Bangladesh budget lacks clarity about source of fund: CPD

It termed the projected revenue unrealistic and pointed out that there is no clear guideline over the source of the funds for implementing the budget.

Its formal reaction came a day after Finance Minister AMA Muhith presented the Tk 4.65 trillion budget for fiscal 2018-19 in parliament. The figure is an increase of 25 percent from the revised budget and more than 16 percent higher than the original budget of the outgoing fiscal year.

The economic think-tank said the proposed budget has increased benefits and allowances for the poor and taken some small projects ahead of national polls.

“The government has taken up these projects with the election in mind,” said Professor Mustafizur Rahman, distinguished fellow at the CPD responding to a question.

The budget proposed higher indirect tax than direct tax, which will put pressure on the middle-income group than the higher-middle income group who are expected to finance the election, according to the CPD.

Pressed to comment on the nature of the budget, Debapriya Bhattacharya, another distinguished fellow at the CPD, said: “It’s an archaic budget for a young Bangladesh.”

The budget for fiscal 2018-19 has maintained a status quo as it focuses more on reviewing the past than the future, the CPD said in a report.

The CPD said the budget lacks sensitivity towards existing and emerging macro stresses, including pressure on balance of payments and exchange rate, inflationary expectations, as well as scant attention to areas requiring reforms.

Moreover, no well-crafted action plan is there to implement the budget, strengthen revenue collection, deliver public expenditure, raise allocative efficiency, improve expenditure efficacy, and even to pursue the deficit financing programme.

The report called the budget programming ‘inconsistent’ as the import growth target is totally out of line with foreign finance-driven import demand.

No substantive work programme exists in the budget to reenergise the stagnant private investment while cost overrun and time overrun of ADP projects are creating fiscal pressure and impeding private investment, according to the report.

Adequate response measures to the challenges in the banking sector are absent in the budget, but it mentions a number of measures that indicate to the contrary, it said.

It drew attention to the fact that the issue of underwriting the cost of hosting Rohingyas is missing.

However, it said, compared to the macro-stresses, inclusivity has been better addressed in the budget, although mostly through short-term measures. “Medium-to-long term challenges—inequality, both income and wealth, unplanned urbanisation and other issues—have been ignored.”

The anticipated price pressure of both food and non-food items will fall disproportionately on people from the low-income group and worsen consumption and income inequality situation, according to the report.

The CPD applauded the enhanced surcharges on assets terming it as ‘steps in the right direction’ and hoped the universal pension scheme will improve inclusivity if implemented.