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Friday, June 14, 2019 10:46:01 PM
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Achieving key goals in doubt

Budget offers little surprise

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Kazi Zahidul Hasan :
Terming the proposed budget for the fiscal 2019-20 as a business 'as usual', leading Economists on Friday expressed their doubt about achieving the key budgetary goals.
Giving their reactions to the proposed budget, they said that the Finance Minister took the traditional path in formulating the budget which lacks necessary reforms to address the problems flagged with regard to unemployment, weak private investment, slow ADP implementation and banking crisis.
Finance Minister AHM Mustafa Kamal on Thursday placed the National Budget for the fiscal year 2019-20 in the Parliament, with a record outlay of Tk 5,23,190 crore.      
In the budget, he proposed lofty income, expenditure and GDP growth targets despite scarce resources, unsatisfactory revenue income and poor
capacity of public agencies to implement the Annual Development Programme (ADP).
"The proposed budget set out 'unrealistic' income and expenditure targets. But it does not elaborate strategies and programs how to raise income and spend more funds given the current capacity of the government agencies and departments and present macroeconomic conditions," Dr AB Mirza Azizul Islam, a noted economist and former Finance Adviser of Caretaker Government, told The New Nation.
He also said that the proposed budget contains no major reforms to address the growing unemployment problem and inequality, sluggish private investment and poverty reduction.        
"The proposal to create Tk 100 crore start-up fund for youth and crop insurance are the positive side. But without these two, the new budget seems to be business as usual," said Dr Mirza Azizul Islam.
He also said that government might face daunting challenge in attaining the revenue collection target for the next fiscal given the current macroeconomic scenario and capacity of the Revenue Board.
The Finance Minister in the budget projected total revenue earnings at Tk 3,77,810 crore. Of the amount, the National Board of Revenue (NBR) is to mobilise Tk 3,25,600 crore.
The growth of NBR's revenue collection has been projected at 18 per cent higher than the revised receipt of the outgoing fiscal.  
"I am damn sure that the Revenue Board will not be able to reach the target when overall import, including capital machinery, fell significantly showing signs of a potential showdown in economic activities," cited Dr Mirza Azizul Islam.
He also mentioned that implementation of a big ADP would remain challenging for the government.  
"The proposed budget is desirable but unachievable," Dr. Ahsan H. Mansur. Executive Director of Policy Research Institute (PRI), told The New Nation.
He said the budget sets ambitious goals of revenue collection, expenditure and GDP growth but it reflects no economic reality.
"Our expectation was that the budget would be driven by economic reality but we did not see its reflection in the proposed budget. So, most of the budgetary goals of next fiscal may not be achieved," cited Dr. Ahsan Mansur.
He mentioned that enrollment of new VAT law would not yield much benefit in mobilising additional revenue, rather it pave way for anomalies in the system.
Regarding the NBR's revenue collection target for the upcoming fiscal, Dr. Ahsan Mansur said that it is no way to achieve the target under the current system of tax administration.
"The NBR is incapable and incompetent to realise such a big revenue," he commented.
Dr Ahsan Mansur, a former IMF economist, in his assessment said that the proposed budget is 'as usual' without major reforms. Even it offers little surprise for masses and real sectors.  
He also observed that the budget does not reflect the macroeconomic reality of the country and it does not take necessary measures to address the emerging economic challenges.
"Even the finance minister in his budget speech does not spell out concrete measures to overcome the ongoing banking crisis," he said.     
Dr Ahsan Mansur found three key challenges on the way to implementation of the proposed budget, which are falling revenue income, sluggish private investment and limited capacity of government machinery.
"The size of the budget is increasing each year, but we have not been able to increase the capability to implement it. Proper implementation of the budget is necessary to promote investment, growth and job creation," he added.

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