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Development Resources from Bangladesh Capital Market - Masih Malik Chowdhury FCA, FCS
O
ptions for Resources for Development
Resources are needed to foster economic growth for a take off to sustainable development. In Bangladesh we have entrepreneurship and human resources at home and abroad which are enormously driving up the economy. Our natural resources are also available. These resources can be tapped from various sources. These among the domestic means are Public borrowings, Tax, VAT, Import & Customs duties, other fiscal means, Bank finances, Stock market, Private sector borrowings & savings. The external means are Foreign grants, loans from multilateral and bilateral agencies & foreign direct investments.
BANK FINANCE IS VERY EXPENSIVE WITH OVER 16% EFFECTIVE RATE OF INTEREST. THIS MEANS HIGH COST OF FUND LEADING TO HIGHER PRODUCT PRICES. AS A RESULT ULTIMATELY THE CONSUMERS SUFFER. THUS CAPITAL MARKET CAN ENSURE LESS COSTLY PRODUCTS. MANY LACUNAE OF CAPITAL MARKET HAVE BEEN REMOVED. TO ATTRACT NEW INVESTMENTS.
Government’s Role in Capital Markets for Economic Development Households are net savers, and their savings are used by entrepreneurs to invest. The rate of investments in a particular economy to a large extent depends on the savings rate of the households which, are channeled into investments depending upon the return on
Figure 1 Financial Intermediation and Economic Growth
From amongst these sources the domestic savings mobilization should be relatively easier. In context of development budget in Bangladesh, there is only a meager deficit of less than 2% of GDP to be financed by external means. A properly functioning stock market can easily harness the resources making up for the shortfall quite well. january-march 2014
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