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Budget implementation to be uphill task: CPD
Centre for Policy Dialogue, a civil society think tank, on Friday said implementation of the proposed budget for 2016-17 fiscal would face challenges as there is uncertainty over how the targeted revenue will be collected.
"Attaining the proposed fiscal framework for FY17 is going to be an uphill task if inability to mobilise the targeted domestic resources and spend the earmarked allocation, failure to use foreign aid in the pipeline and opting for non-concessional foreign loans continue," said CPD distinguished fellow Dr Debapriya Bhattacharya.
In a reaction of the CPD to the proposed budget at a city hotel, he suggested that the government needs to strengthen its institutional capacity and bring in necessary policy reforms to implement the national budget for FY2016-17.
"We're agreed with goals and targets of the budget by and large. But, there're problems in the structures of revenue collection and expenditure," Debapriya added.
Finance Minister AMA Muhith on Thursday placed the proposed national budget of Tk 3,40,605 crore for 2016-17 fiscal in Parliament.
About the growth rate, he said, "We think the achievement of the targeted 7.2 percent growth of GDP is nothing impossible and which is essential also. But an additional Tk 80,000 crore private investment is needed to attain the target. Besides, the revenue collection needs to go up by Tk 65,000 crore, while the revenue expenditure by Tk 75,000 crore."
But he said there are no clear strategies and guidelines in the budget to enhance private investment, which is a must also for the implementation of budgetary targets.
CPD Executive Director Prof Mustafizur Rahman said the growth of service sector and salary hike of public servants were the main reasons behind the jump to 7.05 percent growth of GDP in the current fiscal. In the upcoming fiscal, only high growth in the industry and agriculture sectors can maintain the GDP growth pace, he said.
He, however, said the challenge to achieve 7.2 percent GDP growth would higher in the 2016-17 fiscal.
The CPD distinguished fellow said the growth of non-development expenditure is higher than development expenditure, which is a new feature of the budget.
Non-development expenditure has gone up massively mainly because of the salary hike of public servants, subsidy, big allocation for investment in the capital market and incentives for some export items, he explained.
He observed that increased allocations for education, gender equity, social safety net are good signs for the budget. But the allocation in agricultural sector needs to be increased, while the reporting mechanism in defence budget should be transparent, he emphasised.
About the budget size, Debapriya said the budget did not go up adding that it remained struck at 14.3 percent of GDP in the last 3-4 years. "We challenge them who say the budget is the ever biggest in the history that this budget is not significantly big in terms of GDP percentage."
"We cannot increase the percentage, though the amount of the budget goes up. If the economy is big, the budget will also be the big one. The projections of revenue collection and expenditure will be big as well," he added.
The noted economist, however, said this year the budget was placed in a comfortable macroeconomic environment with robust GDP growth, low inflationary pressure, favourable balance of payment (BoP) and augmented foreign exchange reserve, declining interest rate, resilient growth of export earnings, manageable fiscal deficit and low level of global commodity prices.
Despite macroeconomic stability, the major problems still prevails as fuel prices remain unmatched with international prices, private investment and employment, are low, budget deficit is met by money with high interest rate from internal sources, targeted tax collection remain unattained, implementation of ADP is week and the banking sector faces lack of good governance, he said.
Dr Debapirya said the Finance Minister in his budget speech said some 47 lakh employments are created from 2010 to 2015. But according to the CPD study, the annual employment was only three lakh in the last 2-3 years since 2013.
About mega projects, he said not a single mega project has completed yet. Mega projects could have been implemented under private-public partnership without taking foreign loan at relatively higher interest rate, he added.
Turning to foreign aid, the economist said no major initiative is seen to use some $15b-$25b foreign aid in the pipeline. The government has set a target to use foreign aid every year, but cannot use 50 percent of target finally.
He also questioned about the fresh investment of Tk 13,000 crore in the capital market, which was only Tk 1 crore in the current fiscal, saying that they are confused whether it revamp the capital market at all.
Noting that a confusion has been created over the provision for whitening black money, he said, "We think no waiver and facility should be given to whiten illegal money."