Finance Minister AMA Muhith placed the national budget for 2018-19 in the parliament on June 7 proposing a financial outlay of Tk. 4,64,573 crore. The very size of it is something to ponder about as it is nearly 25 percent higher in amount comparing to the revised budget of the outgoing fiscal (2017-18). Muhith must have taken a bold step in proposing a fat budget in an election year when he had just proposed slashing down the previous budget substantially. He set for revenue-men to bring home over 30 percent higher revenues so that the budget expenditures can be well borne. Such higher target setting ultimately translates into further expansion and enhancement of VAT-net. Once this budget is passed – you avail a ride-sharing service you pay VAT, you buy a modest apartment you pay higher tax.
The budget proposal shows government’s revenue earnings would largely depend on NBR-generated (National Board of Revenue) tax (Tk. 2,96,201 crore) followed by other sources like non-tax revenues (Tk. 33,352 crore) and non-NBR tax (Tk. 9,727 crore). Still there will be an income-expenditure mismatch of Tk. 1,25, 293 crore.
Though economists and analysts voiced concern over deficit financing in budget, the government said it would bank on baking sector, saving schemes and other sources in bridging the gap between budget expenditure and revenue generation. The overall budget deficit (Tk.1,25,293 crore) is 4.9 per cent of GDP. As per finance minister’s proposal, an amount of Tk.54,067 crore (2.1 per cent of GDP) will be financed from external sources while an amount of Tk.71,226 crore (2.8 per cent of GDP) will be financed from domestic sources.
Of the domestic sources, Tk.42,029 crore (1.7 percent of GDP) will be borrowed from the banking system while Tk.29,197 crore (1.2 percent of GDP) from National Savings Schemes and other non-bank sources.
This year’s budget speech, which Muhith themed – Bangladesh on a Pathway to Prosperity – have many comparisons to show how the country thrived economically on various indicators over the past one decade that the Awami League-led 14-party alliance has been on the helm of affairs. In his budget speech the finance minister said, “In the past 10 years starting from 2009, we remained steadfast in taking forward our people-centric agenda mainly for the benefit of the poor and the disadvantaged.”
Muhith gave an overview that how over the past one decade Bangladesh achieved the average GDP growth rate of 6.6 per cent, much higher than the developing economies’ average GDP growth of 5.1 per cent. Besides, during the period public investment rose to 8.2 per cent from 4.3 per cent, per capita income increased from US$759 to US$1,752, inflation declined from 12.3 per cent to 5.8 per cent, revenue-GDP ratio rose to 10.3 per cent from a low of 9.2 per cent, the size of budget grew from Tk. 89,000 crore to Tk. 4,64,573 crore, annual export registered an increase from US$15.6 billion to US$34.8 billion while annual import stood at US$47.0 billion increasing from US$22.5 billion. The rate of poverty declined to 24.3 per cent from 31.5 per cent and extreme poverty rate reduced to 12.9 per cent from 17.6 per cent. The forex reserve increased from US$7.5 billion to US$32.2 billion.
But having said all ‘bold steps’ of economic development, Muhith’s relative ‘calm’ on banking front is something very stupendous. When country’s apex chamber body, economic think-tanks and people on the street continue talking about ‘looting’ of crores of Taka from the country’s banking sector over the past several years, the finance minister kept mum on the topic even on the face of widespread criticism from his party comrades on the floor of the parliament. In fact it was this very Muhith, who spoke of forming a ‘Banking Commission’ back in 2015-16 financial year, ultimately backtracked from doing so three years down the line. A day after placing the 2018-19 budget, Muhith just quipped that he has done the necessary paper works for such a Banking Commission but is passing the buck on to the next government, expected to come into office is six months’ time.
Muhith’s apparent soft stance on bank front comes at a time when he also proposed cutting down tax for banks by 2.5 percent. The move comes at a time when public expectation was rather to see steps for bringing in governance, long been missing in banking sector, and bring the big time ‘bank money plunderers’ to book. But the priority is completely missing out in Muhith’s budgetary schemes of things. When this government took over 10 years back the state-run BASIC Bank was one of the profitable banks but not anymore. After years of and layers of probing process the perpetuators who literally robbed BASIC money are still off the hook. Even the country’s court of law had to summon the bank scam investigators to reprimand and wanting to know what’s taking them so long to complete the probes.
Though he completely missed out giving the nation any sense of direction as far as bringing governance and discipline in the banking sector, Muhith, who placed the budget 10th time on the trot, well projected the economic developments achieved over the past one decade with the present AL-led alliance in power. At the same time he also proposed to enhance allocation to much-touted mega projects, expanding the social safety net purview and shared his thoughts on introducing universal pension scheme. It is important on an election year to bring some visibilities in the big infrastructure development projects. Finance ministers did not shy away from keeping a sizeable amount for expediting the 10 growth-generating large projects, identified as ‘Mega Projects’, which are: (1) Padma Multi-purpose Bridge Project (2) Padma Rail Bridge Project (3) Ruppur Nuclear Power Project (4) Rampal Coal Based Power Project (5) Chattogram-Dohajari to Ramu-Coxes Bazar and Ramu-Gundum Railway Construction Project (6) Dhaka Mass Rapid Transit Development Project (7) Construction of Payra Sea port (First Phase) Project (8) Sonadia Deep Sea port (9) Matarbari Ultra Super Critical Coal Fired Power Project and (10) Construction of Maheshkhali Floating LNG Terminal Project.