Finance minister AMA Muhith on Thursday proposed a budget outlay of Tk 4,64,573 crore for 2019 financial year with over a fourth in deficit and unspecified amount of bail-out fund for scam-hit state-owned banks.
In his four-hour budget speech in parliament, the octogenarian finance minister spent a substantial part to narrate economic progress obtained during the back-to-back five-year tenures of the present government since 2009.
Making a number of proposals, including launching software to monitor large default loans to restore discipline in the trouble-torn banking sector, Muhith proposed allocation of Tk 15,963 crore for investment in shares and equities despite opposition from different quarters.
An unspecified amount of the allocated fund would be spent again to bail out scam-hit banks like Sonali, Janata and BASIC in FY19, which coincides with the next general elections.
Dhaka University’s economics department teacher MA Taslim described the repeating bailout for the scam-hit banks as sad happenings in the past one decade.
He noted that the government was indulging banks as they continued with unethical practices largely responsible for growing loan scams as well as non-performing loan already entering danger zone of above 11 per cent.
Muhith, who announced series of tax measures to collect projected revenue of Tk 3,39,280 crore, however, admitted that it was very difficult to ‘accomplish the task of establishing good governance’ in the country, home to 2.5 per cent of world’s population in less than 0.001 per cent of the total lands of this earth.
Muhith projected collection of revenue of Tk 2,96,201 crore by tax officials announcing series of proposals for expansion of value added tax that would hike prices of rice, furniture, cosmetics, clothes, imported mobile phone sets, energy drinks and tobacco.
The budgetary proposal for keeping the income tax threshold unchanged at Tk 2,50,000 would press the middle class hard, experts said.
The prices of used or reconditioned vehicles and small apartments would increase while the price of hybrid cars and electric cars would decrease as per the budgetary proposals.
The proposed decrease in corporate tax by 2.5 per cent would benefit the private commercial banks, owners of which already obtained facilities like reduction of cash reserve requirement to 5.5 per cent and extension of tenure of directorship for consecutive nine years from previous six years, experts said.
Muhith also proposed to decrease tax to 15 per cent for export-oriented garment manufacturers and 12.5 per cent for listed export oriented garment companies and 12 per cent for export oriented garment factories having green building certification.
He, however, proposed higher surcharge on individuals for owning more than one car and possessing land properties of 8,000 square feet in a city corporation.
Policy Research Institute executive director Ahsan H Mansur said new revenue generation target was highly ambitious.
Not only the revenue generation target but overall budget is ambitious due to lack of capacity of the implementing agencies, he noted.
Revised revenue income in the outgoing fiscal was set at Tk 2,59,454 crore from Tk 2,87,990 crore by reducing Tk 28,536 crore, one of the biggest revision in recent years against the backdrop of unrealistic projection.
Besides, the total expenditure was also slashed to Tk.3,71,495 crore from original Tk 4,00,266 crore although implementation of the revised targets were even remained unfulfilled by a big margin in the past several years.
Muhith projected 7.8 per cent growth in gross domestic product and keeping the inflation at 5.6 per cent in FY19.
The overall investment was projected at 33.54 per cent, almost 2 percentage points higher than the present 31.47 per cent ahead of the general elections when private entrepreneurs generally keep off investment.
For expediting the implementation of the annual development programme of Tk 1,73,000, Muhith proposed releasing fund in favour of project directors from July 1, the first day of the financial year.
For financing the Tk 1,25,293 crore budget deficit, the finance minister projected that Tk 54,067 would be taken as loan from the external sources and Tk 71,226 would be taken from domestic sources.
Of the total expenditure, 27.34 per cent was projected be to spent for social infrastructure including human resource development, 30.99 per cent for physical infrastructure and 5.36 per cent for power sector.
Muhith proposes expansion of child budget to 15 ministries and gave an outline for the introduction of universal pension scheme for all in future.
He also proposes expansion of social safety net programme.