Originally posted in The Messenger on 4 June 2024
The national budget of Tk 8 lakh crore for the fiscal year 2024-2025 is scheduled to be presented in parliament on Thursday (June 6). Dr. Khondaker Golam Moazzem, the Research Director of the Centre for Policy Dialogue (CPD), has stressed the significance of achieving a sustainable situation in foreign transactions and initiating measures to bolster revenue collection in the proposed budget.
This eminent economist argues that it is imperative to scrutinize how the budget can enhance government expenditure management. The budget announcement should delineate the strategies or support mechanisms aimed at providing respite to the general populace from the unbearable inflationary pressures.
In an exclusive interview with MD Mahfuzul Islam of The Daily Messenger, Dr. Khondaker Golam Moazzem shared his thoughts and insights on the budget.
An unprecedented revenue collection target has been set in the budget. Is it realistically achievable?
Golam Moazzem: As in previous years, the revenue collection target set by the government in this budget will likely not be achievable in reality. However, it is heard that the government is slightly reducing tax exemptions in sectors currently enjoying tax benefits to increase revenue income. There are also initiatives to impose new taxes.
Some different initiatives are being taken in the budget. There is a tendency from the government’s side to explore how taxes can be easily imposed or collected. But it is not clear whether such initiatives will ensure tax justice.
In other words, we need to consider whether it is justifiable to collect money from certain sources while possibly avoiding others from which more could be collected. For example, special initiatives are needed to prevent tax evasion, stop tax avoidance, and expand the tax net. To implement these initiatives, digitalisation of the National Board of Revenue (NBR) and the legalisation of the tax system need to be considered. We need to observe carefully the kinds of infrastructural development initiatives included in the budget to support these efforts.
How should foreign borrowing be addressed in the budget?
Golam Moazzem: In terms of the balance of foreign transactions, loan repayments and debt servicing will pose significant challenges. It is crucial to consider how rationally new projects are being undertaken, the resulting interest burdens, and the terms of the loans being taken. We must ensure we are not taking on excessively costly loans or developing a tendency to take short-term loans to repay other loans. Thus, the issue of foreign loans is important.
How should subsidies be handled in the budget?
Golam Moazzem: It needs to be seen how much the government can reduce domestic demand. Currently, there are reports of various unnecessary government expenditures. These expenditures are visible in the budget structure. Additionally, there are many unnecessary projects that are still given priority. The government should exclude those.
It is also important to see what kind of initiatives are taken in subsidy management. Subsidy management should be handled in such a way that it does not put pressure on the general public while trying to reduce the subsidy. For example, if the subsidy is reduced in the power sector, it should not lead to an increase in electricity prices. Other solutions to the issue need to be explored.
Is there anything for controlling inflation?
Golam Moazzem: The main task of the government is to keep inflation under control. Special initiatives are necessary for that. This year, the government has planned to provide assistance to 4 lakh new poor beneficiaries. Along with increasing this number, the amount of assistance for them also needs to be increased. The allocation for the social safety net sector needs to be increased.
Is there any opportunity being given in the budget to whiten black money?
Golam Moazzem: It is being heard that opportunities are being given to whiten black money. We have never supported this and will not support it. These are the government’s motivational measures, which encourage the owners of black money. With this facility, the political government’s accountability is undermined to some extent. By giving opportunities to these dishonest people, honest taxpayers get demotivated. Honest taxpayers pay more taxes, while owners of black money pay less tax with special benefits. Instead, the government should stop the process of generating black money.
Thank you for your time.
Golam Moazzem: Thank you too.