Govt to trim 5yr macroeconomic framework in tune with revenue tumbledown

The government moves to trim the five-year macroeconomic framework in tune with revenue losses as the longstanding political deadlock is casting a shadow on the national economy for a longer term.
Officials said Friday the belt-tightening, in terms of lowering the target of revenue receipts, was being necessitated for lesser-than-expected income from taxes and non-tax sources.
In a major policy shift, they said, the General Economics Division (GED) of the Planning Commission has slashed the revenue-income projection for the next five years from that in the existing Perspective Plan 2021.
According to GED's proposal, it has cut the revenue-GDP (gross domestic product) ratio by 3.6 percentage points to 12 per cent from 15.6 per cent for the next financial year (FY) 2015-16.
It has also downsized the revenue-GDP ratio for the subsequent years in the revised Medium-term Macroeconomic Framework (MTMF) for the next five years from that in the Perspective Plan of Bangladesh.
In the proposed MTMF, the GED has cut the revenue-GDP ratio to 12.4 per cent from 16.6 per cent in FY2017, to 12.5 per cent from 17.4 per cent in FY2017, to 12.8 per cent from 18.2 per cent in FY2018, to 13.0 per cent from 19.1 per cent in FY2018.
In the first half of the current FY2015, the overall revenue collection fell short of target by Tk 20.04 billion mainly because of squeezes in domestic consumption, sluggish economic activities and political uncertainly prevailing in the country over election issues.
According to the National Board of Revenue (NBR), the value-added tax collection, which mostly depends on domestic consumption of products and services, and economic activities like production and investment, was severely affected in the period.
The disruptions caused such a significant shortfall in collection in the July-December period of the FY.
VAT collection alone was lagging behind the target by Tk 26.54 billion while income tax and customs duty collection achieved their respective targets in the period.
According to the provisional data available with the NBR, income tax, VAT and customs wings managed to mobilize Tk 584.49 billion in the period against the collection target of Tk 604.53 billion set for the period.
NBR officials said continuous deficit in revenue collection from the beginning of the fiscal year made the tax administration worried about getting to the goal by the end of the year. The revenue board is preparing a strategic plan for the remaining months to achieve the target, they said.
GED Member Professor Shamsul Alam said they had drafted an MTMF for the next five years to prepare the 7th five-year development plan (FYP), to be implemented between FY2016 and FY2020.
"We are consulting the panel of economists, experts, government agencies and other stakeholders to finalise the MTMF. Then it will be included in the upcoming FYP," he said.
Development analyst Dr Zahid Bakht said: "Bangladesh's economy has almost been in a stagnant position for the last few years. If the government does not take some pragmatic steps, even the revised macroeconomic targets will not be achieved."
The government should go for prompt action to expedite implementation of the ongoing mega-development projects in a bid to facilitate more private investments, he told the FE about the way of unlocking the trapped development recipe.
If the private investment soared, the overall economy would grow by overcoming its prevailing stagnation over the last few years, Dr Bakht said.
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