The national budget of Tk 400,266 crore for financial year 2017-18 is set to be proposed in parliament today seeking the complete implementation of the 2012 law on Value Added Tax with a flat rate of VAT amid growing capital flight and poor private sector investment.
Finance minister AMA Muhith, who is scheduled for 1:30pm to place the budget, stated earlier that the proposed VAT rate would be 15 per cent.
Due to ‘last-minute’ pressure from the government insiders following protests from different quarters, Muhith, however, might change his stand and finally propose the new rate VAT at 13 or 14 per cent, said finance ministry officials.
Although the new Value-Added Tax and Supplementary Duty Act was enacted in 2012 replacing the Value Added Tax Act 1991, the government could not implement the major features of the law due to protests from businesses and lack of consensus on the proposed flat rate of VAT.
The officials said that Muhith would project the size the new budget at Tk 400,266 crore, up by 17.5 per cent from Tk 340,147 crore in the outgoing fiscal.
The octogenarian finance minister may also propose Tk 288,000 crore as overall government income, including Tk 91,000 crore in VAT, and Tk 1,12,266 crore as the budget deficit.
The big budget deficit, as usual, would be met by bank borrowing and loans from multilateral lenders and donors, the officials said.
Of the total outlay, higher expenditure would be kept aside for ‘power and communication sector,’ said Muhith while talking to New Age.
He said that he would increase expenditure on human resource development in the new fiscal to attain 7.4 per cent growth in gross domestic products.
The size of annual development programme has been fixed at Tk 1,53,331 crore giving top priority to transport sector infrastructures, energy, education and health.
Of the ADP size, Tk 96,331 crore would come from the national exchequer while the remaining Tk 57,000 crore would come as project assistance.
The proposed ADP for fiscal 2018 is up by 39 per cent or Tk 42,533 crore from Tk 1,10,700 crore in the outgoing fiscal’s ADP.
Local Government Division has got the highest allocation of Tk 21,464 crore and the power sector has received the second highest allocation of Tk 18,859 crore while the Roads and Highways Division has got the third highest allocation of Tk 16,820 crore in the ADP.
Expectation is running high among different quarters about what measures the finance minister would announce to check the growing capital and push up private investment.
Washington-based Global Financial Integrity, in a report released on May 1, revealed that illicit capital flight from Bangladesh was on the rise from 2007 following political turmoil of the time, and it continued until 2013 when the highest $9.66 billion was siphoned off.
Private sector investment increased only 1 percentage point to 23 per cent of GDP in the outgoing fiscal from 22.1 per cent in fiscal 2016 while export growth were slow and remittance witnessed a negative growth, according to the World Bank.
Demand for the establishment of a commission for reviving the banking sector hamstrung by series of loan scams in the state-owned banks and ‘undue’ influence on the private banks like Islami Bank Bangladesh Limited was also made from different quarters.
Finance ministry officials said that like the outgoing fiscal, Tk 2,000 crore would be projected in the budget for meeting capital shortfall of the ailing state-owned banks like BASIC Bank and Sonali Bank.
They also said that Muhith for the first time might come up with the announcement of special allocation for development of the laggard districts under Rajshahi, Barisal and Mymensing after his initiative of district budget in 2010 failed.
There might be announcements for special allocation for the Hindu community for protection of temples and increased allocation for the people with difficulties in the budget.
Muhith might highlight 10 mega projects, also known as fast-track projects, including Rooppur Nuclear Power Plant, Padma Multipurpose Bridge, Elevated Metro Rail, Padma Bridge rail link and controversial Rampal Thermal Power Plant, in his budget speech.
The projects would receive separate allocation of Tk 31,500 crore and Roopur Nuclear Power Plant might be given highest allocation of Tk 10,274 crore.
The second highest allocation of Tk 7,609 crore is likely to made for Padma Bridge rail link project and third highest of Tk 5524 crore is likely to be given for the Padma Multipurpose Bridge.
The announcement of the new budget will enrich record of Muhith as finance minister. This will be record ninth time he is going to place the national budget in a row and over 11 occasions.
The new budget is important as it would be the last effective budget by the present Awami League government ahead of the next general election scheduled for between October 2018 and January 2019.
Source: New Age