A typical budget it is once again with proposed fiscal measures unlikely to heal the current macroeconomic instability, including steep inflation, and spur economic growth, says CPD in a post-budget opinion.
The Centre for Policy Dialogue (CPD) also sees the provision in the new budget allowing legalization of black money at 15-percent tax an injustice to the taxpayers are to pay corporate tax at 30 per cent in the highest slab.
"Undisclosed money-legalization provision in the budget is unfair and contradictory with the Awami League government's election manifesto," the policy think-tank told journalists Friday at a post-budget presses conference at the CPD office in Dhaka.
It also appears skeptical of the target of enlarging the economy by 6.75 per cent and bringing down the inflation within 6.5 per cent in the next fiscal year (FY 2024-25).
"This budget will fail to curb the ongoing inflation rather enhance the consumer price index (CPI) in the near term," says the CPD in its critical review of the Tk 7.97-trillion national budget placed in parliament Thursday.
Executive Director of the CPD Dr Fahmida Khatun, speaking at the briefing, told journalist that the country is reeling from multiple macroeconomic challenges, including high inflation, low foreign-exchange reserves, poor export and remittance inflows, weak currency, and reduced imports.
"Since the proposed budget has failed to correlate with the realities, stabilizing the ongoing macroeconomic instability will be a big challenge for the government," Dr Khatun said.
This "simple budget" is not acceptable at this tricky moment when the country is going through a crisis time.
Research Director of the Centre Dr Khandker Golam Moazzem termed the budget "an older version under the newly-formed government and its new finance minister".
"This is unfortunate for the general people that the proposed budgetary measures have not correlation with the present macroeconomic reality," he says.
"Amid the current economic stress, the proposed budget should be something new or something special which will relieve the people from the inflationary pressure and make macro-economy stable. But it has failed," the CPD executive director, Dr Fahmida Khatun, further said.
Dr Moazzem thinks under this budget, the non-food inflation will be widened as VAT and other taxes have been proposed to impose. Besides, the energy price will be enhanced to add fuel to the fire of inflation.
The average inflation is now more than 9.0 per cent which is very difficult to bring below 6.5 per cent with the measures in the budget, he points out.
And the budget "has failed to give any reform directions beyond the existing market system".
Distinguished Fellow of the CPD Prof Mustafizur Rahman said if the inflation is even eased to some extent, the price level of many essentials would still be higher following their massive escalation over the months.
"Actually, the inflation among the lower middle-income group and poor people will be much higher than the official estimation as their consumption basket is different. Most of them consume mainly food than other non-food and social services. I think the inflation among those low-income levels will be more than 20 per cent."
On the other hand, the finance minister has reduced the allocation for social security for the distressed people.
"If we deducted the allocations for the pension of the civil servants, profit to saving certificates and agricultural subsidy from the social-security budget, then the safety-net is very inadequate," Prof Rahman said.
The economist was highly critical about the provision of legalizing undisclosed money as he termed it "unethical" and "contradictory" with the AL government's manifesto.
"When the government is fighting for establishing an equitable and corruption-free society, then allowing the tax-dodgers or loan-defaulters or the money-launderers every year is simply unethical and contradictory," he told journalists.
The government has "encouraged the tax-dodgers and rather discouraged the honest taxpayers through allowing unquestionable whitening system of undisclosed money, he added.
About the tax measures, the CPD Executive Director, Dr Khatun, said increase in taxes in some areas is laudable amid Bangladesh's possible LDC graduation in 2026. "But if the tax measures go beyond the general people, and the dishonest people get benefit, it will affect the country's social development."
Terming the tax-income target as very ambitious, Prof Mustafizur Rahman said if the government wants to fulfill the target, the revenue income has to grow 25-27 per cent within the next fiscal year.
"Actually the tax measure sometimes goes for some persons or for some groups in the country, which is unfortunate for all of us," he added.
The CPD urges the government to take austerity within the expenditure for the executives rather than suggesting only the mass people to obey the belt-tightening formula.
It also calls for MPs and the parliamentary standing committees to take effective role and hold discussion on the proposed budget in the parliament.
© 2024 - All Rights with The Financial Express
