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Press reports on CPD dialogue on Analysis of the National Budget FY2016

held as part of CPD IRBD programme at Lakeshore Hotel on Saturday, 13 June 2015.

View more press reports on the event

 

Published in Dhaka Tribune

Kamal outlines revenue collection plans

Tribune Report

CPD chairman says revenue generation is poor compared to any global measures

Planning Minister AHM Mustafa Kamal has outlined the revenue collection strategy to meet the budget deficit amid widespread concern over higher revenue target in the upcoming fiscal year.

“We need to raise revenue collection growth to 30% from 17-18% on an average now in the next fiscal year. It means an additional amount of more than Tk40,000 crore has to be collected,” he said.

Mostafa Kamal was addressing a dialogue on the proposed budget, organised by the Centre for Policy Dialogue (CPD) yesterday.

“Out of additional target, about Tk11,000 crore will be earned from widening tax net, making reforms to auditing, transfer pricing and Vat system, complete digitisation of revenue collection system and making ADR realistic,” he said.

Some Tk26,000 crore will come from outstanding revenue which was hit by litigation. All the cases related to revenue will be settled by this year, the minister said.

Besides, Tk4,500 crore will come from cigarette firms, Tk1,000 crore from mobile phone operators, Tk1,600 crore from garment sector and Tk400 crore from service sector.

In a post-budget press conference, Finance Minister AMA Muhith admitted that the revenue collection target is high and ambitious.

CPD Chairman Prof Rehman Sobhan presided over the dialogue.

He said over the years the country has done reasonably well in enhancing revenue collection.

“However, if we put ourselves into any international comparative measure on revenue generation, we are still doing very poorly.”

Rehman Sobhan said in terms of revenue to GDP ratio growth compared to most of the countries in the region, certainly way behind countries like Vietnam, Bangladesh is in fact very poor.

“So, whether you miss your target or not is less important. The problem is that overall, there is mountainous declining in terms of revenue generation activity.”

State Minister for Finance and Planning Abdul Mannan thinks the budget is a compromising document for any country as the government has to make budget under intense pressure from various sectors.

He said prioritisation is completely missing in the budgetary system of Bangladesh.

About economic statistical credibility, Abdul Mannan said no statistics in the world is credible. “We are not doctoring with the statistics. This is not a problem existing only in our country, but around the world.”

Ex-commerce minister and BNP leader Amir Khosru Mahmud Chowdhury blamed the sluggish private investment for not improving the GDP growth rate.

“For last eight years, the growth rate is sticking to around 6%. It is not increasing since the private investment is poor,” he said.

Amir Khosru said a group of people are looting public money from the state-owned banks under political patronisation and getting impunity.

He said: “Banking division is a big source of corruption. Board of Investment has become an ineffective institution.”

CPD executive director Prof Mustafizur Raman presented the keynote paper on the proposed budget.

He said the new budget has set a target of an additional Tk45,072 crore revenue collection with a 27.6% growth over the outgoing fiscal year.

Under the present circumstances, however, the required growth rate for revenue in the upcoming fiscal year may shoot up to around 36.3%, while for NBR the actual target may stand at around 37%, he said.

“The ambitious target will create a lot of pressure on the government to implement the budget,” the economist said.

 

Published in The Daily Star

Roadmap for revenue
Planning Minister Mustafa Kamal outlines budget financing as CPD holds discussion

Star Business Report

Planning Minister AHM Mustafa Kamal yesterday spelt out an outline for financing the proposed budget, removing the confusion on how the government would meet the 30 percent revenue growth target.

The disclosure came at a post-budget discussion organised by the Centre for Policy Dialogue at the capital’s Lakeshore Hotel.

The government proposed a revenue target of Tk 176,370 crore for fiscal 2015-16, an increase of Tk 40,942 crore over current year.

Of the additional revenue, Tk 11,166 crore will come from income tax, Tk 4,500 crore from cigarette makers and Tk 1,000 crore from mobile operators, Kamal said.

Garment exporters would chip in with Tk 1,600 crore and the services sector Tk 400 crore.

The remaining amount — of around Tk 20,000 crore – will come from transfer pricing, auditing of tax and alternative dispute resolution or ADR.

Some Tk 26,000 crore remains pending with the ADR. “We’ve to resolve these cases anyhow in the coming year,” said the minister.

Most of the discussants at the event said the fiscal targets set in the budget are unrealistic.

All of them criticised the government for poor implementation of the annual development programme but supported initiatives that would help the local industries to grow.

Many of the discussants also demanded withdrawal of tax on education in private institutions. Mustafizur Rahman, executive director of CPD, made a presentation on the budget, which was a summary of the findings of the think-tank’s extensive analysis.

He said the budget has been assessed on five broad criteria: clarity and credibility, alignment with medium-term priorities, efficacy of capital budget framework, justification of the allocations and quality of proposed management and monitoring.

The objectives of the budget appear to be high-revenue growth targeted for underwriting overreaching expenditure, harmonisation of taxes and tariffs to support selected domestic sectors and higher allocations for building physical infrastructure and capacities.

Reform initiatives will need to be given the highest priority if the current macroeconomic stability is to be translated into a journey of higher growth trajectory, Rahman said.

To break the decade-long 6 percent GDP growth-barrier, the CPD said the establishment of five independent commissions would be of great importance.

The commissions are: statistical validation, agriculture price, local government financing, public expenditure review and financial sector reform.

CPD also called for resumption of the stalled reform agenda concerning Public Services Act, PPP Act, Privatisation and Financial Reporting Act and implementation of VAT and SD Act 2012.

Amir Khosru Mahmud Chowdhury, a BNP leader, said private sector investment, which is the engine for growth, has not taken off the past few years due to insecurity, poor democracy and a lack of business-friendly environment.

The former commerce minister particularly criticised the continuous recapitalisation of state banks with taxpayers’ money, as it sends out a wrong signal and encourages the culprits “to loot money again and again”.

“The culprits have taken away thousands of crores taka from state banks. They have looted the money with state patronisation,” said Chowdhury.

The government allocated Tk 5,000 crore in the outgoing fiscal year for recapitalisation of state banks, with the lion’s share going to the scam-hit Sonali and BASIC banks.

The proposed budget for the coming year has also earmarked Tk 5,000 crore for the same purpose. AB Mirza Azizul Islam, former finance adviser to caretaker government, said the fiscal targets are unrealistic.

The size of the budget should be Tk 273,000 crore, he said, while blaming the administrative inertia and inefficiency for poor implementation of ADP. Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association, urged the government not to create further pressure on the existing taxpayers.

Prof Rehman Sobhan, chairman of CPD, came down hard on the successive governments for poor implementation of ADP.

“An explosion of expenditure [in ADP] happens in the last two months. Also, most of the projects remain behind schedule and get extended,” he said in his concluding remarks. In response, the planning minister said no projects other than the mega ones would be extended for more than two years.

He also said the government is planning on outsourcing the monitoring of ADP implementation to a firm.

 

Published in The Financial Express

Govt may outsource dev project monitoring

FE Report

The government plans to outsource the job of monitoring and supervision of projects implemented under the Annual Development Programme (ADP) from the next year with a view to improving quality as well as bringing back transparency and accountability.

Planning Minister AHM Mustafa Kamal disclosed this when the participants at a budget analysis made queries about the unusual delay in project execution and the poor quality of projects.

They also raised questions about the capacity of Implementation, Monitoring and Evaluation Division (IMED) and the extent of coordination among concerned ministries and divisions. Lack of capacity to handle the projects, they said, resulted in the creation of white elephants that tend produce negative results.

“You are spending a lot of money, but projects are not being implemented properly,” said Centre for Policy Dialogue (CPD) Chairman Professor Rehman Sobhan, who stressed the need for strengthening the capacity of IMED as well as independent evaluation of the development projects.

“Most of the works are done from April and onwards, mainly in monsoon,” said Prof Sobhan adding that even the government does not know what is being done with the money.

The local think-tank, CPD, organised the post-budget dialogue “Analysis of the National Budget FY 2015-16” at the city’s Lakeshore Hotel on Saturday. It was attended by a large number of economists, researchers, businessmen, academics and officials from government and non-government organisations.

Most of the speakers at the meeting pointed out that around 50 per cent of the ADP is implemented in the first 10 months of a financial year, and there is a rush in the remaining two months causing wastage of public money and hampering the quality of works.

The minister pointed out that measures would be taken to check misuse of fund and ensure proper implementation of the projects.

“No project director will be given the responsibility of more than one project,” said Mr Mostafa Kamal adding that training will be imparted to officials concerned to raise their efficiency level and even the bargaining ability to handle the issues of foreign assistance.

Although many of the speakers at the dialogue identified revenue collection as one of the major challenges for the next fiscal year, the planning minister sounded quite confident about reaching the revenue target.

He said reforms have been carried out in the National Board of Revenue (NBR), adding manpower of the NBR has been doubled and officials there have been trained. “We can get an additional amount of Tk 111.62 billion from NBR due to the reforms,” said the minister giving a break-up of deficit financing.

Portraying the government’s success in various macroeconomic indicators, the planning minister pointed out that the government will present a Tk 2.5 trillion ADP outlay within next three years.

“The ADP outlay was only Tk 215 billion during the period of BNP,” said the minister posing a oblique reference to BNP chairperson’s adviser Amir Khasru Mahmud Chowdhury, who at the function bitterly criticised the government for ‘plundering’ national resources.

Mr Cowdhury, also a former commerce minister, in his speech said that the country’s economic growth has become stagnant at around 6.0 per cent which was around 7.0 per cent in the FY07. He accused the government of destroying economic institutions.

He strongly criticised the government for setting aside Tk 50 billion for recapitalising the state-owned banks saying it is totally wastage of public money and plundering of national resources. “The cliques are plundering money from banks and capital market and the government is recapitalising those to facilitate more plunder,” said the former minister.

He lamented that despite being identified, the culprits behind the stock market scam are moving freely and through recapitalising the banking sector the government is giving a wrong signal.

Replying to queries from the audience regarding various demands like district budget, women budget and child budget State Minister for Finance M A Mannan, who attended the programme as the special guest, said the budget is hugely misused in Bangladesh, which no government could avoid. He termed it a ‘systematic misuse’. He said the government should fix its priority first in the budget.

“Prioritisation is completely missing in the budget,” said the minister adding that the budget is for all, not for a particular group. It serves the interest of all.

“The districts do not have any government and they do not have any income. Then how do you expect district budget?” asked the minister.

Adviser to the former caretaker government Dr. Mirza Azizul Islam also expressed his doubt about achieving the revenue target which he termed unrealistic because the recent historical data shows that it will be difficult.

Moderated by Professor Rehman Sobhan, the programme was addressed among others by Bangladesh Bank Chief Economist Biru Paksha Paul, ICB Managing director Md. Fayekuzzaman, former Tariff Commission chairman Dr. M Mozibur Rahman, BGMEA president Md. Atiqul Islam and Bangladesh Women Chamber of Commerce & Industry (BWCCI) president Selima Ahmad.

CPD Executive Director Dr Mustafizur Rahman presented the keynote paper on the subject showing how challenging attainment of the revenue target in fiscal 2015-16 will be. He identified poor fiscal planning, sluggish private investment, domestic borrowing, poor revenue generation, poor utilisation of concessional financing like project aid as some of the major challenges the economy will confront in the next fiscal.

 

Published in BSS

Widening of tax net stressed

DHAKA, June 13, 2015 (BSS) – Speakers at a dialogue on the national budget 2015-16 today suggested the government to expand the tax net and modernize the collection system to meet the revenue target.

They said if the tax net is not widened and strengthened the collection would remain low forcing the government to go for bank borrowings.

Centre for Policy Dialogue (CPD) organized the dialogue in a city hotel to analyze the proposed budget for FY16.

Finance Minister Abul Maal Abdul Muhith on June 4 unveiled the national budget of Taka 295,100 crore for fiscal 2015-16, where revenue collection has been set at Taka 208,443 crore in which the NBR would contribute Taka 176,370 crore.

CPD Executive Director Professor Mustafizur Rahman made a keynote presentation on the proposed budget in which he suggested the government to bring some reforms in the financial sector for implementation of large budget.

CPD advocated for expediting the reform agendas such as public services Act, PPP Act, privatization and financial reporting Act which remained stalled.

The private think-tank body recommended forming five independent commissions for statistical, agriculture price, local government financing, public expenditure review and financial sector reform towards better macroeconomic management.

Speaking on the occasion as the chief guest, Planning Minister A H M Mustafa Kamal said all the macro-economic indicators give clear indication that proposed budget is implementable.

“We’ve set a goal, and we know the problems and ways of solutions . . . so we are confident that we can implement the budget,” he said.

Replying to the remarks of BNP leaders Amir Khasru Mahmud Chowdhury about the low rate of private sector investment, Kamal said: “when any entrepreneurs see frequent hartal, blockade and petrol bomb why he/she would be interested to invest in the country.”

“Bangladesh economy is moving ahead in a way a balanced economy should run,” the planning minister pointed out.

Terming the budget as a “document of compromise”, State Minister for Finance and Planning M A Mannan said the government has to formulate the budget having consultations with different stakeholders and pressure groups.

Criticizing the proposed budget, BNP leader Amir Khasru Mahmud Chowdhury said investment is the key component of the growth, but for the last few years the private sector is showing reluctance to investment in the country, which forced the public sector to increase its investment.

He said the government has failed to bring reforms in the financial sector that’s why the sector lost dynamism.

Moderated by the CPD Chairman Professor Rehman Sobhan, economists, academicians, bureaucrats, businessmen, politicians and representatives of stakeholders took part in the dialogue.

 

Published in News Today

Rev collection target biggest challenge: CPD

Centre for Policy Dialogue (CPD) on Saturday observed that achieving the revenue collection target in the proposed budget for FY 2015-16 will be the biggest challenge for the government, reports UNB.

The civil society think tank came up with the observation at a dialogue titled ‘Analysis of the National Budget FY 2015-16’ arranged at a city hotel. Planning Minister AHM Mustafa Kamal, State Minister for Finance and Planning MA Mannan, CPD Chairman and noted economist Prof Rehman Sobhan and Chittagong city BNP president Amir Khasru Mahmud Chowdhury were present at the programme.

CPD executive director Prof Mustafizur Rahman presented the keynote paper at the dialogue where he identified a number of challenges to implementation of the proposed budget as regards to macroeconomic context, fiscal framework, budgetary measures and reforms. One of the major challenges of the proposed budget is the revenue collection, he said, adding that the revenue deficit in the outgoing budget is nearly Tk 30,000 crore.

The budget implementation will be disrupted if the revenue collection target fails, said the CPD executive director. An additional investment of Tk 57,000 crore in the private sector is required to achieve the projected 7 percent GDP growth, said Prof Mustafizur.

“Implementing annual development programme (ADP) of Tk 97,000 crore will be another big challenge for the government.” Speaking at the programme, Rehman Sobhan mentioned that the revenue expenditure target appeared to be alright but financing of fiscal framework is somewhat questionable as financing is increasingly being dependent on the anticipation of high foreign funding.

Mustafa Kamal, the chief guest of the programme, highlighted a number of achievements of the government in formulating and implementing the budget as well as the government’s step-by-step planning regarding financing the budget.

The other major challenges as identified by the CPD are declining allocation for the social sectors, health and agriculture, lack of governance in ADP implementation, and a number of budgetary and fiscal measures related to taxation, customs and supplementary duty, private investment, incentive in power and energy, discontinued initiatives and necessary economic and institutional reforms.

Former caretaker government adviser Dr AB Mirza Azizul Islam, Bangladesh Bank Chief Economist Dr Biru Paksha Paul, Bangladesh Tariff Commission Chairman Azizur Rahman and BGMEA president Atiqul Islam also spoke at the programme.

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