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13 June, 2019 12:57:48 AM
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Kamal eyes big

Finance minister plans to strengthen fiscal framework as he is set to unveil Tk 5.2 lakh crore budget today
Faisal Mahmud, Dhaka
Kamal eyes big

Finance minister AHM Mustafa Kamal is all set to announce the first full national budget of the third consecutive government formed by the country’s oldest political party, Awami League, in parliament today. The budget for FY2019-20 is likely to worth Tk 523,190 crore, about 12 per cent higher than last year’s proposed budget of Tk 468,200 crore. In a big move, the finance minister has a vision towards strengthening the fiscal framework.  

It is going to be a large and ambitious budget for which the government has set a revenue target of Tk. 3,77,810 crore, which is 17.92 per cent more than the one in the outgoing financial year (FY). Information obtained from the finance ministry hints that this time the government is not going to raise income tax rates.

Of the revenue earned in the current financial year, the National Board of Revenue (NBR) will collect Tk. 325,600 crore, which is around 16.28 per cent higher than the revised collection target of Tk. 280,000 crore in the current financial year. The target was 31.64 per cent higher in the current budget compared to the previous one.

This time, the highest expenditure, or Tk. 69,260 crore, will go for salary and allowances of government employees. This is 19.43 per cent more than that in the revised budget of the outgoing fiscal year. The development budget will also see a rise by 21.38 per cent to Tk. 202,721 crore. As a means to showcase the incumbent government’s achievements, a major focus of this year’s budget will be on speeding up implementation of several mega infrastructure projects, including the Padma Bridge, Rooppur Nuclear Power Plant and Metro Rail.

The government has already allocated one-fourth of the development budget for 14 mega projects, including the Padma Bridge, Metro Rail and the Rooppur Nuclear Power Plant. The development budget in the outgoing financial year is 16.95 per cent higher than that in the previous fiscal year.

After the communication sector, the second highest allocation will be made for the power sector. This sector is likely to get Tk. 26,017 crore, making up 12.83 per cent of the total outlay in the proposed development budget, he said. The infrastructure planning, water supply and housing sector may receive the third highest funding of Tk. 24,323 crore, or 12 per cent, and education and religion sectors will receive the fourth largest allocation of Tk. 21,379 crore, or 10.55 per cent of the proposed Annual Development Programme (ADP) for the next fiscal.

To cater to the need of the lower and lower middle class, the government plans to bring more people under the social safety net, without raising the allowance per person in most of the schemes. The number of beneficiaries who get allowances and food under the programme will go up by around 13 lakh to 89 lakh in this year’s budget.

In the ongoing fiscal year’s budget, it was 76 lakh. Like the previous year’s budget, the government plans to legalise black money by allowing it to be invested in industries with an aim to boosting private investment. Black money holders will not face any questions about the source of the money if they invest in industries and pay a certain amount of tax, a senior official in the Finance Ministry said.

The government believes that by boosting investment, the move will help generate employment in the private sector. The opportunity to legalise black money in the industrial sector was first introduced in FY 2003-04, but was withdrawn after two years.

In FY 2006-07, the caretaker government also offered the scope for converting illegal earnings into white money by paying a penalty. Neither instances resulted in a positive response, said revenue officials.

Economists of the country said that despite poor performances by government agencies in implementing the budgets over the last one decade, the government has set ambitious targets for itself in the new budget.

The budget implementation rate during the AL government’s tenure reached its peak at 87 per cent during the 2013-14 fiscal. It is estimated that the rate will fall to 74 per cent in the last completed financial year.

Criticising the current economic outlook, the Center for Policy Dialogue (CPD) on Tuesday said macroeconomic stability was strength of Bangladesh’s economy, but it has developed cracks and shows signs of weakness. About challenges facing the upcoming budget for the fiscal year 2019-20, the CPD identified three issues—revenue collection, reforms in the banking sector and addressing the exchange rate against the US dollar—as crucial for the government.

Issues like revenue collection, banking reforms, especially making the interest rate flexible, and addressing the exchange rate, would be very crucial, said Dr Debapriya Bhattachariya, distinguished fellow of the CPD. Failure in revenue collection has become an insurmountable barrier for Bangladesh’s economic development, said the CPD economist, warning that if the country fails to overcome this, it would squeeze out the investment opportunity needed for development.

“Implementation of development projects and ADP is being hampered due to failure in meeting the target of revenue collection,” he mentioned.    

According to the CPD, since the 2012-13 fiscal year, the ADP implementation rate was 90-95 per cent, which came down to 80-85 per cent in 2018. And as per the latest data available, about 48 per cent of the ADP has been implemented in the first three months of 2019. If the government tries to collect funds from sources other than revenue, economic weakness would possibly be aggravated, cautioned Debapriya.

“Allowing whitening of black money in the coming budget would be a departure from the Awami League’s electoral pledge,” Debapriya said. In the election manifesto, the AL had pledged to eradicate bribery, black money and earnings through muscle power, he mentioned.  

He also said that the government must realise the commitments made in the election manifesto, the Seventh Five Year plan and sectoral policies with regard to providing allocation for education, health, social protection and Sustainable Development Goals (SDGS).

Former Bangladesh Bank governor Atiar Rahman said the government has been allocating commendable shares of the national budget for sectors like education and health. However, these portions still remain lower than what are global norms and hence must be increased.

“For example, Bangladesh ought to allocate 6 per cent of its GDP for education and 3 per cent of its GDP for health. This means that these shares deserve to be doubled,” he added.  He also emphasised going beyond just allocating resources and focusing more on quality spending of the allocations. The former BB governor also said Bangladesh has to improve its tax-GDP ratio if it intends to enhance its performance in public financing.

“Bangladesh is currently under prudent and compassionate leadership,” Rahman added. He expressed hope that national budgets of coming fiscal years would reflect the prudence and compassion towards the masses.

SR

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Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
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Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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