UNB, Dhaka :
Executive Director of the Centre for Policy Dialogue (CPD) Prof Mustafizur Rahman has emphasised enhancing institutional capacity and establishing good governance to implement the budget for the 2016-17 fiscal.
Finance Minister A.M.A. Muhith is expected to place a proposed Tk 340,600 crore budget in Parliament on Thursday. “We need to concentrate on implementation of the budget through enhancing the institutional capacity of different agencies for revenue collection, budgetary expenditure, and resource mobilisation,” Rahman told UNB.
The noted economist said, unless the prescription is followed, the targets will prove unachievable and the budget will need to be revised downwards. Prof. Rahman however said the upcoming budget size over Tk 340,000 crore should not be considered ‘big’, in view of the current economic situation, population size and socio-economic challenges facing Bangladesh. “It is less than 20 percent of the country’s GDP, whereas it is often 30-35 percent in many developing and developed countries. So the size of the budget is not that high,” he said.
Bangladesh is in need of “mega infrastructures” to enhance its business competitiveness, according to Dr Rahman. “Bangladesh needs many types of investment. So, the size of our budget is not big to my consideration.” The CPD Executive
Director mentioned a number of challenges in both resource mobilisation and expenditure. In terms of resource mobilisation, he said the challenges will lie in attaining the target of VAT collection, preventing tax evasion through plugging leakages and loopholes in collection of internal resources, widening the direct tax net, exploiting digitalisation and preventing illicit financial outflows.
In case of expenditure, he said the major challenges will be to enable smart financing and allocative efficiency in terms of both revenue expenditure and development expenditure (ADP), establishing good governance, and implementing projects in time avoiding cost escalation. Dr Rahman further said the budget should maintain coherence with the UN-declared Sustainable Development Goals (SDGs) and targets relating to the 2nd year of the 7th five-year plan. He also pointed out the bottleneck posed by the narrow tax net in the country.
“Only 12 lakh people pay taxes now, but withholding taxes are collected from some 40 lakh accounts. If we can prepare a digital database of withholding tax payers, it’ll be possible to bring those 40 lakh people under the tax net,” he said. On the much-hyped ‘mega-projects’ expected to receive special attention in the budget, Dr Rahman insisted they should be cost effective with good governance, to ensure expected returns and low user fees. The CPD leader referred to a study by the Implementing Monitoring and Evaluation Division (IMED), which found the average period of a project in Bangladesh is 2.9 years but implementation takes five years, escalating the cost by 51 percent. Moving on, Dr Rahman expressed his concern over the rise in non-performing loans (NPL)in the banking sector. He believes reforming the banks is essential to getting rid of the inefficiency driving up these loans.
Turning to allocation for the education sector, he said according to UNESCO, a developing country like Bangladesh should allocate 20 percent of budget and 6 percent of GDP for the education sector, but the current allocation in Bangladesh is 11 percent of budget and less than two percent of GDP. “I think we should emphasise not just horizontally expanding education, but also vertical deepening of education. That means looking at the quality of education, promoting scientific and technical education.”
About the current fiscal’s budget, he said although the government has recently estimated that the shortfall in revenue collection will be Tk 31,000 crore, the final figure would touch Tk 40,000 crore, as projected earlier by CPD. His parting note was to urge preparing the budget with a realistic approach that is cognizant of the revised budget of the previous fiscal. Only then will it contain targets that are achievable.
Executive Director of the Centre for Policy Dialogue (CPD) Prof Mustafizur Rahman has emphasised enhancing institutional capacity and establishing good governance to implement the budget for the 2016-17 fiscal.
Finance Minister A.M.A. Muhith is expected to place a proposed Tk 340,600 crore budget in Parliament on Thursday. “We need to concentrate on implementation of the budget through enhancing the institutional capacity of different agencies for revenue collection, budgetary expenditure, and resource mobilisation,” Rahman told UNB.
The noted economist said, unless the prescription is followed, the targets will prove unachievable and the budget will need to be revised downwards. Prof. Rahman however said the upcoming budget size over Tk 340,000 crore should not be considered ‘big’, in view of the current economic situation, population size and socio-economic challenges facing Bangladesh. “It is less than 20 percent of the country’s GDP, whereas it is often 30-35 percent in many developing and developed countries. So the size of the budget is not that high,” he said.
Bangladesh is in need of “mega infrastructures” to enhance its business competitiveness, according to Dr Rahman. “Bangladesh needs many types of investment. So, the size of our budget is not big to my consideration.” The CPD Executive
Director mentioned a number of challenges in both resource mobilisation and expenditure. In terms of resource mobilisation, he said the challenges will lie in attaining the target of VAT collection, preventing tax evasion through plugging leakages and loopholes in collection of internal resources, widening the direct tax net, exploiting digitalisation and preventing illicit financial outflows.
In case of expenditure, he said the major challenges will be to enable smart financing and allocative efficiency in terms of both revenue expenditure and development expenditure (ADP), establishing good governance, and implementing projects in time avoiding cost escalation. Dr Rahman further said the budget should maintain coherence with the UN-declared Sustainable Development Goals (SDGs) and targets relating to the 2nd year of the 7th five-year plan. He also pointed out the bottleneck posed by the narrow tax net in the country.
“Only 12 lakh people pay taxes now, but withholding taxes are collected from some 40 lakh accounts. If we can prepare a digital database of withholding tax payers, it’ll be possible to bring those 40 lakh people under the tax net,” he said. On the much-hyped ‘mega-projects’ expected to receive special attention in the budget, Dr Rahman insisted they should be cost effective with good governance, to ensure expected returns and low user fees. The CPD leader referred to a study by the Implementing Monitoring and Evaluation Division (IMED), which found the average period of a project in Bangladesh is 2.9 years but implementation takes five years, escalating the cost by 51 percent. Moving on, Dr Rahman expressed his concern over the rise in non-performing loans (NPL)in the banking sector. He believes reforming the banks is essential to getting rid of the inefficiency driving up these loans.
Turning to allocation for the education sector, he said according to UNESCO, a developing country like Bangladesh should allocate 20 percent of budget and 6 percent of GDP for the education sector, but the current allocation in Bangladesh is 11 percent of budget and less than two percent of GDP. “I think we should emphasise not just horizontally expanding education, but also vertical deepening of education. That means looking at the quality of education, promoting scientific and technical education.”
About the current fiscal’s budget, he said although the government has recently estimated that the shortfall in revenue collection will be Tk 31,000 crore, the final figure would touch Tk 40,000 crore, as projected earlier by CPD. His parting note was to urge preparing the budget with a realistic approach that is cognizant of the revised budget of the previous fiscal. Only then will it contain targets that are achievable.
