The upcoming budget represents numerous challenges for the government to tackle, not limited to the ceaseless inflation which has resulted in a cost of living crisis and the rising prices of staples.
However, one particular aspect that the government must address is its dependency on loans -- especially for its annual development program -- which has resulted in Bangladesh’s private sector finding it increasingly difficult to borrow from our banking sector.
According to the Centre for Policy Dialogue, due to low revenue collection the government has found it increasingly hard to fund its annual development program without resorting to borrowing from the banking system. This has resulted in private sector borrowings becoming all but crowded out of the system, which does not bode well for the sector.
The upcoming budget for the Fiscal Year 2024-2025 then needs to keep the needs of the private sector in mind. Private entrepreneurship has steadily proven itself as a major driving force of Bangladesh’s economy in the past few decades, but much of that success has been achieved with a distinct lack of state support and far too many hurdles which hinder entrepreneurs.
Since revenue collection is cited as one of the reasons behind the government having to constantly dip into bank borrowing, there is no other way out than taking the necessary steps to widen our tax net. Taxes are indeed a necessary practice that we must all contend with, but the way that Bangladesh’s tax culture enshrouds the entire operation with its lack of fiscal transparency only fuels the public’s distrust with the system.
A lot of Bangladesh’s current progress can be attributed to our thriving private sector, which is why it is that much more unfortunate that administrative failures are ultimately what is stunting the private sector’s potential growth.