Finance Minister unveils national budget
07 Jun 2018, 12:58 | updated: 07 Jun 2018, 13:04
Dhaka: Finance Minister AMA Muhith placed the national budget for the 2018-19 fiscal in Parliament on Thursday with all the indicators pointing to another expansionary budget in keeping with the AL government’s previous budgets.
The Finance Minister started rolling out the budget at about 12:30pm.
Earlier, the Cabinet at its special meeting on Thursday approved the proposed budget of 4,64,573 crore BDT for the new fiscal year (2018‐19).
The last budget of the AL-led coalition’s second successive term in power is also the 12th budget for Muhith personally, who before AL delivered two budgets under H.M. Ershad in the 1980s, reports the UNB.
It will see him draw level with the late Saifur Rahman, whose twelve budgets were delivered under Khaleda Zia, Ziaur Rahman and Abdus Sattar.
Although precise details remain undisclosed till Muhith’s budget speech in Parliament tomorrow, he has hinted that it will clock in more or less around the Tk 468,000 crore-mark ($58 million).
Experts believe the Finance Minister is likely to focus on development initiatives, employment generation and welfare in the budget as the national election will be held at the end of this year.
Muhith himself however has pushed back on this idea, pointing out the need for expansionary budgets for a country with such a large population as Bangladesh, irrespective of elections.
Even as he has pursued fiscal expansionism though, the finance minister has been resolute in not letting the budget deficit spiral beyond 5 per cent of GDP – which has been achieved despite the size of the budget more than quadrupling in these last ten years.
Talking to reporters on Monday, Muhith wished for higher revenue earnings, encouraged by the number of taxpayers having reached almost 3.3 million, with a large chunk of the newly registered ones being young people.
“I feel very good after 10 years,” Muhith said, adding that when he started people were unwilling to pay taxes due to harassment. “I don’t think it exists anymore in the country.”
Ten years ago the number of taxpayers in Bangladesh hardly crossed 1 million. The trebling of this number can be related to Muhith’s economic vision, since his expansionary fiscal policies has not relied on foreign aid, but rather on challenging the National Board of Revenue, or NBR, to exponentially increase its collections, either through cutting down on tax dodging or bringing more people under the tax net.
The revenue collection target for the coming fiscal year is likely to be fixed at Tk 340,775 crore, up 18 percent from the Tk 287,990 crore set for the current, outgoing fiscal.
Finance Ministry officials said the revenue target will be fixed in such a way so that the budget deficit remains within 5 percent.
Muhith in his budget is expected to unveil an annual development programme (ADP) for the coming fiscal that is likely to be in the region of Tk 178,000 crore.
To get some perspective on that, consider that the first three budgets in their entirety that Muhith announced since the AL’s return to power in 2009 amounted to Tk 114,000 crore, Tk 132,000 crore and Tk 160,000 crore.
Earlier, Planning Minister AHM Mustafa Kamal forecast that the Bangladesh economy will attain GDP growth exceeding 8 percent in the next fiscal, up from the 7.7 percent this year.
Muhith in the budget is likely to work with a GDP growth target of 7.8 percent, officials have said on numerous occasions.
There might be an announcement to bring more people under social safety net programme in the next budget, officials said.
There is an indication that there will be another announcement for freedom fighters on enhancing their facilities.
Sources at the Finance Ministry said the number of income taxpayers in the country has increased significantly and it is still rising – encouraged by this, Muhith has been sounding out an idea to bring down the corporate tax rate for companies.
In a pre-budget discussion, the Finance Minister indicated that the tax rate will be reduced as the number of taxpayers is on the rise – although this doesn’t necessarily mean a cut in the existing rates. The government may just raise the tax-exempt ceiling.
The government is also taking steps to form a banking commission to try and turn around the scandalously scam-hit finance sector. Muhith’s speech is likely to expand on that tomorrow.
The government will put emphasis on boosting domestic investment as the government thinks foreign investors will not be interested to invest in Bangladesh till the domestic private sector investors themselves come forward.
Almost every budget speech of Muhith in the last ten years has stressed the importance of domestic private investment picking up, without making much impact. This year, the Finance Minister thinks the investment climate has improved creating confidence among investors and he will try to give it impetus in his speech.
He will also highlight steps to strengthen the country’s capital market.