International Business Forum of Bangladesh (IBFB) feared that the proposed bank borrowing in the budget might bring crowding out effect in the private investment that still reels particularly from political unrest and higher interest rate.
In the proposed budget, the government has set a target to borrow Tk31,000 crore from banking system in the next fiscal year, which is more than 4% from the revised budget of the outgoing fiscal year.
“Public borrowing from banks might increase further if the government fails to get the projected foreign loans. In that case, the situation might turn from bad to worse,” IBFB president Hafizur Rahman Khan said in a statement giving reaction to the proposed budget.
The government expected to receive foreign aid of Tk24,275 crore in the FY2014-15. About the budget size, Khan, however, said, “It is a big budget but time-befitting.”
IBFB identified that good governance and political stability is the key to implement the proposed budget.
“The government needs to increase administrative efficiency, to ensure good governance and political stability for implementation of the proposed budget,” said IBFB chief.
He added it is important to implement the such big budget right at this moment for taking its fruits to the door of the people. IBFB appreciated the budget for taking measures to protect local industry, including pharmaceuticals, LPG cylinder, iron and ispat, shipbuilding, paper, ceramic, rubber, electrical and plastic.
“Import duty reduction on raw materials and duty hike on finished products will help expand local industry,” Khan said. On the other hand, he said, withdrawal of tax at source for letters of credit opening will bring dynamism to the country’s dull business situation.
Terming revenue income target of Tk1,49,720 crore as “a bold step,” IBFB said it is necessary to ensure transparency, accountability and efficiency in the administrative level to achieve the revenue target.
The Forum demanded raising of tax-free income limit to Tk2.5 lakh and Tk3 lakh for women be reconsidered taking colossal damage of businesses caused by the political unrest and many other reasons into account.