Published in The Independent on Thursday, 3 June 2016
Revenue target raises jitters
Economists have expressed apprehensions over the implementation of the proposed budget, particularly achievement of its revenue target, as the government lacks the capability to mobilise resources for such an ambitious target.
They pointed out that the Tk. 2,42,752-crore revenue target was 26.92 per cent higher compared to the revised target of revenue (Tk. 177,400 crore) in the current fiscal year.
They, however, conceded that the government has brought about some positive changes in the allocations, by increasing the budgetary allocations in the education and health sectors.
Former adviser to the caretaker government, Dr AMB Mirza Azizul Islam, told The Independent that the target of the National Board of Revenue (NBR)—of achieving Tk. 2,03,152 crore—was quite unrealistic as the NBR lacks efficiency. He suggested widening the tax net in rural areas and mobilising new taxpayers to achieve the budget’s target.
Dr Mirza Aziz also pointed out that the finance minister has relied on domestic sources to meet the expenditure instead of foreign financing. He observed that the finance minister has set a target to mobilise Tk. 61,548 crore from domestic borrowings and Tk. 38,938 crore from the banking system, while Tk. 30,789 crore will come from foreign borrowings.
He said the government would have to shoulder the burden of interest of domestic loans. However, it would have been easy for the government if it could have mobilised loans from external sources, he argued.
Similarly, Dr Ahsan Mansur, executive director of the Policy Research Institute of Bangladesh, said the budgetary targets of the government are in line with the Seventh Five-Year Plan (SFYP).
But the revenue target is a challenge for the government. It is difficult to achieve a higher target, he noted, as in previous fiscal years, the government could not achieve the revenue target. Regarding the deficit of Tk. 97,853 crore or 5 per cent of the gross domestic product (GDP), Dr Mansur said it is tolerable and manageable. He also emphasised the need to build up the capability of the NBR to mobilise revenues.
Centre for Policy Dialogue (CPD) executive director Prof. Mustafizur Rahman also expressed apprehensions over whether the revenue target would be achieved. He also said it would be tough to implement the budget without building up the government’s efficiency.
Regarding inflationary pressures, the CPD’s executive director said the government may not succumb to inflationary pressures in the upcoming fiscal year, as the international market is favourable for Bangladesh.
Finance minister AMA Muhith has set a target of 5.8 per cent inflation in the next fiscal, which, he observed, was achievable. He also said achieving the revenue target would be tough, as the VAT law will be effective from July 2017.
In respect of the overall income and expenditure of the government, he said the government has increased these to the tune of 30 per cent on an average on both sides. He did appreciate the initiative of the finance minister for employment generation, however, saying that it was a positive aspect of the budget.