Tuesday, 26 September, 2023

Budget projections illusory: CPD

Budget projections illusory: CPD

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The Centre for Policy Dialogue (CPD) has termed the budget projection as illusory for the new fiscal year as the government is targeting ‘destructive’ revenue measures, tightening private sector growth.

“The government has projected a wider operating expenditure narrowing the annual development programme. The more money will go for non-development sectors. The increasing bank borrowing will fuel the inflation further,” CPD Executive Director Fahmida Khatun told a press briefing at Lakeshore Hotel in Dhaka on Friday, sharing feedback on lofty budget of Tk 7.6 trillion for the 2023-24 fiscal year.

The economic think tank claimed that the ‘ambitious’ growth projection of 7.5 and taming inflation below 6 percent match with the reality.

“The government aims to raise Tk 1.32 trillion, or 17.37 per cent of the total expenditure from banking system. It will narrow space for private sector. It’s not clear to us how the lofty target of 27 percent growth in private sector credit in this reality,” Fahmida said.

She mentioned that there domestic industries are facing setback amid shortage of power and energy while foreign currency reserve under stress with downtrend of remittance.

The CPD also claimed that fiscal policies are mostly unachievable having a contrast with monetary policy of the central bank.

From now on, individuals -- who do not have taxable incomes -- will have to pay a minimum income tax of Tk 2,000 to avail 44 types of government services, according to budget speech of finance minister. Fahmida has urged the government to withdraw such measures immediately to in name of widening tax net.

CPD distinguished fellow Dr Mustafizur Rahman mentioned that the increasing volume of government borrowing from banking system may fuel inflation further as the money goes to non-productive sector.

“We have been advocating for formulating a ‘bank commission’ to supervise the system with zero tolerance. But, there is missing a wiliness to curb bad loan which topped to Tk 1.31 trillion setting new record for economy,” he said.

Dr Mustafiz has urged the government to concentrate on direct taxation on solvent one rather than imposing indirect tax on commoners who are worse victim of high inflationary pressure. 

CPD research director Dr Khondaker Golam Moazzem has mentioned that the smart budget has bypassed the required reformation in capital market.

“Everything being done for the capital market is on an ad hoc basis. As a result, the capital market is unable to stand. If the amount of tax avoided can be collected, the revenue can be increased by 42 percent ,” Dr Moazzem said.            CPD researchers have mentioned that Bangladesh expenses less than 1 percent of GDP to health sector which is worse allocation among other least developed countries. Dr Mustafizur suggested for increasing allocation for education and development of children as they will enter the workforce in future to drive the growth of economy.

CPD senior research fellow Towfiqul Islam Khan, research fellows Muntaseer Kamal and Syed Yusuf Saadat were also present on the occasion.