Ahead of his 10th budget, Finance Minister AMA Muhith acknowledges some of his failures, going so far as to say that he was “frustrated” for not being able to collect taxes as projected or implement the much hyped district budget. But the octogenarian English graduate and policymaker of five decades dodged questions about the major mishaps that rocked the banking sector under his watch, during an hour long interview with a handful of reporters yesterday at his office. Dhaka Tribune
's Asif Shawkat Kallol has more.
What is your philosophy for the upcoming budget?
The government cannot provide more service to citizens without a big budget. We started with a budget outlay of Tk94,000 crore and the next budget is Tk340,000 crore. At the start of our second tenure, I spoke to my friends [his colleagues at the ministry] and our secretaries about where I want to see the Bangladesh economy in 2018-2019 fiscal year when we officially achieve middle income status. The next budget is in line with that goal. At the end of our second tenure, the budget should reach Tk500,000 crore.
Although, according to the latest data, there was an 8% revenue shortfall in the last budget, I believe we have a solid ground in the current fiscal year because of good economic performance. I am confident that our economic targets including GDP growth will be achieved. We know there are deficiencies in budget targets. We are putting hard work into finding out new avenues of revenue earning.
How do you plan to implement the VAT law that is supposed to be effective from July 1 next fiscal year?
There has been a lot of confusion with the new VAT law. I cannot operate a VAT system unless people are paying up. I hope that local business leaders including the FBCCI will extend their cooperation to the government in implementing the VAT law.
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The attempts to introduce district budget have failed. But my objectives have been achieved
When will Bangladesh become a welfare state?
In two years, we are hoping to formulate some kind of regulation to introduce private sector pensions. The government will contribute in these pension schemes. And by the end of our tenure, we will introduce universal pension and social safety net for every citizen of Bangladesh.
Are you giving more incentives to new export oriented businesses?
We will have to look at what percentage of the total export volume a business constitutes before handing out incentives. New export industries will get some incentives. Other existing exporters' incentives will be slightly adjusted.
What is our progress towards becoming a middle income country?
According to the World Bank Atlas we already are a middle income country. The United Nations will make its review of middle income countries in 2018. I am quite sure about we will make the list. I have told the UN General Assembly that if Bangladesh achieves its economic targets regularly, it will reach the Sustainable Development Goals in 2024, six years before the deadline.
Are there any surprise elements in the next budget like you did with district budgets before?
The attempts to introduce district budget have failed. But my objectives have been achieved; we found out what we are spending and where we are investing at the district level. We will do reforms in district administration finances based on these findings.
I will focus on digitising land records in this budget. If we do this, revenue earnings will grow several folds from land taxes, collection of land revenue and property transfers. My proposal in the next budget is to transfer land revenue collection to district administrations.
Is your government facing an image crisis with the banking sector mishaps like Hallmark scam, Basic Bank forgery and the recent central bank
reserve fund heist?
Well, but the banking sector expansion has been unprecedented. More people are now under the banking system than ever before. The Bangladesh Bank heist has delayed our plans to launch the Banking Commission but we will do it within the next fiscal year.
But I am concerned about the capital deficit at the state banks. We may have to raise their funds from the capital market.
What is in the budget on environment?
I have failed to introduce the green tax, but the climate funds will continue. Development partners highly appreciate our climate change fund. I was against continuing the fund because the Environment Ministry failed to collect funds from development partners. We have spent $324 million in climate change projects.
Also, more funds will go to health and education as fuel subsidy has dropped.
Has the investment situation improved in Bangladesh?
Confidence is building up among investors. We are trying to reform policies to increase their confidence. Overall investment situation in the country is quite good.