among consumers about the possible rise in power tariff after implementation of a uniform VAT rate under the new VAT and Supplementary Duty Act 2012.

Currently, there is 5.0 per cent VAT on power tariff that might be raised to 15 per cent after implementation of the new law from July 1.

The NBR letter said now there exists 15 per cent VAT indirectly and 5.0 per cent directly on power tariff.  

Power Division pays 15 per cent VAT on purchase of inputs, including fuel, gas and coal, under the existing VAT Law 1991. It will be able to claim refund of the paid VAT under 'input credit system' according relevant provision in the new VAT law. The provision is not there in the current law.

As the government offered VAT exemption in power generation and imposed 5.0 per cent truncated-base VAT on supply stage, Power Division is not allowed to claim the tax refund on inputs.

The new law has addressed the 'distortion' in the VAT system. Valuation process of products and services will be changed in the new VAT law.

Consumers will pay less VAT to the government under the new law even though power tariff remains the same, the letter said.

The existing VAT law has two processes - VAT inclusive and exclusive, but the new law has the provision to conduct valuation only on VAT inclusive. Prices of services and products will be VAT inclusive under the new law.

For example, per unit power tariff is Tk 9.0 and after adding five per cent VAT (Tk 0.45) it stands at Tk 9.45. In the new law, VAT on power tariff will be calculated to the amount of Tk 1.23 on the total power tariff of Tk 9.45.

However, Power Division can claim refund on the paid VAT on purchase or import of inputs for power generation.

Syed Waseque Md Ali, Managing Director of First Security Islami Bank Ltd. inaugurating its Rahattarpul Branch at Chittagong City on Tuesday. SM Nazrul Islam, Head of General Services Division, Md Wahidur Rahman, Chittagong Zonal Head of the bank and local

Forty one bankers from the country’s 17 commercial banks participated in the ICC Austria Global Trade Finance Week held recently in Vienna, Austria.

The three-day event was also attended by more than 200 bankers from EU countries and discussed issues related to letters of credit, bank guarantees and credit risks, said a media release of International Chamber of Commerce Bangladesh (ICCB).
ICCB President Mahbubur Rahman was the chief guest at the concluding session of the 11th Global Conference on Letters of Credit, International Trade Finance Week. He mentioned that Bangladesh needs to enhance its capacity and efficiency in the banking sector on a priority basis as the country is now 41st largest economy in the world with a GDP of US$270 billion growing at 7.2 percent per annum.

Merchandise export is US$40 billion and merchandise import is US$ 43 billion and both are growing at a healthy rate as depicted by the GDP growth, Rahman said, adding that ICCB has arranged jointly with ICC Austria the event in Vienna for the bankers as EU is the largest export destination for the garment industry.

ICCB Banking Commission Chairman Muhammad A (Rumee) Ali and Helal Ahmed Chaudhury, former managing director of Pubali Bank and Member of ICCB Banking Commission were invited as speakers by ICC Austria to talk on Risk Management and Corporate Governance and Challenges of Correspondent Banking Relationship for Banks respectively.

ICCB Secretary General Ataur Rahman also attended and briefed the participants about the activities of ICCB. He also proposed to arrange a similar event jointly with ICC Austria in Bangladesh early next year.

The delegation members included Md. Hashem Chowdhury, Additional Managing Director and Chief Operating Officer of Mutual Trust Bank Limited, Amin Uddin Ahmed and Tariqul Islam Chowdhury, deputy managing directors of Sonali Bank Limited, Shah Md. Abdul Bari, deputy managing director of EXIM Bank Limited, Md. Abdul Hye.