Financing a 'big' budget to be key challenge: CPD
Saturday, 9 June 2007
FE Report
The Centre for Policy Dialogue (CPD) Friday said financing the proposed budget for fiscal 2007-08 will be the major challenge for the government.
"The government must make arrangements of financing such a big budget within the first quarter of the next fiscal year through energetic kick-off," CPD's executive director (ED) Debapriya Bhattacharya told newsmen in a post-budget reaction on the day at the BRAC auditorium in the city.
Finance Adviser A.B. Mirza Azizul Islam Thursday unveiled a Tk 871.37 billion national budget for the fiscal 2007-08, setting priority to controlling inflation, stepped-up growth of agriculture, expansion of education facilities and promotion of rural development.
Commenting on the proposed change in customs duty (CD), the CPD, a civil society think-tank, said the proposed restructuring of tariff, notwithstanding being progressive in nature, might hurt the interest of domestic industries.
Commenting on the challenges for implementation, the CPD suggested forming a task force for accelerated disbursement of project aid, develop a strategic approach focusing on power sector and strengthening the linkages of private sector, local government and NGO partnership with the government.
"We must not destroy our dream of such a big expenditure…and we have to successfully face such challenges," Debapriya, also a noted economist, said.
According to CPD, the challenges for the fiscal 2007-08 would be stabilising the market price (particularly food prices), achieving pro-poor growth, addressing inequality, investment augmentation, improved domestic savings, expanding domestic tax base, greater foreign aid flow, improving quality of ADP implementation, improving investment in agriculture, proper utilisation of allocation in power, education and health, sustaining export growth, improving FDI flow, greater mobilisation of equity capital, sustaining remittance flow and pushing forward structural reforms.
On the other hand, the private think-tank said the major features of the fiscal budget proposed for first time by a caretaker government, were reflection of transition and reform, recognition of growing structural inequalities, attempts to improve transparency in budgetary accounting, reaffirmation of commitment to poverty reduction strategy paper (PRSP) principle, critical dependence of macroeconomic framework on investment performance and efforts to create a balance within an inherited public finance structure.
The CPD welcomed the proposed fiscal measures on integration of tariffs and quasi-tariffs, re-fixation of tariff slabs, harmonisation of supplementary duties, upward revision of taxable income, significant reduction of zero-duty tariffs and widening of VAT net.
On the price stabilisation measures, the CPD said that majority of its recommendations to rein in the price hike of essential commodities have been reflected in the proposed budget.
Commenting on the targeted GDP growth rate of 7.0 per cent in fiscal year (FY) 2007-08, the CPD said an extra 1.0 per cent of GDP and 5.0 per cent improvement of Incremental Capital-Output Ratio (ICOR) will be needed to achieve the rate.
The CPD further said that the proposed budget lacks details on job creation.
"According to the poverty reduction strategy (PRS) estimates, 3.6 million new employments were to be created in FY 06-07 but only 1.4 million jobs may have been created during the period," Debapriya said.
Commenting on the internal revenue earnings, the CPD said the trend shows that the proposed earning is gradually moving away from international trade taxes to domestic taxes and greater dependence on indirect taxes is also becoming visible.
The Centre for Policy Dialogue (CPD) Friday said financing the proposed budget for fiscal 2007-08 will be the major challenge for the government.
"The government must make arrangements of financing such a big budget within the first quarter of the next fiscal year through energetic kick-off," CPD's executive director (ED) Debapriya Bhattacharya told newsmen in a post-budget reaction on the day at the BRAC auditorium in the city.
Finance Adviser A.B. Mirza Azizul Islam Thursday unveiled a Tk 871.37 billion national budget for the fiscal 2007-08, setting priority to controlling inflation, stepped-up growth of agriculture, expansion of education facilities and promotion of rural development.
Commenting on the proposed change in customs duty (CD), the CPD, a civil society think-tank, said the proposed restructuring of tariff, notwithstanding being progressive in nature, might hurt the interest of domestic industries.
Commenting on the challenges for implementation, the CPD suggested forming a task force for accelerated disbursement of project aid, develop a strategic approach focusing on power sector and strengthening the linkages of private sector, local government and NGO partnership with the government.
"We must not destroy our dream of such a big expenditure…and we have to successfully face such challenges," Debapriya, also a noted economist, said.
According to CPD, the challenges for the fiscal 2007-08 would be stabilising the market price (particularly food prices), achieving pro-poor growth, addressing inequality, investment augmentation, improved domestic savings, expanding domestic tax base, greater foreign aid flow, improving quality of ADP implementation, improving investment in agriculture, proper utilisation of allocation in power, education and health, sustaining export growth, improving FDI flow, greater mobilisation of equity capital, sustaining remittance flow and pushing forward structural reforms.
On the other hand, the private think-tank said the major features of the fiscal budget proposed for first time by a caretaker government, were reflection of transition and reform, recognition of growing structural inequalities, attempts to improve transparency in budgetary accounting, reaffirmation of commitment to poverty reduction strategy paper (PRSP) principle, critical dependence of macroeconomic framework on investment performance and efforts to create a balance within an inherited public finance structure.
The CPD welcomed the proposed fiscal measures on integration of tariffs and quasi-tariffs, re-fixation of tariff slabs, harmonisation of supplementary duties, upward revision of taxable income, significant reduction of zero-duty tariffs and widening of VAT net.
On the price stabilisation measures, the CPD said that majority of its recommendations to rein in the price hike of essential commodities have been reflected in the proposed budget.
Commenting on the targeted GDP growth rate of 7.0 per cent in fiscal year (FY) 2007-08, the CPD said an extra 1.0 per cent of GDP and 5.0 per cent improvement of Incremental Capital-Output Ratio (ICOR) will be needed to achieve the rate.
The CPD further said that the proposed budget lacks details on job creation.
"According to the poverty reduction strategy (PRS) estimates, 3.6 million new employments were to be created in FY 06-07 but only 1.4 million jobs may have been created during the period," Debapriya said.
Commenting on the internal revenue earnings, the CPD said the trend shows that the proposed earning is gradually moving away from international trade taxes to domestic taxes and greater dependence on indirect taxes is also becoming visible.