Big budget with 'poor revenue may create problem for govt'
Friday, 5 June 2009
FE Report
Big budget with poor revenue might create problem for the government if it fails to address the inflationary pressure, said Krishi Bank chairman Khondkar Ibrahim Khaled on Thursday.
"The government should undertake necessary measures to reduce inflationary pressure in the next budget," he said at a launching ceremony of Bangladesh Economic Outlook - 7th issue published by Shamunnay, a non-governmental organisation, in the city.
It is expected that the finance minister will allow 'undisclosed money' to flow into formal channel on condition of its investment in certain sector, he said.
"But it will be suicidal if the money is allowed to invest in housing sector," Mr Khaled said.
Former finance minister M Saifur Rahman also gave the same benefit to tax evaders and within two months after announcing it, the price of per square feet apartment price in Dhanmondi area went up to Tk 5,000-Tk 6,000 from Tk 2,000, he added.
"The money should be invested in productive sector, especially in manufacturing sector," he suggested.
Mr Khaled, also a former deputy governor of the Bangladesh Bank, said the government should appoint senior and experienced businessmen having wide contact abroad in foreign mission on an ad hoc basis.
"I have talked to several reputed businessmen who have shown willingness to work in the foreign mission on temporary basis," he said.
Syed Manzur Elahi, a reputed businessman and a former adviser, has good relations with Italy and he can be appointed in the Italian mission for a short period and diplomats can also learn many things about economic diplomacy from him, he added.
The former deputy governor cautioned that the government should not pursue 'extreme capitalism' ideology to govern the country.
"Welfare state model followed in the Scandinavian countries is the best one," he said.
The government should revitalise Trading Corporation of Bangladesh, Bangladesh Agriculture Development Corporation and other important government agencies, which can help the country at times of difficulty, he added.
Former finance and planning minister M Syeduzzaman said maintaining fiscal balance in the next budget will be a big challenge for the government.
"There will be a big gap between expenditure and revenue earning in the budget and it can be filled up by widening tax net," he suggested.
Many international organisations want to lend money to the government, and if properly negotiated the country can have enough foreign funds to reduce income-expenditure gap in the budget, he said.
The size of next annual development programme (ADP) is ambitious, but it is attainable, he said adding: "Efficient government mechanism and proper utilisation of resources can ensure quality ADP implementation."
ADP implementation has multiple effect in terms of employment, capital formation and channelling money to rural and urban economy, he added.
Regarding stimulus package, he said it will help the affected sectors by providing one-time cash subsidy. "The government should formulate long-term strategy to help the sectors become more competitive."
Bangladesh Knitwear Manufacturers and Exporters Association president Fazlul Hoque said in July-September quarter the readymade garment export growth was 54 per cent, but it was only 8.0 per cent October-March period.
"In the last 12 years, the sector enjoyed an annual growth rate of 22 per cent, but this year it will likely to fall at single digit," he feared.
Big budget with poor revenue might create problem for the government if it fails to address the inflationary pressure, said Krishi Bank chairman Khondkar Ibrahim Khaled on Thursday.
"The government should undertake necessary measures to reduce inflationary pressure in the next budget," he said at a launching ceremony of Bangladesh Economic Outlook - 7th issue published by Shamunnay, a non-governmental organisation, in the city.
It is expected that the finance minister will allow 'undisclosed money' to flow into formal channel on condition of its investment in certain sector, he said.
"But it will be suicidal if the money is allowed to invest in housing sector," Mr Khaled said.
Former finance minister M Saifur Rahman also gave the same benefit to tax evaders and within two months after announcing it, the price of per square feet apartment price in Dhanmondi area went up to Tk 5,000-Tk 6,000 from Tk 2,000, he added.
"The money should be invested in productive sector, especially in manufacturing sector," he suggested.
Mr Khaled, also a former deputy governor of the Bangladesh Bank, said the government should appoint senior and experienced businessmen having wide contact abroad in foreign mission on an ad hoc basis.
"I have talked to several reputed businessmen who have shown willingness to work in the foreign mission on temporary basis," he said.
Syed Manzur Elahi, a reputed businessman and a former adviser, has good relations with Italy and he can be appointed in the Italian mission for a short period and diplomats can also learn many things about economic diplomacy from him, he added.
The former deputy governor cautioned that the government should not pursue 'extreme capitalism' ideology to govern the country.
"Welfare state model followed in the Scandinavian countries is the best one," he said.
The government should revitalise Trading Corporation of Bangladesh, Bangladesh Agriculture Development Corporation and other important government agencies, which can help the country at times of difficulty, he added.
Former finance and planning minister M Syeduzzaman said maintaining fiscal balance in the next budget will be a big challenge for the government.
"There will be a big gap between expenditure and revenue earning in the budget and it can be filled up by widening tax net," he suggested.
Many international organisations want to lend money to the government, and if properly negotiated the country can have enough foreign funds to reduce income-expenditure gap in the budget, he said.
The size of next annual development programme (ADP) is ambitious, but it is attainable, he said adding: "Efficient government mechanism and proper utilisation of resources can ensure quality ADP implementation."
ADP implementation has multiple effect in terms of employment, capital formation and channelling money to rural and urban economy, he added.
Regarding stimulus package, he said it will help the affected sectors by providing one-time cash subsidy. "The government should formulate long-term strategy to help the sectors become more competitive."
Bangladesh Knitwear Manufacturers and Exporters Association president Fazlul Hoque said in July-September quarter the readymade garment export growth was 54 per cent, but it was only 8.0 per cent October-March period.
"In the last 12 years, the sector enjoyed an annual growth rate of 22 per cent, but this year it will likely to fall at single digit," he feared.