'There is no well-crafted action plan to implement the budget, strengthen revenue collection (and) deliver public expenditures'
The proposed national budget lacks clarity about the source of funding and is missing a proper action plan for its implementation, a leading independent think tank said yesterday.
The Dhaka-based Centre for Policy Dialogue (CPD) delivered its damning verdict a day after Finance Minister AMA Muhith placed the Tk 4.65 trillion budget for FY2018-19 before parliament on Thursday.
“The budget is, overall, one for maintaining the status quo,” Debapriya Bhattacharya, a distinguished CPD fellow, said while presenting the think tank’s analysis at a hotel in Dhaka yesterday.
“There is no well-crafted action plan to implement the budget, strengthen revenue collection (and) deliver public expenditures.”
The noted economist said the budget statement was more a review of the past than a focus on the future, and described it as a“an old-budget for a young country”.
“It lacks sensitivity towards existing and emerging macro stresses such as pressure on balance of payment and exchange rates, inflationary expectations, reducing unemployment and inequalities, and attention to areas requiring reforms,” Debapriya said.
Even though the proposed budget is over 16% higher than the original budget of the outgoing fiscal year, the CPD said Bangladesh will need additional investment to achieve the 7.8% GDP growth rate projected for FY19.
It estimated the sums required to meet this goal as Tk117,000 crore for the private sector and Tk30,000 crore for the public sector.
The government might also face challenges in bringing down the inflation rate to 5.6%, the think tank said, amid upward pressure on prices observed in the closing months of FY18.
“In our country, there is a trend that the rich get richer and enjoy more benefits than others,” Debapriya said. “The proposed budget will do nothing but promote this trend.”
Although the budget aims to broaden the tax net and provide protection to domestic market-oriented and import-substituting industries, some of the highly optimistic projections in revenue mobilization are highly unlikely to be attained, according to the CPD report.
“Without commensurate institutional strengthening and the much-needed reforms, the significant gap between high ambitions and actual achievements in mobilization of revenues will continue to persist,” the report noted.
“In terms of income tax, the demands of lower-income groups of taxpayers did not materialize, while the corporate taxation changes were geared not to stimulate investment but to succumb to pressure from the banking lobby. It is nothing but a wrong move.”
The CPD report pointed to a number of laudable fiscal measures to strengthen local industries and enhance revenue earnings.
However, it said the budgetary allocation for annual development programs (ADPs) is “nothing but business as usual”.
It noted a large number of projects with stagnated implementation capacity, and a rise in the number of unfunded projects.
“The government has undertaken those projects eyeing the impending general election,” CPD Distinguished Fellow Prof Mustafizur Rahman said.
Even so, the think tank said the long-awaited Padma Bridge is among the projects unlikely to completed within the current fiscal year.
The allocations for both education and health have also decreased.
In FY2018-19, the education sector is set to receive 11.4% of the total budget, down from 12.6% in the revised budget of FY18. For health, the allocation has fallen from 5.39% in the outgoing fiscal year to 5.03% for FY2018-19.
The think tank, however, praised the budget for outlining some commendable steps to help improve inclusivity, albeit mostly through short term measures.
These include enhancing safety net coverage, increasing surcharges on assets, and introducing a universal pension scheme for all.
“The support to social safety net programs is appreciated,” Debapriya said.
“(However), the medium to long-term challenges – inequality, both incomes and wealth, unplanned urbanization and some other pressing issues – remain ignored.”
CPD Research Director Khondaker Golam Moazzem and Research Fellow Towfiqul Islam Khan also spoke at Friday’s event, which was chaired by Executive Director Fahmida Khatun.