Finance minister AHM Mustafa Kamal placed his fourth budget this year. Two among the budgets he placed earlier were during corona times. Although the virus subsided, the fallout of Russia-Ukraine war has brought severe challenges to the world economy. Bangladesh, which graduated from the least developed country to a developing one, is not an exception. While we trumpet about attaining food autarky, we still have to import majority of food products. The foreign trade record of last several months is disquieting.
It was expected that the finance minister would come up with specific directives in the budget to face the challenges. The minister identified six major challenges for the 2022-23 financial year.
These challenges include containing inflation and enhancing domestic investment, financing additional subsidy required for the increased price of gas, power and fertilizer in international markets, utilising funds available through foreign assistance, ensuring timely completion of projects in education and health sectors, increasing collection of local Value Added Tax and raising the number of individual tax-payers and maintaining stability in the exchange rate of taka and keeping foreign exchange reserves at a comfortable level.
We would say that the finance minister has rightly pointed out the challenges but failed to roll out appropriate remedy. The amount of rise in allocation for social safety nets is not sufficient. Spiraling prices of commodities have already impacted people’s lives negatively. Many families have downsized their expenditure in food, education and treatment.
Those who have not cut their expenditure are also not getting the service they once would due to inflation. The economists suggested that rationing system be rolled out for people of the lower and lower middle class. Although the business class gets financial stimulus, the budget did not have any stimulus for such a huge portion of population.
The finance minister has unveiled a Tk 6.78 trillion budget setting a GDP growth target of 7.5 per cent. The previous budget was Tk 6.03 trillion and revised budget was of Tk 5.93 trillion. There exists a gap between estimated budget and revised budget. The current finance minister also failed to shed the habit of downsizing the budget.
The finance minister has set 7 per cent tax for bringing back laundered money to increase the forex reserve. The economists have questioned the feasibility of the decision. Ethical questions also lie here. With the decision, those who have not laundered money have been indirectly ‘penalised’. Such a question was raised when a provision was given to whiten black money.
In our assessment, the budget does not seem to have capacity to match expectation with reality. The minister has vowed to take the economy forward in this challenging time, but did not give any specific framework on how to achieve the goal maintaining transparency and accountability.
Like every year, this year’s budget also overlooked education and health –two most import sectors of human resource development—which is not expected at all.