The finance minister has addressed the media a day after presenting the incumbent government’s last national budget
Finance Minister AMA Muhith is confident the Bangladesh economy can achieve his projected 7.8% growth target in the next fiscal year.
The minister addressed several queries in his traditional post-budget press conference on Friday, 24 hours after placing a Tk4,64,573 crore budget for FY2018-19 to parliament.
“Every target is an estimation (but) when we set a target, we consider all variables and find an achievable goal,” Muhith said.
“In setting the targets in a budget, a lot of factors are taken into consideration. There is shortfall in every budget but the possibility of missing targets in the next budget is low, and this will continue to fall in the years to come.”
On the subject of the upcoming parliamentary election, Muhith welcomed the “slow start” to campaigning and said this would be ultimately beneficial to the country.
“Usually, election activities start in April if the polls are at the end of the year, however this year the campaign has been slow to begin, which is good for the economy because it will not hamper the implementation of the budget,” he said.
Muhith was brazen when asked if he had kept one eye on the election as he drafted his budget.
“I am a member of a political party - not only that, an important member - therefore all my budgets are election-centric,” the finance minister said.
“I promised not to introduce new taxes and not to increase tax rates, and I have been able to keep my word.”
The finance minister defended his corporate tax policy amid concerns from business over a failure to make a blanket cut.
“Bangladesh's corporate tax structure is progressive,” he said. “We have reduced corporate tax for banks, insurance, and non-bank financial institutions from 40% to 37.5% because the rate is higher compared to other countries.”
Responding to the proposed budget, the National Board of Revenue (NBR) claimed that the revenue target set for FY19 is “achievable,” as the government has taken measures to widen the tax net, while people are increasingly tax-compliant.
“There are nearly 3.6 million Tax Identification Numbers (TIN) and this is increasing gradually because of the mandatory requirement of TIN in several matters such as taking out a trade licence or taking part in elections,” said NBR Chairman Md Mosharraf Hossain Bhuiyan.
“Also, the NBR is opening more offices around the country and taking steps to bring small traders under the Value Added tax (VAT) net in rural areas, which would ultimately help NBR reach the revenue target.”
Also in Friday’s press conference, Muhith conceded that he had changed his mind on forming a commission to consider banking reforms, despite previously describing such a move as “imperative”.
“Before the budget, I spoke about the formation of a banking commission to bring order to the banking sector, but it is not happening soon,” the minister said.
“I thought of forming the commission for the banking sector in near future, but I am not doing that.”
Trade bodies and financial experts have long been demanding that the government form a high-powered commission in the wake of a series of high profile scams, and to address the problems and irregularities crippling the financial sector.
The most recent commission for the banking sector was formed in 2004, however.
“We have completed all the paperwork, and we would like to leave this for the next government,” Muhith said. “It will depend on the next government what reforms are needed for the sector.”
The 84-year-old political veteran also acknowledged that he had not mentioned the interest rate of savings certificates in his 12th - and probably final - budget.
“Usually it is reviewed every two to three years but this year it is late (and) will be reviewed after the budget,” he said.
On the cost of housing the Rohingya refugees, Muhith said the government has kept an allocation of Tk400 crore in reserve.
“But we may not have to spend the money as the World Bank and Asian Development Bank are considering providing financial support,” he said.