Fiscal targets of budget fail to reflect reality: CPD

FE Report | Published: June 15, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

Macroeconomic correlates are pretty inconsistent and key fiscal targets do not reflect reality in the budget estimation for fiscal year (FY) 2014-15, a key note paper presented at a function, organised by the Centre for Policy Dialogue (CPD), said.
It said the budget has not provided for necessary institutional reforms towards better fiscal management and supportive policy environment creation.
The CPD organised a policy dialogue on 'Analysis of the National Budget for FY 2015' at a city hotel Saturday.
Speakers at the programme underscored the need for political stability and dialogues among parties concerned to attract investment and speed up the pace of the country's GDP growth. They also found the budget not in tune with the Sixth Five-Year Plan.
Dr Fahmida Khatun, research director of the CPD, presented the keynote paper in the programme with some major observations. CPD chairman Professor Rehman Sobhan moderated the programme.
Representatives from business community, government officials, economists, former bureaucrats, advocacy and research organisation officials attended the programme.
Planning Minister AHM Mustafa Kamal, State Minister for Finance MA Mannan, former Finance Adviser to the caretaker government Dr. Akbar Ali Khan, former Bangladesh Bank (BB) governor Dr Salehuddin Ahmed, CPD executive director Professor Mustafizur Rahman, and distinguished fellow Dr Debapriya Bhattacharya, among others spoke on the occasion.
Dr Bhattachariya said the budget should be framed on ground realities, not on vision.
"Vision and budget cannot be the same. The planning process may incorporate ambition. But the same cannot have a place in the budget," he said.
For this reason, expenditure and allocation have a mismatch to the extent of around 13 per cent, he said.
"The financial sector will be disrupted and the market will get a different signal if the budget is prepared on vision," he said.
Dr Akbar Ali Khan stressed the need for participation of major opposition parties in the budgetary process and reaching a political consensus.
He said poverty rates have come down on the basis of the government's estimation that has taken into consideration the local factors. In international perspective, the poverty rate is still high.
Dr Khan maintained that the improvement in poverty situation is not sustainable as the situation could be on a reverse trend in the event of an increase in the price of essentials.
"The budget has failed to mention sources from where the government would collect the projected revenue in the upcoming fiscal," he said.
Dr Salehuddin Ahmed underscored the need for attracting investment and monitoring infrastructure projects.
He recommended reduction of bank borrowing by managing soft loans in larger volume.
Dr Ahmed criticised the government's support to the "inefficient" state-owned banks.
He also suggested institutional development of local government.
Former Finance Minister and member of CPD board of trustees, Dr M Syeduzzaman said the public administration has received the highest allocation, 15.3 per cent, in the budget for next fiscal.
"The nation would expect that the allocation will be justifiably spent by appointing skilled manpower following rules of business," he added.
Outcome of the budget, in terms of GDP, will depend first on realising revenue targets, using the projected foreign aid in the pipeline, attitude of the private sector and effective use of available resources for implementing the private investment programmes, he said.
If private investment is at least 25 per cent of GDP and resources and infrastructure are available, then the budget targets will not be ambitious, he said.
Mr Syeduzzaman said the financial sector is facing serious problem.
"Single client exposure for building the Padma Bridge is not a healthy process. It will be give a big shock to the inclusive growth through the banking sector which we are expecting. And it would be a wrong signal to the private sector investment," he added.
Planning Minister Mostafa Kamal said the revenue collection has achieved remarkable growth, around 20 per cent, in the last five years.
He said real investment has increased this year while private sector investment saw a nominal slide.
The State Minister for Finance said the government has proposed a wide range of incentives in the budget to attract investment.
There are some historical impediments but the government has proved it successful in many respects, he added.
Exporters Association of Bangladesh (EAB) president Abdus Salam Murshedy sought unified dollar rate for all exporters and simplification of bonded warehouse facility.
Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) president Kazi Akramuddin said the budget has rightly focused SME and women development issues.
Anis-Ud-Dowla, chairman of ACI limited and former president of the Metropolitan Chamber of Commerce and Industry (MCCI), sought proper justice for payment of proper tax.