Economists term budget 'ambitious', voice concern over implementation

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FE Report
Leading economists have hailed the budget as ambitious but warned that "execution" and "resource mobilisation" would be the key challenges in implementing the outlay.
They termed the size of the budget as "big and ambitious" and stressed that the government should start monitor the spending right from the very beginning in an efforts to garner maximum benefit.
"It is a bold and ambitious budget, aimed at poverty reduction, generating employment, development of physical and social infrastructure and widening social safety net programme," former finance minister M Syeduzzaman said.
"Successful implementation of big infrastructure projects in sectors such as power, gas, roads and newly included river dredging will have a big impact in the society," he said.
He said the government's planned expenditure would boost domestic demand and raise growth. "It's a new direction to economy. If global demand falls, it will work as a cushion to offset any adverse affect," he added.
Syeduzzaman said mobilising resource and financing the projected budget deficit would be the key tests of the government.
"The government needs to move away from the dependency on import duty. It has to boost internal production based revenue collection to offset any fall in import duty," the former minister said.
He said the government should put all its efforts to get its fair share of the financial packages announced by the multilateral donor agencies and the G-20, he said.
"International agencies including the World Bank, International Monetary Fund and G20 have expressed their willingness to help the developing countries. Bangladesh should effectively bargain for its fair share," he added.
Rapid implementation of physical infrastructure projects is also a big challenge for the government, he said.
"If the government can implement the annual development programme it will have a multiplier effect on poverty alleviation, employment generation and private sector," he added.
The former minister felt that the framework of public-private partnership (PPP) should be simple and transparent to ensure maximum participation of the private sector.
"I think private sector is willing to help the government and they can also raise fund from the capital market," he said.
For an effective social safety net programme, the government must have a variety of modalities to deliver cash and non-cash benefits and local government should be used effectively in this regard, he suggested.
UNB adds: Former finance adviser Dr. Mirza Azizul Islam strongly protested the provision to whiten black money in the budget.
"It'll frustrate the genuine taxpayers," he said in a quick reaction immediately after Finance Minister AMA Muhith placed the budget in parliament.
He, however, welcomed the overall budget as it has given priority to the sectors, also supported by the last caretaker government.
Dr Aziz, who also allowed undisclosed money earned through legal means to get legalized during his tenure, said the budget proposal restricted revenue authorities to question the black money holders about their source of money.
"It's unethical," he said, adding that the genuine taxpayers have to give 20-25 percent tax while the black money holders will pay only 10 percent to whiten their money.
He said the provision would also pose a risk to achieve the revenue target as the black money holders would take the opportunity to whiten their money on the third year.
"It'll also encourage people, who are supposed to pay tax this fiscal year, to pay tax in the third fiscal year."
The former finance adviser doubted whether the huge revenue target would be achieved next fiscal considering the performance of the current fiscal year.
"Increased tax on luxury item is unlikely to help much in this regard," he said.
About PPP, he said the allocation should have been at best Tk 10 billion to start with. He apprehended that there would be a conflict of interest between the private sector and the government over the pricing issue.
He also stressed the need for institutional and legal framework to operate the concept as it involves large projects.
Dr Aziz has reservation on the success of the huge ADP of Tk 30,500 crore as the country cannot even implement a Tk 20,000 crore ADP.
"I don't think the administration can be improved to the capacity in only one year to implement the ADP."
Our staff reporter adds: Former Bangladesh Bank governor Salehuddin Ahmed stressed execution and stepped-up monitoring of the "big budget" to make sure that it spurs domestic demand.
"It will be difficult to implement the budget properly if the government does not work seriously from the first day of the next fiscal,"
"It should be monitored closely to prevent wastage of funds or diverting them to less-productive sectors. The quality of government expenditure should be ensured to get maximum output from public money," he said.
He warned of soaring price pressure if the government fails to ensure that the money is well spent.
"The inflationary pressures may go up if the government expends more money in administrative work rather than productive sectors," Ahmed told the FE.
He said the government should at least make sure maximum spending in agriculture and small and medium enterprises (SMEs) to reduce poverty by way of creating more employment opportunities in rural areas.
Ahmed appreciated the Public-Private Partnership (PPP), created by the government to boost spending in key physical infrastructure such as power, energy and roads.
"It' a very good move to attract investment in infrastructure. It will spur growth in the longer term and could woo huge investment from the private sectors," he said.
Executive Director of the Centre for Policy Dialogue (CPD) Dr Mustafizur Rahman said the opportunity of investing undisclosed income in industry and capital market is good as it would help offset global economic recession.
"But it would not bring any good to the country if it is continued for a long period," he said.