Pre-budget discussion: Speakers stress uplifting economy from 'yellow zone'

Speakers at a pre-budget discussion on Sunday said that the macroeconomic situation of Bangladesh is down to the 'yellow zone' and the next budget should aim to curb inflation, cut public expenditure and focus on income generating projects.

They said that to bring back stability in the macroeconomic situation, a contractionary budget is a must and tax earning has to be increased through diversification and innovative taxation system to raise the government’s financial ability.

The speakers said this at a ‘Pre-Budget Discussion highlighting Income Tax, VAT, Customs duty, Sector-wise allocation of Budget, external debt, etc,’ organised by the Institute of Chartered Accountants Bangladesh at CA Bhaban, Karwan Bazar in the capital.

Former state minister Shamsul Alam was present at the event as the chief guest, while Ahsan H Mansur, executive director at the Policy Research Institute (PRI) was present as the special guest.

Shamsul Alam said Bangladesh’s tax-GDP ratio is low, though the size of the economy is USD 460 billion, which is 34th in the world. He said there is much tax exemption in Bangladesh and lower FDI inflow, which is also cause of lower tax GDP, but it’s time to come out of this situation.

“We collect 34 per cent revenue from direct tax while 66 per cent revenue generated from indirect tax. This scenario should be opposite considering the taxable population in the country and this needs to be changed,” said Shamsul.

Ahsan H Mansur said global inflation is affecting the domestic economy, so without decreasing inflation in the global arena, the domestic inflation would not come down to the desired level. He said the situation calls for a contractionary budget through cutting allocation for unproductive mega projects.

Mansur said the government borrowed from the banking system around Tk 1,500 billion (Tk 1.5 lakh crore) while total deposit collected by banks was Tk 1,850 billion (1.85 lakh crore). In such a situation the private sector is deprived of funding.

He believes that the government would fail to pay liabilities in the range of USD 2 to 3 billion in the next fiscal year due to the unstable macroeconomic situation. Payment of power plants bills may also be delayed to survive the economy in this situation. 

Senior economist of PRI, Ashikur Rahman said that Bangladesh’s macroeconomic situation is down to the yellow zone, and measures should be taken in the next budget to recover from the position it finds itself in.

Among others, Policy Exchange chairman Mashrur Reaz, former NBR chairman Muhammad Abdul Mazid, former senior secretary of finance Mahbub Ahmed, former NBR member Aminur Rahman, former (customs and VAT) member Md Farid Uddin, former Japan Bangladesh Chamber of Commerce and Industry president Abdul Haque, BKMEA executive president Mohammad Hatem, former MCCI president Md Saiful Islam, ICAB president Mohammad Forkan Uddin, ICAB vice president Maria Howlader, ICAB chief executive officer Shubashish Bose spoke at the event.