The finance minister, Abul Maal Abdul Muhith, will today propose the budget for the 2014–2015 financial year aiming to pace the sluggish economy and to clear obstacles to investments focusing on further revenue income and foreign aids.
Muhith, in his sixth budget speech in a row, will propose an outlay of about Tk 2,50,000 crore, with the deficit of Tk 67,552 crore, or 5 per cent of the gross domestic product. The revenue income, including the revenue board portion, in the proposal is expected to be Tk 1,82,954 crore.
Finance officials said that the GDP growth had been set at 7.3 per cent, inflation at 6 per cent and public deficit at 5 per cent in the proposal. The budget will pledge about a dozen large projects such as the Rooppur nuclear power plant, the Padma bridge, the metro rail and the elevated expressway along with high economic expansion and low inflation, officials involved in the budget-making process said.
Analysts, however, say that traditional but futuristic measures that could dominate the budget proposal might backfire if non-economic factors such as political uncertainty and insecurity continued. Analysts and economists think that targets of revenue earning, annual development plan and foreign aids could be challenging. Officials said that the target for the National Board of Revenue in the next financial year is Tk 1,49,720 crore, up by about 20 per cent from the revised target of the outgoing financial year for the board portion.
Former caretaker government finance adviser AB Mirza Md Azizul Islam on Wednesday told New Age, ‘It could be extremely difficult for the board to achieve the high growth target given the sluggish trend in the economy and lack of confidence among local and foreign investors.’
He said that the estimated foreign funds of about Tk 28,000 crore to finance the budget deficit could be almost impossible and might result in heavy bank borrowing.
As for furthering investment climate and private-sector investments to pace the economy, Azizul said that although the budgetary measures were positive, they could fail to attract investors as investment decisions required a political stability.
‘Problems with poor investments are beyond economic factors as investors still fear that political unrest could come back soon,’ he said.
He said that fiscal incentives offered in different countries to attract investments had not worked as expected. Highlighting the challenges for Muhith, the Centre for Policy Dialogue executive director Mustafizur Rahman said that three factors could be major challenges for the next financial year — revenue mobilisation, the implementation of the annual development plan and the mobilisation of funds to finance deficit.
“The estimates are ambitious and difficult to achieve,’ Mustafizur told New Age on Wednesday. Asked how the probable budgetary measures could increase investment, Mustafizur said that non-economic factors were more important than budgetary measures to increase investments.
The Centre for Policy Dialogue in a recent report said that private investments in the gross domestic product in the current financial year was likely to slow down to 21.4 per cent, which was 21.7 per cent in the past financial year.
Bangladesh Bank data, on the other hand, show that private-sector credit growth year-on-year in July–March of the current financial year was only 11 per cent against the central bank’s target of 16.5 per cent.
The latest central bank data show that the banking sector had a huge amount of investable money, Tk 135,000 crore, as of May. Analysts said that more than Tk 80,000 crore ADP implementation would be impossible if private-sector demands were not ensured. The budget may propose a number of stimuli to encourage investments, officials said.
News Source: The New Age
