Kazi Zahidul Hasan :
Economists on Friday said that the government should set realistic budgetary targets and projections along the lines of recent macro-economic development, otherwise, implementation of budget will face a lot of challenges.
They said, the government always sets lofty budgetary target keeping fiscal measures unchanged, and later it proved very difficult to reach the targets.
“The budget should strike a balance between spending and revenue earnings. It should also focus on controlling government spending, reduce wastage and widen the tax net to mobilize additional revenues without putting additional burden on the existing tax-payers,” Dr AB Mirza Azizul Islam, a former Finance Adviser to a caretaker government, told The New Nation yesterday.
He said such interventions are necessary to help stabilise government finances and avoid deepening debt.
“In the last few years, budgets set ambitious revenue collection targets. But the targets were cut back when it proved impossible to achieve. So, the next budget should fix a reasonable revenue collection target in view with the economic reality. Otherwise, budget implementation will face serious challenge, ” said Dr AB Mirza Azizul Islam.
Pointing to the recent revenue collection situation, he said, the government has fixed Tk 2.96 trillion as the revenue collection target for the NBR for the current fiscal year. But the collection has fallen short by a huge margin during the first eight months forcing the government to cut revenue collection target to Tk 2.80 trillion.
From July-February of this fiscal year (2018-19), the National Board of Revenue (NBR) managed to collect Tk 1,33 trillion revenue against the annual target of Tk 2.96 trillion, leaving the board to collect Tk 1,62 trillion more revenues in remaining months of this fiscal year.
“The government is largely depending on revenues to meet its development and non-development expenditure. Shortfall in collection will not only affect the development pursuit of the government, but it will also force the government for costly internal borrowing
that will push up its debt,” he added.
He also cited that each budget also set high GDP growth projection, which does not match with the latest statistics and indicators of State of Economy. When asked, Dr AB Mirza Azizul Islam said that most important goal of the next budget should be creating jobs and lifting stagnant private investment.
He said, infrastructure constraint and high cost of doing business are holding back investment. The new budget should set appropriate policies to improve the situation.
Finance Ministry officials said, the government is likely to announce a Tk 5.25 trillion budget for the next fiscal year with a special focus on lifting rural economy and job creation.
The Budget Management and Resource Committee under the Finance Ministry in its latest meeting outlined the size of the next fiscal’s budget (2019-2020).
The next fiscal’s budget will be 11.50 percent higher than the Tk 4.64 trillion budget of the current fiscal year (2018-19), which is 16 per cent bigger than the original budget of the previous fiscal (2017-18).
The size of the budget for fiscal year 2017-18 was Tk 3.41 trillion and it was 15.5 per cent larger than the budget for the fiscal year 2016-17.
The revenue collection target for the next fiscal will be Tk 3.78 trillion, of which the National Board of Revenue will collect Tk 3.25 trillion, according to Finance Ministry projection.
“The government used to set ambitious targets while formulating budget but many of the macroeconomic targets were dead on arrival. The government is going to miss some key budget targets this year also,” Dr Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI) of Bangladesh, told The New Nation.
He said, government fixes unrealistic budgetary goals and finally it cannot be implemented fully.
“The next budget should be prepared with realistic views with significant structural and policy changes,” he said adding that implementation of new VAT law and reform in the tax system are necessary to achieve the next fiscal’s revenue collection target,” he said.
Mansur also said that the main challenge for the new budget would be to increase the private sector investment, which has remained stagnant for the last few years.
“The budget should focus on booting investment to spur growth along in job creation. It should take a realistic view to improve ease of doing business as well as on plans to rapidly facilitate new investment in private sector,” he said.
Dr Ahsan H Mansur cited that the government is going to place another mega budget keeping up its policy continuity.
“But it would face daunting challenge to implement the budget unless significant changes are being brought in the fiscal measures with capacity building measures for Ministries and public agencies.”
The government is likely to project the growth in gross domestic product (GDP) at 8.2 per cent and the rate of inflation at 5.5 per cent for financial year 2019-2020, according to Finance Ministry officials.
The new budget is likely to earmark Tk 2.02 trillion for the Annual Development Programme (ADP), which is 17.18 per cent higher than the original ADP size of Tk 1.73 trillion for the current fiscal year.
“The government is likely to present another expansionary budget considering the development needs of the country. The budget is expected to set ambitious goals also,” said Zaid Bakht, Chairman of Agrani Bank.
He said implementation and the financing would be challenging if the government does not set the goals realistically.
“Prudent fiscal management is also necessary to reap benefit from a realistic budget,” Zaid Bakht said.
Economists on Friday said that the government should set realistic budgetary targets and projections along the lines of recent macro-economic development, otherwise, implementation of budget will face a lot of challenges.
They said, the government always sets lofty budgetary target keeping fiscal measures unchanged, and later it proved very difficult to reach the targets.
“The budget should strike a balance between spending and revenue earnings. It should also focus on controlling government spending, reduce wastage and widen the tax net to mobilize additional revenues without putting additional burden on the existing tax-payers,” Dr AB Mirza Azizul Islam, a former Finance Adviser to a caretaker government, told The New Nation yesterday.
He said such interventions are necessary to help stabilise government finances and avoid deepening debt.
“In the last few years, budgets set ambitious revenue collection targets. But the targets were cut back when it proved impossible to achieve. So, the next budget should fix a reasonable revenue collection target in view with the economic reality. Otherwise, budget implementation will face serious challenge, ” said Dr AB Mirza Azizul Islam.
Pointing to the recent revenue collection situation, he said, the government has fixed Tk 2.96 trillion as the revenue collection target for the NBR for the current fiscal year. But the collection has fallen short by a huge margin during the first eight months forcing the government to cut revenue collection target to Tk 2.80 trillion.
From July-February of this fiscal year (2018-19), the National Board of Revenue (NBR) managed to collect Tk 1,33 trillion revenue against the annual target of Tk 2.96 trillion, leaving the board to collect Tk 1,62 trillion more revenues in remaining months of this fiscal year.
“The government is largely depending on revenues to meet its development and non-development expenditure. Shortfall in collection will not only affect the development pursuit of the government, but it will also force the government for costly internal borrowing
that will push up its debt,” he added.
He also cited that each budget also set high GDP growth projection, which does not match with the latest statistics and indicators of State of Economy. When asked, Dr AB Mirza Azizul Islam said that most important goal of the next budget should be creating jobs and lifting stagnant private investment.
He said, infrastructure constraint and high cost of doing business are holding back investment. The new budget should set appropriate policies to improve the situation.
Finance Ministry officials said, the government is likely to announce a Tk 5.25 trillion budget for the next fiscal year with a special focus on lifting rural economy and job creation.
The Budget Management and Resource Committee under the Finance Ministry in its latest meeting outlined the size of the next fiscal’s budget (2019-2020).
The next fiscal’s budget will be 11.50 percent higher than the Tk 4.64 trillion budget of the current fiscal year (2018-19), which is 16 per cent bigger than the original budget of the previous fiscal (2017-18).
The size of the budget for fiscal year 2017-18 was Tk 3.41 trillion and it was 15.5 per cent larger than the budget for the fiscal year 2016-17.
The revenue collection target for the next fiscal will be Tk 3.78 trillion, of which the National Board of Revenue will collect Tk 3.25 trillion, according to Finance Ministry projection.
“The government used to set ambitious targets while formulating budget but many of the macroeconomic targets were dead on arrival. The government is going to miss some key budget targets this year also,” Dr Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI) of Bangladesh, told The New Nation.
He said, government fixes unrealistic budgetary goals and finally it cannot be implemented fully.
“The next budget should be prepared with realistic views with significant structural and policy changes,” he said adding that implementation of new VAT law and reform in the tax system are necessary to achieve the next fiscal’s revenue collection target,” he said.
Mansur also said that the main challenge for the new budget would be to increase the private sector investment, which has remained stagnant for the last few years.
“The budget should focus on booting investment to spur growth along in job creation. It should take a realistic view to improve ease of doing business as well as on plans to rapidly facilitate new investment in private sector,” he said.
Dr Ahsan H Mansur cited that the government is going to place another mega budget keeping up its policy continuity.
“But it would face daunting challenge to implement the budget unless significant changes are being brought in the fiscal measures with capacity building measures for Ministries and public agencies.”
The government is likely to project the growth in gross domestic product (GDP) at 8.2 per cent and the rate of inflation at 5.5 per cent for financial year 2019-2020, according to Finance Ministry officials.
The new budget is likely to earmark Tk 2.02 trillion for the Annual Development Programme (ADP), which is 17.18 per cent higher than the original ADP size of Tk 1.73 trillion for the current fiscal year.
“The government is likely to present another expansionary budget considering the development needs of the country. The budget is expected to set ambitious goals also,” said Zaid Bakht, Chairman of Agrani Bank.
He said implementation and the financing would be challenging if the government does not set the goals realistically.
“Prudent fiscal management is also necessary to reap benefit from a realistic budget,” Zaid Bakht said.
