The Centre for Policy Dialogue (CPD) on Friday expressed its scepticism about implementation of the budget, given the unrealistic growth and revenue targets against the backdrop of sluggish revenue performance. Terming the proposed budget “a surrealistic one”, the civil society think-tank said there was no realistic match between expenditure and revenue collection. It identified the financing of the deficit budget as a major challenge for the government as the sources that have been listed are not capable of supplying adequate funds.
“It will be difficult for the government to achieve the target in an election year amid heightening political tension,” said Debapriya Bhattacharya, distinguished fellow of the CPD, while addressing a press briefing on Friday. He emphasised the need for a mid-term review, taking the country’s overall socio-political situation into consideration.
The CPD organized the press briefing at BRAC Centre to express its initial reactions about the proposed budget. The briefing was also addressed, among others, by CPD executive director Dr. Mustafizur Rahman and officials Dr. Fahmida Khatun and Dr. Khandaker Golam Moazzem.
Dwelling on the country’s overall situation, including political unrest, Bhattacharya said hartals, anarchy and election-centric violence might put implementation of the budget at risk.
Considering the realities and global economic indicators, the government might need to bring changes, amendments and inclusions in the budget mid-term.
The government, Bhattacharya pointed out, has not set the priority areas for six months, which is necessary as it will not get a full tenure to implement the budget. “It is not clear how it will make ‘front-load’.”
Dwelling on the country’s overall macro-economic situation, which included decline of the private sector, inadequate revenue earnings, dependence on bank loans and a weakness in the country’s financial demands, Bhattacharya pointed out if the government fails to collect funds, there would be increased bank borrowings,
leading to increasing cash liquidity.
“If cash liquidity begins, the private sector will not get the loans it needs, resulting in reduction of investment in the private sector, which finally, would take a toll on the economy,” said the CPD fellow. The dependency on foreign fund and bank loans, Debapriya Bhattacharya said, will create problems for the private sector.
According to the CPD study, the USD 3bn target for foreign donations would be impossible to achieve, he added. In the previous budget, the target was USD 2.2bn, whereas the amount obtained was USD 1.2bn (in April 2013).
Finance minister AMA Muhith on Thursday announced a Tk. 2.22 trillion budget for fiscal 2013-14, with a deficit of Tk. 55,032 crore. The deficit financing would be met through foreign loans worth Tk. 23,720 crore and Tk. 33,964 crore from domestic borrowings.
The budget deficit has been projected at 4.6 per cent of the gross domestic product (GDP). To finance the deficit, the government has projected high foreign financing and increased borrowings from bank and non-bank financial institutions.
This budget has aimed at a growth of 7.2 per cent. But, according to the Sixth Five-Year Plan, the rate should have been 7.6 per cent. The minister has held himself back as there are shortcomings galore in the expectations for the current fiscal year, he said. The budget, which is the largest in the history of Bangladesh, will be very effective for the country if it can be implemented, Debapriya Bhattacharya said, pointing out that this budget will go through three governments. “Hence, this is a complex year.”
Bhattacharya said the target for revenue mobilisation by the National Board of Revenue (NBR) has been set at high levels. “We’ve much doubt over the NBR target. Emphasis needs to be placed on raising efficacy of tax administration, broadening the tax base, and gearing up income tax mobilisation efforts.” He also thinks it will be very difficult for the NBR to achieve the revenue collection target.
In his budget speech, Muhith expressed his confidence that the present government would be able to start construction of the Padma Multipurpose Bridge (PMB) project before its term ends. But the CPD fellow criticised the Tk. 68.52-billion allocation for the PMB and suggested that the government should seek foreign funding for implementing the mega project.
“The proposed investment for the agricultural sector is not adequate. This sector might require subsidies in the future,” Bhattacharya also pointed out.
Stating that there are windows in this budget for converting black money through the housing sector, Bhattacharya said this might push up land prices. “This sector will not benefit
from this.”
Almost Tk. 13 billion have been converted into white money in the first three years of the incumbent government, he said. “Considering the social and political harm done, we have not received proportionate benefits from such conversion.”
The CPD fellow also criticised the first-ever district budget allotted for Tangail. “I did not find it was a budget for districts in any way. This might just be called the government’s financial statement for Tangail district.”
-With The Independent input
