Budget size, GDP growth target for next FY not finalised yet, he says

Finance Minister AMA Muhith on Thursday said the government will focus on bringing
a momentum in overall investment in the coming fiscal year as he thinks the sluggish
investment trend was the weakest side of the government in the last five years.
Investment was very limited in last ! years". #e want to take a big initiative in this
area. Its a very difficult target$ but we must do it at any cost$% he told re&orters at the
'ecretariat after the first &re(budget discussion with leading economists.
The Finance Minister said the &rivate sector investment did not increase in the last five
years$ which is the lifeline of the economy. #e need to look into it why the domestic
investment remained so low.%
The investment(to()*+ ratio stagnated at ,-(,! &ercent for nearly a decade and the
government wants to raise the investment(to()*+ ratio to ., &ercent for having a higher
economic growth.
Asked about the key focus areas for the ne/t budget$ Muhith said$ #ell focus on how
to increase the total investment$ how to obtain more foreign direct investment F*I" and
most im&ortantly how to im&rove the 0uality of the administration.%
1e also said the &riority$ as &er the government manifesto$ still remains the highest on
&ower and energy$ agriculture and human resource develo&ment.
Budget Size, GDP
Asked about the si2e of the ne/t budget fiscal year ,34-(,34!"$ Muhith said$ 5othing
is finalised yet. #eve to calculate more. 6y ne/t month it could be known.%
7arlier at a &rogramme in 'ylhet$ he said the si2e of the national budget for the u&coming
fiscal year might be around Tk ,.! trillion.
#hen his attention was drawn to this$ he said$ Its not definite. #ere yet to reach that
stage to tell you the e/act si2e of the ne/t budget.%
8es&onding to a 0uestion on )*+ gross domestic &roduct" target$ Muhith said they are
yet to reach any decision yet. It )*+ target" is reduced to 9.! &ercent for the current
fiscal year against :., &ercent". #ere not in a &osition right now to tell you about ne/t
years target. 1o&efully$ itll be known in the ne/t month.%
;n revenue generation$ the Finance Minister sounds o&timistic over increased earnings
from revenue in the coming fiscal year.The Finance Minister said the ne/t budget would
be &art of its five years target but how long the &resent government remains in &ower is
different thing.Muhith ho&ed that the Financial 8e&orting Act will get through +arliament
in the ne/t session.
Budget Deficit
The Finance Minister said many are advising that the budget deficit could be ke&t at
more than ! &ercent of the )*+ for the coming fiscal year. Im totally against it. Ive no
intension of increasing the deficit beyond ! &ercent.%
They$ however$ were unanimous that the budget deficit should not be under any
circumstances over !.3 &er cent of the gross domestic &roduct )*+".
District Budget
The Finance Minister said the government would come u& with district budget on a very
limited scale in an effort to decentralise &ower and strengthen local government.
'even districts will be covered under the district budget &lan. The &ur&ose of the district
budget is to hel& them district(level administration" &re&are &ro&osals for their own
budget.%
Advisory Bodies
Muhith said since the Finance Ministry does not have any advisory body involving
&rivate sector$ he wants to have such a committee. 'o$ Ill try to set u& two bodies<one
for Finance *ivision.%
Proposals
1ighlighting the &ro&osals that he got from the economists$ Muhith said they talked
about &ro&er &lanning on land use. 'ince weve land scarcity$ we need to have a &ro&er
&lanning on land use.%
The economists also suggested the Finance Minister to give more focus on railway sector
and e/&editing the +ublic(+rivate +artnershi& +++" initiative.
Muhith also said there were &ro&osals on strengthening banks internal control and
banks management system since it was not as good as e/&ected.
They also &ro&osed to monitor the )*+ growth &ro=ection after every three months
instead of once in a year. The 6angladesh 6ureau of 'tatistics 66'" now comes u& with
)*+ figure at the end of fiscal year.
7conomists from the think(tanks including 6angladesh Institute of *evelo&ment 'tudies
6I*'" and +olicy 8esearch Institute +8I" were &resent.
6angladeshi Finance Minister A.M.A. Muhith announced a >.4.: billion national budget
for the ,34-(,34! fiscal year on Thursday$ aiming at boosting a stagnant economy.
The budget allocation is u& 49 &ercent from ,34.(,34- and envisions the gross national
&roduct will grow :.. &ercent$ u& from 9.! &ercent growth this fiscal year.
The budget targets holding inflation within 9 &ercent and kee&ing the deficit to ! &ercent
of )*+.
he deficit will !e financed !y !orrowing fro" !an#s and with foreign loans$
Muhith$ an ?4(year(old bureaucrat(turned &olitician$ said the &ro&osed budget will
su&&ort the @targeted growth$ contain inflation and reflect the as&irations@ of the &eo&le.
Talking to =ournalists before the budget announcement$ he said$ @This will be a budget to
meet &romises unfulfilled in the last term.@
Along with the new budget$ the government &lans a @)reen Ta/@ on &olluters.
@Those who &ollute will have to &ay ta/es as long as they kee& on &olluting$@ Muhith
said.
@;n the whole this budget is designed to face the challenge of increasing investment.
+olitical stability has returned and ho&efully will continue. #e will &ut em&hasis on gas$
&ower and infrastructure$@ he added.
The budget also gives &riority to a number of mega&ro=ects$ including the !.!?(kilometer
+adma 6ridge to connect *haka with southwestern 6angladesh$ the ,$333(megawatt
8oo&&ur nuclear &ower &lant being built with 8ussian assistance$ the 'onadia dee&(sea
&ort near Ahittagong$ an B5) terminal$ a large coal(fired &ower &lant being built with
Indian hel& and a metro rail &ro=ect being &ursued with assistance from Ca&an.
%entre for Policy Dialogue &%PD'
A+* said ensuring the desired investment to achieve the &ro&osed )*+ growth to :..
&ercent in the budget for ,34-(4! fiscal year is not &ossible. +rivate sector investment
should reach at least ,! &ercent from ,4 &ercent. That means$ around Tk :!$333 crore
additional amount of investment will be needed.% #hich A+* said an im&ossible
target%. To achieve the target$ the total investment should be at ?.(?- &ercent. ;f the
amount$ around :(? &ercent may come from the &ublic sector. 6ut in the &ro&osed budget
it was assumed that around ,4 &ercent investment would come from &rivate sector$ said
*r *eba&riya 6hattacharya$ distinguished fellow of A+*. The economic value of the four
&ercentage &oint investment in &rivate sector is Tk :!$333 crore >D!3 crore"$ he said.
'o$ it is a matter of concern that what will be the source of the additional amount of
investments. In the history of 6angladesh$ this has not ha&&ened$ he said.
The 0uality of investments$ both &ublic and &rivate$ is needed to be increased to achieve
the target$ *r *eba&riya told media while &resenting co""ents and analysis on
(ational Budget at 6rac Aentre Inn in ca&itals Mohakhali this morning.
Bike you all$ we also want the target be achieved. 6ut to achieve the desired target$ the
most im&ortant thing is investment. #ithout investment no target can be achieved.%
Meanwhile$ the A+* 0uestioned the base year for setting the target of )*+ growth rate in
the &ro&osed budget.
The target of growth rate has been set by selecting ,33!(,339 fiscal as base year$ while
the other calculations have been done on the basis of 4DD!(4DD9 fiscal$ he said.
6ut the booklet on the budget &rovided by the finance ministry reads as all calculation
have been done by taking ,33!(,339 fiscal as base year$ he said.
'o$ there will be some confusion E which year will be the base year for the :.. growth
rate$ he added.
#e fear that the double use of statistics$ in one hand 4DD!(4DD9 fiscal and on the other
hand ,33!(,339 fiscal$ will affect our various discussions$% he said.
'o$ we suggest all the budget discussion and calculation should be done immediately by
taking ,33!(,339 fiscal year as base year.% he added.
Aommenting on the vision of the budget$ he said the 'i/th Five Fear +lan has com&letely
been ignored and there is no clear direction or seventh five year &lan.
In the analysis$ A+* identified that the budgetary measures have ob=ectives to attain
fiscal consolidation backed u& by high growth revenueG to revitalise economic growth
momentumG to revert the downturn of investment and to further control inflation.
1owever$ the budget has not &rovided for necessary institutional reforms towards
im&roved fiscal(budgetary management as well as su&&ortive &olicy environment$
according to A+*.
The analyses &ointed out that allocation for agriculture and allied sectorsG education and
health sectors as &ercentage of )*+G A*+ &ro=ects concerning develo&ment of childrenG
and the real value of allowance under social safety net &rogrammes ''5+" are declining
every fiscal year.
A+* em&hasised the need for economic reforms including im&lementation and oversight
ca&acities.
In order to achieve a com&rehensive economic goal$ the A+* &ro&osed establishing an
Agricultural +rice Aommission to ensure fair &rices of agricultural commodities$ to
ensure incentive &rice for the &roducers while maintaining market stability.
It also suggested establishing of an Inde&endent 'tatistical Aommission to validate the
Macroeconomic correlatesG a Bocal )overnment Financing Aommission and a +ublic
7/&enditure 8eview Aommission.
B)A%* +,(-Y
The think tank A+* today criticised Finance Minister AMA Muhith for sustaining the
&rovision of whitening of black money through his silence on the issue in the budget
&ro&osal for FF ,34-(4!.
It is very regretful for us as the finance minister$ des&ite his assurance of giving no
sco&e of whitening black money in the budget$ did not make it clear in his budget
s&eech$% alleged A+* distinguished fellow *r *eba&riya 6hattacharya.
#e understand that the minister like before a&&roved the &rovision of whitening black
money with his silence and it should not be$% *r *eba&riya said.
In one side$ ta/ has been increased$ ta/ sectors and tariff have been e/&anded while the
ta/(non(&ayers are getting all advantages (( it is a contradictory &olicy and cannot go
together$% he said.
It weakens the &olicies of the whole economic structure$ observed the economist while
&resenting the analysis on the &ro&osed 5ational 6udget for ,34-(4! fiscal year at 6rac
Aentre Inn in Mohakhali in the ca&ital this morning.
Former finance adviser to the caretaker government A6 Mir2a A2i2ul Islam said
according to my own calculations$ ne/t year should focus on ta/es and revenue of 4
million -. thousands taka. 1owever cor&orate restricted ta/ rates$ ta/ income limits
increased if ta/ is not &ossible to achieve this goal and can be. Hen of ta/es should be
raised by increasing the ta/ rate.
5ational 6oard of 8evenue 568 " is res&onsible sources $ non E &ublic traded
com&anies cor&orate ta/ rate is .! &er cent of cases. 'ome .: &ercent of these ta/es is
currently give of com&anies. In the case of &ublicly trade com&anies listed com&any
share " ta/ rate is ,! &ercent of a half &ercent. 1owever$ if .! &ercent of a com&any to
&ay dividends will be less than 43 &ercent. ,, &ercent of the &rofits will be given to the
com&any gives Twenty &ercent to half.
1owever$ the ta/ rate will remain unchanged in the other com&anies. Aonsidering the rate
at which new cor&orates to Mobile +hone ;&erator com&any -3 &ercent to -! &ercent$
and the '7A$ 6anks$ Insurance$ Financial institutions around -, &ercentG Merchant 6ank
at .: &ercentG 5on E +ublicly traded com&any .! &er cent and ,! &er cent rate of ta/ will
&ublicly traded com&any.
;n the others side )arments sector to be given ta/ &aid huge discounts will continue ne/t
fiscal year. For com&anies in the a&&arel industry to source .3 &ercent of the decimal has
been reduced from ?3 &er cent. Bevy the ta/ at source at the rate of .3 &er cent of the
decimal are considered. 43 &ercent of the com&anys year eases levy source is assumed to
be &aid.
The cor&orate ta/ D: &ercent come 5ational 6oard of 8evenue 568 " Barge Ta/&ayers
Init. 5e/t fiscal year revenue target is set and the amount of 4? thousands crore taka. 4!
thousand 4:! crore taka in the current fiscal year is the target. Terms of mobile o&erators$
banks$ insurance $ financial institutions$ nearly ?3 &er cent of the revenue comes from .
These com&anies will not change the ta/ rate. 8estricted so as a result of the new ta/
rates cor&orate two cases do not seem to be too 568 revenue loss.
.ncreasing the tax free li"it/
The ne/t fiscal efficiency &eo&les of classes ta/&ayers ta/ limit. 1owever$ income
levels and ta/ rates remain unchanged. 5e/t fiscal year$ u& from two million -3 thousand
taka may be &aid out of ta/. Ta/&ayer and ta/(free limits for women and 9! years of age
and two lakh :! thousand taka and estimated three lakhs to &romote limits may be
im&aired.
The minimum ta/ limits the ta/ &ayers money of two million ,3 thousands. #omen and
senior citi2ens$ the limit of the two lakh !3 thousand ru&ees.
Ban# as rent/
The ne/t fiscal basis leading to a decision$ the landlord surveillance efficiency. 8ent
through bank transactions will take &rotect ta/ home owners. After years of ta/ returns or
return to see in dealing with the officials of the account. 6ecause of the Income Ta/ Act
. " of the Act$ any ta/&ayer money from the rent$ if that is not reasonable$ however$ the
area e0uivalent to the amount of rent based on the value of the rent &aid by the ta/&ayer
to determine the income.
This &rocess can be brought to the monitor without the tenants income 568 officials
say. 8evenue from the ta/ at source on rent$ but it is now considering moving away from
wells$ sources said. Ta/ deducted at source at the time of rental to be 0uite a com&licated
&rocess that can not walk in the way of 568. TI5 to the landlord ta/es is mandatory.
7/ce&t in the ca&ital and other large cities$ the new holdings number$ individual level
not commercial " gas$ &ower and other services may be re0uired to remain in the TI5.
'urvey of *haka and Ahittagong TI5 is 4 million 9, thousands revenue that the landlord
has discovered. 568 has started a letter to the landlord TI5. The landlord come in under
ta/ to have a s&ecial announcement in the ne/t budget.
'u&&lementary income unre&resented ne/t year to legali2e illegal or black money new
barring any s&ecial amenities. 6uy a flat in the year to Cune .3 was given an o&&ortunity
to 0uestion without black money white$ not e/&ect e/&iration.
1owever$ the budget of ,34, (4. of the Income Ta/ ;rdinance$ an amalgamation of 4D
valid visited last o&&ortunity to declare the income was &aid. According to this section$
deferred ta/es are to &ay 43 &er cent e/tra fine. Although neither of the last two fiscal
advantage of this stuff has been known to have not declared income.
Mir2a A2i2ul Islam refers to validated Fi/ed Income Advantage unre&resented said$
This o&&ortunity is likely to be misused. *rastic action to &revent the misuse of
o&&ortunity. 5o one really had a legitimate income$ whether E and should be
investigated. %
,ther offers/
The new budget could be brought &lastic industries ta/ holiday facility. #ith the ta/
increase fish business. There are . &ercent ta/ on income from the fisheries sector. It may
be ! or : &ercent. *uring the last national election$ candidates take advantage of lower
ta/ rates showed huge returns from the fisheries sector. In addition to the budget for the
refund to be declared in a se&arate fund.
*haka and its surrounding districts$ es&ecially the kind of environment$ 586 decided
&olicy. As well as the districts ca&ital *haka inside of )a2i&ur$ 5arayangan= new
industries as well as the e/isting ta/ rates could be further ta/es. If any owner of the
factory took away from these &laces$ you will get ta/ rebate facility. 1owever$ ta/ rates
are not finali2ed yet.
0012 supple"entary duty on the product/
Aar$ made dress$ ceramics &roducts$ sanitary &roducts$ refrigerators$ air(conditioning
e0ui&ment and others technical goods one of u& to 93 &ercent from .9 to 3 on two
&roduct contains su&&lementary duty. 5e/t fiscal year$ 49, of the su&&lementary duty on
the &roducts being withdrawn. 'u&&lementary duty on 4:3 goods have left. According to
568$ the su&&lementary duty on all &roducts e/ce&t a&&arel and vehicles may be
withdrawn.
+assenger baggage rules are making changes in gold also raised ta/es. *ecimal 99 to 44
grams one( Boaded " sbarna&indera weight being &ut on duty $ three thousand .33
ru&ees . This ta/ money is now =ust 4!3 . 1owever$ u& to 33 grams of gold is not to bring
any charges.
Budget 2304 52306/ A case for plain land ethnic groups
6angladesh houses multi(ethnic grou&s which include 6engalis as well as small ethnic
&o&ulation. Though there is confusion about the e/act number of the adivasi &o&ulation$
it is assumed that it is around . million the only disaggregated data on tribal &o&ulation
was available in 4DD4Aensus". About ,., million live in -4 &lains districts of 6angladesh.
In the ,34,(,34. budget$ the government recognised this fact and &ut in a 'ection headed
Minority and Inder&rivileged Aommunity% with 'ub(sections from ,4? to ,,4. A
careful look would show that it focused solely on the ethnic grou&s of Ahittagong 1ill
Tracts. Moreover$ in ,34.(,34- there were s&ecial budgets for *alits$ 1i=ras$ 6edes etc.
The adivasis of the &lains$ as usual$ were de&rived. The &lains land adivasis belonging to
.: ethnic grou&s (( )aros$ 'antals$ 1a=ongs$ ;raon$ Mundas$ Moni&uris$ Hhasis$
6urmans$ Hoch etc. (( are e0ually or more de&rived$ voiceless$ and at the lower strata of
the society economically.
According to the +rime MinisterJs 'ecretariat ,344(,34,"$ the total allocation in the
budget year ,344(,34, for the &lains land adivasis was Tk. 4! crores. The '&ecial Affairs
*ivision 'A*" of the +rime MinisterJs 'ecretariat oversees the fund$ and it is alleged
that it hardly engages the key stakeholders in &lanning and strategising at the central and
grassroots (( u&a2ila (( levels. The Ministry of Ahittagong 1ill Tracts Affairs looks after
the overall socio(economic$ education and health issues of the adivasis of Ahittagong 1ill
Tracts.
+artici&ation in the #ar of BiberationK It can be mentioned that the small ethnic
communitiesLtribal &eo&les from the &lain land &artici&ated in the Biberation #ar of 4D:4
en masse. Many died in the war. Their &ro&erty and households were destroyed$ cattle
stolen$ women ra&ed and land grabbed during the #ar. Those communities$ however$ did
not receive due recognition and were rather neglected and e/cluded from develo&ment
initiatives. Therefore$ the develo&ment needs of the ethnic minority grou&s of the &lain
land cannot be overlooked. The government needs to make &ositive contribution to u&lift
the most vulnerable &eo&le of the country.
+rime Minister 'heikh 1asina signed the A1T Accord in 4DD: and created the A1T
Ministry. #e believe that it is she who will also be able to create a ministry for the &lains
land small ethnic communities and allocate budget for their develo&ment. +erha&s some
ste&s given below will consolidate their active &artici&ation in national develo&ment and
&ave the way for their integral develo&mentK
4. Allocation of budgetary &rovisions for &lains land ethnic grou&s in the budget of
,34-(,34!G
,. Areation of a new ministry for the &lains land ethnic minority communitiesG or any
e/isting ministry could e/tend its &ortfolio to include their affairsG
.. Formation of develo&ment consortium for the socio(economic develo&ment of the
&lain land adivasis.
Budget 230452306/ he priority of private invest"ents
)enerally a budget denotes the antici&ation of income and e/&enditure for a given &eriod.
A budget is also known as the annual financial statement of a country. The national
budget is not far different from an individualJs budget. Ideally a budget(be it for an
individual or the nation(may be balanced or it may be a sur&lus or deficit budget. In a
balanced budget revenue earnings and e/&enditure are e0ual. ;n the other hand$ a sur&lus
budget indicates more revenue earnings than e/&enditure while a deficit budget is =ust the
o&&osite where e/&enditure e/ceeds earnings. The national budget is &assed by the
&arliament after threadbare discussion. It has been learnt that the budget for the ne/t
fiscal will be &resented on Cune !. This will be the ?th budget to be &resented by the
incumbent finance minister Abul Maal Abdul Muhith. The finance minister told media
that the si2e of the ne/t budget would be around Tk ,.! trillion against Tk ,., trillion in
the fiscal year ,34.(4-. +re(budget discussions have already started where most trade
bodies demand lowering the e/isting ta/ and MAT rates. 'ome of them also demand
enhancement of ta/es on such im&orted items which are &roduced locally as well. This is
indeed a =ustified &ro&osal. To encourage the domestic &roducts we need to restrict
im&ort of such &roducts.#e concentrate more on the gross domestic &roduct )*+"
growth$ but show little concern about investments$ the &rere0uisite for )*+ growth.
)overnment investments in large infrastructure &ro=ects should be increased. There
should be a clear indication in the budget regarding the +adma bridge$ mono rails$ the
dee&(sea &ort$ flyovers$ four(lane highways$ electricity$ water management and other big
&ro=ects. At the same time$ there should be stability in the country. #ithout stability$
&articularly in the &olitical field$ it will be difficult to maintain the e/isting growth. #e
have already e/&erienced lower revenue collection for the current financial year.+rivate
investment is the main catalyst of our economy. 'o the government must work for
creating a congenial atmos&here to boost investments. +rivate investors are still in a
dilemma and they are following the Jwait and seeJ &olicy. It is the res&onsibility of the
government to restore confidence of the investors.It is a common belief that there is a big
amount of black money in the country. The source of black money must be detected and
&lugged. There should be no concession for the black money holders in the coming
budget. The ta/ net should be increased without increasing the e/isting ta/ rate. The
5ational 6oard of 8evenue 568" may bring all the landowners and flat owners under
the ta/ net. The ta/ collection &rocess needs to be modernised and sim&lified. )ood
governance in all stages has to be ensured and corru&tion has to be contained. Aorru&tion
is the single com&onent which is not only kee&ing us caught in a vicious cycle but also
tarnishing our image in the international arena. Bet us ho&e for a good budget by the
government at the outset of its new term.The writer is 'enior Mice +resident$ 7astern
6ank Btd.
Finance Division, +inistry of Finance
The 5ational 6udget formulation &rocess of the FF ,34-(4! has begun with the issuance
of 6udget Aall Aircular(4 6A(4". As first stage of the &rocess$ the Medium Term Macro
7conomic Framework MTMF" has already been u&dated for FF ,34-(4! to ,349(4:.
The &rimary indicative e/&enditure ceilings and the revenue targets for the line ministries
have been set and made available on the website of the Finance *ivision. Through 6A(4$
line Ministries are re0uested to u&date their Ministry 6udget Framework M6F" where
the Ministries will u&date their latest medium(term strategy and e/&enditure &lan.
#ith a view to enhancing citi2ens understanding of the national 6udget and to ensure
their effective &artici&ation in the budget formulation &rocess$ Finance *ivision is going
to &ublish a 6udget 6ooklet for FF ,34-(4! both in 6engali and 7nglish.
Finance *ivision has been im&lementing *ee&ening Medium Term 6udget Framework
and 'trengthening Financial Accountability% *MT6F N 'FA" +ro=ect to undertake
reforms in the +ublic Financial Management system. A range of activities to deliver key
out&uts are well in &rogress. All the budget entities have been brought under the MT6F
&rocess. A macro fiscal model has been develo&ed along with establishing a macro(
economic database. *evelo&ment of a new Ahart of Accounts and Integrated 6udget N
Accounting 'ystem i6A'OO" is underway.
As &art of the &rocess of creating a critical mass of trained officials in +ublic Financial
Management$ Finance *ivision continues to deliver a 43(week flagshi& training course
called 7Fiscal -cono"ics and -cono"ic +anage"ent &F--+'. The 4-th F77M
course is going on while the 4!th course will be commenced on Canuary 4D$ ,34-. The
to& 43 &artici&ants from each F77M course are awarded scholarshi&s to &ursue a one(
year Masters +rogramme abroad. As many as 4!4 &artici&ants have com&leted their
Masters from the re&uted universities of the Inited Hingdom and Ca&an.
In addition$ Finance *ivision has launched another flagshi& course namely 7Budget
+anage"ent Specialist &B+S' %ourse8 for the line Ministry budget officials. Five to&
&artici&ants from each 6M' course are also sent abroad for advanced training on +ublic
Financial Management. The -th 6udget Management '&ecialist course is now going on.