bdnews24.com :
Size is not an issue but Bangladesh’s government has to toil hard to implement its planned Tk 3.41 trillion budget, economists say.
The huge allocations proposed for education and health are commendable, they add, but the plans seem blurry in power and manpower. Finance Minister AMA Muhith presented his mega plans for the 2016-17 fiscal in Parliament on Thursday. It relies heavily on VAT for funding large expenditures and raising revenue income. Growth target is 7.2 percent along with a goal to contain average inflation within 5.8 percent.
Mohammed Farashuddin, a former governor of Bangladesh Bank, sees positive times ahead for the economy, while AB Mirza Azizul Islam highlights doubts in his immediate reaction. Researcher Zaid Bakht was disappointed with what he said were unclear parts inside the financial plans. Dr Farashuddin appreciated the increase in the allocation for education and health sectors. He said the government would have to work harder for reaching the revenue earning target and to enhance ADP implantation skills to implement the budget.
Referring to the 7.2 percent growth target and present 1.2 percent population growth, Farashuddin said, “It means our per capita income will grow at 6 percent. I think it implies that the Bangladesh economy is on the right track.” He does not agree with the contention that the budget, which is 29 percent higher than the current fiscal year’s initial outlay, is ambitious. “In my judgement, in no way is this budget ambitious.
The proposed budget is equivalent to 17.2 percent of the GDP against an ideal 1:3 ratio,” he said. The ex-governor called the growth target ‘conservative’. “The 7.05 percent growth will be achieved in the current fiscal. Everything in and outside the country is favourable. The growth target for the upcoming FY could be higher.”
This budget, in his opinion, could lead the country to economic emancipation dreamt by the Father of the Nation Bangabandhu Sheikh Mujibur Rahman. He suggested an increase in the number of taxpayers and more efforts by the tax officers to raise the revenue collection.
“Only 1.2 million people of a 160 million population pay taxes. Revenue earning won’t increase unless the number goes up,” he said. Farashuddin advised the government to put in more efforts to ADP implementation. A former advisor to the caretaker government, Mirza Azizul Islam thinks the government will be sweating to execute the fiscal plans. A gap in actual revenue income and development spending will continue to remain like in the past several years. “The difference between target and execution keeps getting bigger every year. It looks like there will be a continuation this year.” It will especially be impossible to execute the budgetary plans on revenue collection, NBR’s tax revenue, non-tax revenue and Annual Development Plan (ADP).
The reliance on foreign financing for meeting a Tk 978.53 billion deficit will also pose a problem, he said. “The foreign loan target is not an issue. But the problem is we can’t use it. There is almost $22 billion in the pipeline. Getting loans is not an issue, putting the money to use is.”
There has been a lot of talk about the slow strides in private investment but economist Zaid Bakht thinks there may be hope in the new plans. In this case, the budget’s big size is positive because it marks a continuation. “We did well with expansive budgets even at a time of global depression.”
The special allocations set aside for big projects should attract private investment, said the research director for Bangladesh Institute of Development Studies (BIDS).
“Not everything will fall in place with high government spending. Private investment is needed here. So there is an effort here to raise the quality of this expenditure. “There are separate budgets for mega projects like the Padma Bridge. This, if successful, will bring in good results in terms of private investment.”
Public-private partnership can show the way if capital for investment runs dry, he said. Export processing zones can also play a vital role in investment and creating jobs. “It will be a success story when we build some EPZs,” he said. The economist is, however, frustrated with some points of the budget.
“The crisis of power, energy and gas is a serious problem. It was said that work is in progress in this field, but nothing specific was mentioned,” he said. “But it (being specific) is needed for retail production. There was also no guideline as how to the related projects would be implemented quickly,” he added.
According to Bakht, tax at source should be cut for readymade garment and “some other” sectors.
He also emphasised development of manpower. “We are hiring managers from India, Sri Lanka. We’ll have to stop it by improving the skills of our own manpower. But there was nothing specific on the issue in the budget,’ he said.
Size is not an issue but Bangladesh’s government has to toil hard to implement its planned Tk 3.41 trillion budget, economists say.
The huge allocations proposed for education and health are commendable, they add, but the plans seem blurry in power and manpower. Finance Minister AMA Muhith presented his mega plans for the 2016-17 fiscal in Parliament on Thursday. It relies heavily on VAT for funding large expenditures and raising revenue income. Growth target is 7.2 percent along with a goal to contain average inflation within 5.8 percent.
Mohammed Farashuddin, a former governor of Bangladesh Bank, sees positive times ahead for the economy, while AB Mirza Azizul Islam highlights doubts in his immediate reaction. Researcher Zaid Bakht was disappointed with what he said were unclear parts inside the financial plans. Dr Farashuddin appreciated the increase in the allocation for education and health sectors. He said the government would have to work harder for reaching the revenue earning target and to enhance ADP implantation skills to implement the budget.
Referring to the 7.2 percent growth target and present 1.2 percent population growth, Farashuddin said, “It means our per capita income will grow at 6 percent. I think it implies that the Bangladesh economy is on the right track.” He does not agree with the contention that the budget, which is 29 percent higher than the current fiscal year’s initial outlay, is ambitious. “In my judgement, in no way is this budget ambitious.
The proposed budget is equivalent to 17.2 percent of the GDP against an ideal 1:3 ratio,” he said. The ex-governor called the growth target ‘conservative’. “The 7.05 percent growth will be achieved in the current fiscal. Everything in and outside the country is favourable. The growth target for the upcoming FY could be higher.”
This budget, in his opinion, could lead the country to economic emancipation dreamt by the Father of the Nation Bangabandhu Sheikh Mujibur Rahman. He suggested an increase in the number of taxpayers and more efforts by the tax officers to raise the revenue collection.
“Only 1.2 million people of a 160 million population pay taxes. Revenue earning won’t increase unless the number goes up,” he said. Farashuddin advised the government to put in more efforts to ADP implementation. A former advisor to the caretaker government, Mirza Azizul Islam thinks the government will be sweating to execute the fiscal plans. A gap in actual revenue income and development spending will continue to remain like in the past several years. “The difference between target and execution keeps getting bigger every year. It looks like there will be a continuation this year.” It will especially be impossible to execute the budgetary plans on revenue collection, NBR’s tax revenue, non-tax revenue and Annual Development Plan (ADP).
The reliance on foreign financing for meeting a Tk 978.53 billion deficit will also pose a problem, he said. “The foreign loan target is not an issue. But the problem is we can’t use it. There is almost $22 billion in the pipeline. Getting loans is not an issue, putting the money to use is.”
There has been a lot of talk about the slow strides in private investment but economist Zaid Bakht thinks there may be hope in the new plans. In this case, the budget’s big size is positive because it marks a continuation. “We did well with expansive budgets even at a time of global depression.”
The special allocations set aside for big projects should attract private investment, said the research director for Bangladesh Institute of Development Studies (BIDS).
“Not everything will fall in place with high government spending. Private investment is needed here. So there is an effort here to raise the quality of this expenditure. “There are separate budgets for mega projects like the Padma Bridge. This, if successful, will bring in good results in terms of private investment.”
Public-private partnership can show the way if capital for investment runs dry, he said. Export processing zones can also play a vital role in investment and creating jobs. “It will be a success story when we build some EPZs,” he said. The economist is, however, frustrated with some points of the budget.
“The crisis of power, energy and gas is a serious problem. It was said that work is in progress in this field, but nothing specific was mentioned,” he said. “But it (being specific) is needed for retail production. There was also no guideline as how to the related projects would be implemented quickly,” he added.
According to Bakht, tax at source should be cut for readymade garment and “some other” sectors.
He also emphasised development of manpower. “We are hiring managers from India, Sri Lanka. We’ll have to stop it by improving the skills of our own manpower. But there was nothing specific on the issue in the budget,’ he said.
