Kazi Zahidul Hasan :
Economic analysts on Tuesday said that the ruling Awami League government would face big challenge to increase tax revenue and generate jobs in the next fiscal due to election year economic uncertainty.
Historically, Bangladesh economy remains sluggish and even GDP growth declines in an election year. It recovers only after the election.
“The election year economic uncertainty has already appeared in the scene with looming inflation, trade deficit, banking sector irregularities, sluggish investment and revenue shortfall,” Dr AB Mirza Azizul Islam, a leading fiscal analyst, told The New Nation yesterday.
He said the economic downturn fuelled by election year factors would hamper the government’s revenue collection target in the next fiscal and thereby affect its development agenda.
The government plans to set Tk 3,40,000 crore revenue collection target for the next fiscal. The revenue collection goal for fiscal 2017-18 is Tk 287,990 crore.
Finance Minister AMA Muhith recently said the next fiscal year’s budget would be between Tk 460,000 crore and Tk 475,000 crore. He said the revenue target would be fixed in such a way that budget deficit remains within 5.0 per cent of GDP.
“The government has planned to set a higher revenue collection target for next fiscal projecting a 18 per cent year-on-year growth. However, the NBR’s revenue collection target is likely to set at Tk 290,000 crore, up 16.84 percent from Tk 248,190 crore in the current budget, which does not match with the election year’s economic reality,” he added.
He said any shortfall in revenue collection would put the government in a tight corner to implement its development budget in next fiscal.
Dr Mirza Azizul Islam, a former Finance Adviser of the Caretaker Government, further said what can the government do in the budget is to raise fund both by cutting some low priority spending and raising revenues, particularly through a series of measures to curb loopholes that are used particularly by very high-income people to avoid paying taxes.
About the government’s next fiscal budget, he said, “It should be focused on necessary expenditure in the productive sectors to spur growth and job creation. Adequate budgetary allocation should go to improvements in infrastructure, education, training, export diversification and scientific research.”
At the same time, the government should take necessary steps in spending cuts in its non-development budget and measures should be taken on widening tax net (direct tax) from high-income earners.
“Election year factor creates an unfavourable economic conditions leading to slowdown in economic activities, revenue collection and job opportunities,” Dr Salehuddin Ahmed, former Bangladesh Bank (BB) Governor, told The New Nation yesterday.
He said the economic slowdown will remain this time also posing big challenge for the government’s revenue mobilization, acceleration of investment and job creation.
Analyzing the election year’s macroeconomic conditions, Dr Salehuddin Ahmed said, “If we observe since 1990 until now, the trend in election year economic indicators, then it shows that consistently in election years there is a measurable decline of economic growth.”
When asked, he said, “The upcoming national budget should give trust on revival of economy, overcoming challenges at the economic front, particularly resolving the energy crisis and reducing non-development expenditures.”
Dr Salehuddin Ahmed also said the budget will also focus on introduction of reforms for improving governance, capacity building in projects implementation, and development of energy and infrastructure and boosting private sector investment.”
“These are the bases for development of industries. Once industries are developed it would create huge job opportunities, narrow down the trade deficit and help develop more diversified export products,” he noted.
