Revenue target main challenge

Say economists

Economists offered mixed reactions to the budget, saying that the size was expected, adding it would be quite a challenge to collect revenues in implementing the plans outlined by finance minister AMA Muhith.
Muhith, yesterday, placed the Tk 2.95 trillion budget in Parliament, with a thrust on increasing revenues to meet at least two-thirds of the budget allocations.
“The National Board of Revenue (NBR) had failed to fulfil its target, last year, in collecting revenue. Doubts remain on whether the NBR can fulfill the revenue collection target,” Khondaker Mustahidur Rahman, professor of economics at Jahangirnagar University, told The Independent.
The finance minister has placed the mega budget with a deficit of Tk 86,657 crore, he said.
Prof Rahman, who is also a former vice-chancellor of JU, said the finance minister expressed hope that a shortfall of Tk 30,000 crore will be covered by borrowings or grants from donors, another Tk 38,000 crore shortfall could be managed by raising loans from Bangladeshi banks, and a further Tk 17,000 crore shortfall would be covered by selling savings bonds. He added, “If a government fails to collect money from foreign donors—it has to fill the shortage through local banks. Besides, the collection of Tk 17,000 crore, by selling savings bonds, won’t likely be achieved, as the interest rate has already been reduced by 2 per cent.”
He said the food inflation rate remains tolerable, but the rates of inflation in medical and transportation sectors remain extremely high.
“Businessmen are not investing in industries, due to political uncertainty and high bank interest rates. As a consequence, scope of employment won’t increase. So, it'd be difficult to achieve a GDP growth of 7 percent,” Prof. Rahman said. The quality of investment should be increased, including reduction of bank loan interest, he added.
Referring to agriculture-based countries such as India, Malaysia and Thailand, Prof. Rahman said these countries had invested heavily in developing industries and have improved their overall economy.
Prof Abu Ahmed of Dhaka University said the allocation of resources was adequate in the budget and the finance minister has given special attention on banking and stock market sectors.
“The small traders in the stock market will benefited as they can keep income of Tk 25,000 as tax-free. Besides, three incentives have also been proposed for the stock market and income of banks will also increase. I don't think the budget has been bad,” he said.
The target of 7 per cent GDP growth is more realistic, Prof. Ahmed said, adding, “It'll be a big challenge for the government to implement the budget. The government has to ensure good governance, to implement the budget.”
The size of this year's budget has increased by 20 per cent compared to last year, Prof Anu Mohammad said.
“It’s a good looking budget—but there are doubts about its implementation. The finance minister placed the budget without identifying the reasons for not fulfilling the revenue target last year,” he said.

Revenue target main challenge

Say economists

Economists offered mixed reactions to the budget, saying that the size was expected, adding it would be quite a challenge to collect revenues in implementing the plans outlined by finance minister AMA Muhith. Muhith, yesterday, placed the Tk 2.95 trillion budget in Parliament, with a thrust on increasing revenues to meet at least two-thirds of the budget allocations. The National Board of Revenue (NBR) had failed to fulfil its target, last year, in collecting revenue. Doubts remain on whether the NBR can fulfill the revenue collection target, Khondaker Mustahidur Rahman, professor of economics at Jahangirnagar University, told The Independent. The finance minister has placed the mega budget with a deficit of Tk 86,657 crore, he said. Prof Rahman, who is also a former vice-chancellor of JU, said the finance minister expressed hope that a shortfall of Tk 30,000 crore will be covered by borrowings or grants from donors, another Tk 38,000 crore shortfall could be managed by raising loans from Bangladeshi banks, and a further Tk 17,000 crore shortfall would be covered by selling savings bonds. He added, If a government fails to collect money from foreign donorsit has to fill the shortage through local banks. Besides, the collection of Tk 17,000 crore, by selling savings bonds, wont likely be achieved, as the interest rate has already been reduced by 2 per cent. He said the food inflation rate remains tolerable, but the rates of inflation in medical and transportation sectors remain extremely high. Businessmen are not investing in industries, due to political uncertainty and high bank interest rates. As a consequence, scope of employment wont increase. So, itd be difficult to achieve a GDP growth of 7 percent, Prof. Rahman said. The quality of investment should be increased, including reduction of bank loan interest, he added. Referring to agriculture-based countries such as India, Malaysia and Thailand, Prof. Rahman said these countries had invested heavily in developing industries and have improved their overall economy. Prof Abu Ahmed of Dhaka University said the allocation of resources was adequate in the budget and the finance minister has given special attention on banking and stock market sectors. The small traders in the stock market will benefited as they can keep income of Tk 25,000 as tax-free. Besides, three incentives have also been proposed for the stock market and income of banks will also increase. I dont think the budget has been bad, he said. The target of 7 per cent GDP growth is more realistic, Prof. Ahmed said, adding, Itll be a big challenge for the government to implement the budget. The government has to ensure good governance, to implement the budget. The size of this years budget has increased by 20 per cent compared to last year, Prof Anu Mohammad said. Its a good looking budgetbut there are doubts about its implementation. The finance minister placed the budget without identifying the reasons for not fulfilling the revenue target last year, he said.