Finance Adviser Dr Mirza Azizul Islam on Tuesday defended his budget proposals for fiscal 2008-09 saying there is no scope for criticisms, as "the proposed budget, which aims at alleviating poverty, is investment-friendly."
Addressing a crowded post-budget press conference at the NEC conference hall Dr. Aziz claimed that the budgetary measures, if properly implemented, would build a strong base for a wealthy Bangladesh.
Flanked by the cabinet secretary, Bangladesh Bank Governor, finance secretary, ERD secretary and NBR Chairman, the finance adviser said the changes in import duty structure, reduction of corporate taxes, tax holiday scheme for many new sectors, special benefits for SMEs, live-stock, poultry and ICT sectors and withdrawal of advanced income tax for trade licences made this budget business-friendly.
"All these measures are sure to spur growth in the economy," he asserted.
The finance adviser said the deficit of over Tk. 305.8 billion is not that high in percentage of GDP (gross domestic product). In the outgoing fiscal, he said, the deficit rose to 4.8 per cent of GDP from the projected level of 4.2 per cent and this year the deficit will be only 4.99 per cent of the GDP.
"There will be no crowding out effect," Mirza Aziz said dismissing the criticism that the government borrowing from the banking sector will affect the credit flow to the private sector. It will not have an adverse affect as the money will be circulated within the economy, he said adding the overall debt as a payment of GDP will not increase substantially.
Despite the government's bank borrowing, the credit to private sector was 23 per cent in the current fiscal and the similar growth is expected in the coming fiscal too, said Dr. Aziz upon getting support from the central bank governor.
Bangladesh Bank governor Dr. Salehuddin Ahmed supplemented the adviser saying "the borrowing is not a problem, but we are to ensure that the government is going for quality expenditure."
Replying to a questioner the finance adviser said he is not supportive of view that the revenue target for FY 2008-09 is ambitious. "If we look at the current year's achievement we see that the target is not unrealistic," he said. "We have already created an environment of tax payment in the country," Mirza Aziz claimed.
The size of ADP (annual development programme) is not small as many people said, rather it is a practical one, Dr. Aziz said adding "there will no meaning of having a paper ADP." He said he had gone for an in-depth analysis of ADPs that have adopted since 1972 and prepared this year's one to implement it properly. "Even the economists during pre-budget discussions advised me to prepare a practical ADP instead of a big one," the adviser said.
Dr. Aziz said the projections for foreign aid were fixed after thorough evaluation of the trend of donor financing.
Replying to a question on the vision of budget the finance adviser said "I do not know whether the budget can revolutionise, but I tried to be time-bound." He said the budget envisages measures to overcome crisis, which is prevailing around the globe. Food security is a worldwide problem, aggravated further by the fuel price hike.
He said: "The projected nine per cent inflation is not so high if you look at the inflationary trend of neighbouring countries. I will be happy if the inflation remains around 3, 4 or 5 per cent," he said adding the projection has been made taking into account the overall global scenario.
"Our main target is to raise the income of the poor," he asserted.
Both the finance adviser and the NBR chairman categorically said that there is no provision in the budget for whitening the black money. Only the legally earned undisclosed incomes are allowed to be legalised after paying a certain amount of fines, they said.
Dr. Aziz hoped that the private sector would announce a pay hike for their employees as a 20 per cent dearness allowance has been proposed for the government employees.
