The government is driven by its dream of pushing Bangladesh further on the path of prosperity and the finance minister is tailoring his first budget that will be “smart” and properly implementable.
AHM Mustafa Kamal is set to propose the budget, likely to be Tk 5.25 trillion in size, for fiscal year 2019-20 in parliament on Thursday, with an eye on implementing the Awami League’s 2018 campaign pledges.
The ruling party’s election manifesto was titled ‘Bangladesh on a journey towards prosperity,’ and the latest budget seeks to further that initiative.
The government is placing the maximum emphasis on developing rural infrastructure to ensure that people living in these areas have access to all urban amenities in keeping with the party’s electoral promises, according to finance ministry officials.
There can be instructions for creating multiple thresholds in order to implement the long-delayed VAT law.
For Bangladeshis working abroad and young entrepreneurs, the new budget is likely to deliver some good news.
The finance minister had earlier spoken about his plan to widen the tax net instead of raising rates for meeting revenue targets.
The draft of his budget speech cites about Tk 5.232 as the likely expenditure in the coming fiscal year.
The new budget will exceed the revised one for the current fiscal year by 18 percent in that case.
The possible national expenditure counted by the finance minister is 18.1 percent of Bangladesh’s GDP.
Kamal appears to be shying away from taking big and ambitious measures given that his predecessor AMA Muhith had made a Tk 4.64 trillion budget for the outgoing fiscal year, which is 25 percent more than the revised one for 2017-18 fiscal year and 18.3 percent of total GDP.
Kamal, instead, is focusing more on continuance of the last budget and making implementable plans.
His plans to collect revenue indicate the same. He hopes to get 72 percent of the possible expenditure from revenue.
The proposed budget for 2019-20 fiscal year sets out a revenue income goal of Tk 3.77 trillion, according to the budget speech by the finance minister sent to the government press on Tuesday.
It marks an increase by 19 percent from the revised budget of the current fiscal year.
Muhith set the current revenue goal of Tk 3.39 trillion with an increase of 25 percent from the revised budget of the previous year.
The gap in income and expenditure makes the deficit in the upcoming budget bigger than the previous ones.
The deficit is set extend to Tk 1.45 trillion in the 2019-20 budget. It amounts to five percent of the GDP and economists consider the gap within an acceptable range.
Kamal plans to rake in Tk 638.48 billion from foreign loans and Tk 773.63 billion from the home sector to balance the deficit.
He hopes it will be possible to achieve 8.2 percent GDP growth while reining in the rate of inflation to 5.5 percent.
‘STAIRWAY TO PROSPERITY’
Finance Minister Kamal’s maiden budget will mark a continuation of the journey started through the unveiling of independent Bangladesh’s first budget of Tk 7.86 billion in 1972 by Tajuddin Ahmad.
After 10 budgets placed by Muhith, Kamal is planning the huge spending in an effort to enhance the people’s quality of life amid cheap fuel prices in the international market, a stable political environment and controlled inflation in the country.
The finance minister will present the new budget in parliament at 3pm on Thursday and the bill is likely to be approved on Jun 30. The new fiscal year begins on Jul 1.
The national budget increased by more than four times during the tenure of Muhith. The budget in 2009-10 fiscal year was Tk 1.10 trillion, increasing to Tk 4.64 trillion in the 2018-19 fiscal year.
The finance minister has so far remained tight-lipped about the upcoming budget. “The budget will have a lot of interesting things in it which will be disclosed only when presented in the parliament, and not beforehand,” he told the media.
The new budget has been designed in line with the recent election manifesto, in accordance with the directive of Prime Minister Sheikh Hasina, Shamsul Alam, member of the General Economy Department in the Planning Commission told bdnews24.com.
Economic growth has been accompanied by an income disparity, he noted. Both the social security and expenditure should be expanded in light of this issue.
“Therefore, the upcoming budget is focusing on the motto ‘my village, my city.’ This has been mentioned in the election manifesto of the Awami League. Under this philosophy, the government will initiate programmes geared towards the socio-economic development in the country as well as poverty alleviation.”
The Awami League government plans to expand the national budget to Tk 7 trillion and scale double-digit GDP growth by 2021, the golden jubilee of the country’s independence.
All these issues have been considered in designing the new budget, said Shamsul Alam.
Economic researcher Zaid Bakht has urged the government to take ‘brave’ decisions by dialling up investments in the country.
“The stalemate in the investment sector in the country has not receded despite the growth in several economic indices, including the export income and remittance. The investment increased in the government sector but not in the private sector. It still remains in the same threshold,” the chairman of Agrani Bank told bdnews24.com.
“The loan flow in the private sector is only 12 percent at the end of April, though the central bank had mentioned a rate of 16.5 percent in its monetary policy. It proves that the stalemate in the investment sector has not receded.”
The authorities must reduce the number of bad loans to ensure good governance in the banking sector, suggested Zaid.
A number of changes have been made to the revised budget for the outgoing fiscal year, bringing it down to Tk 4.42 trillion from Tk 4.64 trillion.
The revenue income was revised from Tk 3.39 trillion to Tk 3.16 trillion.
The size of ADP is also reduced in the revised budget to Tk 1.67 trillion from the original Tk 1.73 trillion.
The budget deficit rose to Tk 1.22 trillion in the revised budget from Tk 1.21 trillion. However, the deficit still covers five percent of the country’s GDP.