The meeting between Finance Minister Saifur Rahman and representatives of some two dozen non-government organisations (NGOs) however could not decide on the mode of subsidy distribution.

The suggestion strongly pursued by the NGO leaders was for introducing a direct farm subsidy system in which the farmers would obtain benefits using subsidy coupons.

Agreeing with the concept the finance minister noted that although a coupon system might prove useful, no one could ensure that it would not be misused. "It can just happen that the person in charge of issuing the coupons to the farmers will issue them to non-farmers and other favoured people," Saifur remarked.

He asked the NGOs to draft a proposal outlining the mechanism for delivering such direct subsidies.

Among the NGOs represented in the meeting were Brac, Save the Children, ActionAid, ASA, Care, World Vision, Caritas and Gono Sakkhorota.

The NGO leaders urged Saifur to lower the interest rate on loans given by the government-sponsored Palli Karma Sahayak Foundation (PKSF) by 1 percent.

The PKSF provides loans to small NGOs at 3.5 percent interest rate and to big ones at 7 percent. The NGOs, in their turn, lend this money to farmers and other borrowers charging a 15-percent interest. Recently, the PKSF has instructed the NGOs not to charge their borrowers more than 12.5 percent interest from July 1. The NGOs' request for reduction of the interest rate on PKSF loan was made in this context.

The finance minister brushed aside the request saying, "The spread between your cost of fund and interest on loans is wide enough -- from 8 to 10 percent. So, you should rather consider narrowing the spread."

The NGOs also suggested to Saifur that a part of the annual budget spending on social, education and health sectors might be utilised through the NGOs in order to get better results.

The finance minister promised them to look into the proposal.

"The PKSF is already there to support you. In addition, we are working on setting up the NGO Foundation," he noted.

"Through the PKSF and the NGO Foundation, the government can give funds to NGOs for safety net programmes and education, health, nutrition and sanitation projects. We do want to increase our involvement with NGOs," he said.