Bangladesh’s new budget will cautiously follow global and local economic realities with focus on containing inflation and supply- chain management for sustaining fiscal growth.
Implementation of ‘Smart Bangladesh’ concept will be the thrust in undertaking fiscal and taxation measures.
Such views came out from two consultative meetings held Thursday to discuss the final budgeting nitty-gritty.
Also, keeping budget deficit within tolerable limit, ensuring modern urban facilities in every village, measures to ensure food for all, expansion of social-safety net, ensuring digital education and health services, agri-mechanisation, irrigation, implementation of fast-track infrastructures, and measures to mitigate impacts of climate change will be given utmost preference.
These were discussed in detail at a virtual meeting of the committee for coordination on fiscal, monetary, and currency exchange with finance minister Abul Hassan Mahmood Ali in the chair.
The meeting outlined the budget for the next fiscal year, amounting to Tk 7.97 trillion-a contractionary budget with only 4.73-percent increase compared to the actual budget of the current fiscal year worth Tk 7.61 trillion.
Usually in every fiscal year budget is increased by 10 to 12 per cent. Finance officials say this is for the first time in the history of budget the size has been increased by such a small amount keeping in mind the global economic scenario and domestic revenue- mobilisation prospects.
For the new fiscal year revenue-mobilisation target is set at around Tk 5.4 trillion, up from Tk 4.30 trillion of current fiscal year, sources said.
For the new fiscal year, the meeting decided to set a target to bring down the rate of inflation to 6.5 per cent from a usual nine plus per cent during the last couple of months.
The gross domestic product (GDP) growth target is set at of 6.75 per cent for fiscal year 2024-25 from 7.5 per cent in the current fiscal.
In the new fiscal year the budget deficit is estimated at Tk 2.57 trillion while the size of annual development programme (ADP) is set at Tk 2.65 trillion, up from Tk 2.63 trillion in the current fiscal year.
A senior finance-division official said the amount of subsidy in the next fiscal year would not increase in the next fiscal year. However, he wouldn’t disclose the figure.
Sources said chairman of the National Board of Revenue (NBR) Abu Hena Md Rahmantul Munim at the meeting placed a plan for increased revenue mobilisation for the next fiscal year which includes mandatory e-challan for payment of value-added tax amounting Tk 1.0 million and over instead of Tk 5.0 million, launching electronic tax deduction at source platform, the setting up of electronic fiscal device, and measures for identification of new taxpayers, among others.
He also described the challenges now facing in revenue collection including the complications arising due to containing imports by government’s austerity measures.
The dwindling foreign-currency reserves were also discussed at the meeting, officials said.
At the meeting central bank governor Abdur Rouf Talukder said the loan interest rate in the international market is still very high and so Bangladesh’s private sector is not borrowing from there as expected.
Also, he said, “foreign investors are also not bringing adequate investment in the Bangladeshi bourses now, which is also a reason forex stock not building up”.
However, finance secretary Dr Khairuzzaman Mozumder at the meeting claimed that “export earning is rising and remittance is flowing in at increased volume in the recent months and so the forex reserves will get a good shape after April”.
Businesses are unable to take the benefit of corporate-tax cut as complying with the tax authority’s imposed conditions on cash transaction seems difficult given the country’s enormous informal economy, it was stated at the second meeting on the budget.
The government reduced corporate tax rate by 2.5 percentage points to 27.7 per cent in the budget for fiscal year 2022-23 imposing a condition to discourage cash transaction. Otherwise, corporate-tax rate would be 30 per cent for businesses.
A non-listed company can avail the reduced tax benefit if it uses bank transfers in order to receive all revenues and receipts, make all single transactions exceeding Tk 0.5 million, and execute expenses and investments worth more than Tk 3.6 million annually.
Volume of informal economy, 85 per cent, compels businesses into cash transaction, thus making the 2.5-percent tax cut ineffective for them.
Businesses raised the point, among others, in the consultative meeting of the National Board of Revenue (NBR) on Thursday.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and the NBR jointly organized the 44th meeting at a city hotel ahead of National Budget for Fiscal Year 2024-25.
They sought a safe exit policy for the banks to salvage the problem-stricken banks, resolve harassment on customs assessment and unintentional mistakes of HS code, allow adjustment of advance income tax, introduce digital archives of data, introduce complains center on tax matters. The finance minister Abul Hassan Mahmood Ali attended the programme at chief guest while State Minister for finance Waseqa Ayesha Khan was special guest.
FBCCI president Mahbubul Alam chaired the programme, also attended by presidents of International Chamber of Commerce, Bangladesh, Metropolitan Chamber of Commerce and Industry (MCCI), Foreign Investors Chamber of Commerce and Industry (FICCI), Dhaka Chamber of Commerce and Industry (DCCI), Bangladesh Textiles Mills Association (BTMA), Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA) presidents and other chamber and association leaders across the country.
