Budget of Tk 400,266cr passed
The parliament yesterday passed a budget of Tk 400,266 crore for fiscal 2017-18 -- the highest in the country's history.
Earlier on June 1, Finance Minister AMA Muhith had proposed the ambitious budget for the incoming fiscal year -- banking on higher collections thanks to the new VAT law that was scheduled to come into effect from tomorrow.
The lawmakers pushed back the implementation of the VAT and Supplementary Duty Act 2012 by two years, but the budget size -- an increase of 26.19 percent from the outgoing fiscal year -- was not scaled back accordingly.
This has raised questions on how funds would be mobilised to implement such a big budget.
Muhith did not specify in parliament on Wednesday whether the revenue generation target would be affected following the shelving of the new VAT law.
He, however, said the size of the budget would have to be amped up to transform Bangladesh into a middle-income country by 2021 and a developed one by 2041.
“So, it is normal for our budget to be a bit ambitious.”
The implementation record of every budget from fiscal 2008-09 to fiscal 2016-17 suggests the incoming year's one is not impracticable, the finance minister said.
The average budget implementation rate has been 88.8 percent of the estimated budgets since fiscal 2008-09, according to Muhith.
The budget outlined a development expenditure of Tk 159,013 crore, including Tk 153,331 crore for the annual development programme (ADP).
Muhith said the government's capacity to implement ADP has increased more than four times in its two terms.
The budget has outlined measures to fast-track the implementation of 10 large projects being financed by foreign assistance. “The financing of these projects has been ensured on a priority basis.”
The budget, which takes effect from tomorrow, gave the highest allocation of Tk 25,740 crore to the defence ministry, followed by Tk 24,674 crore to the local government division, Tk 23,147 crore to the secondary and higher education division, and Tk 22,023 crore to the primary and mass education ministry.
It has outlined a gross expenditure of Tk 535,214 crore, which includes the amount the government spends to pay back the principal amount of both domestic and external loans.
But the amount set aside for the loan repayment is not included in the budget. So, the net expenditure for the new fiscal year stands at Tk 400,266 crore.
As the uniform 15 percent VAT is not being implemented the government could have revised the budget estimates, both income and expenditure, said Khondker Golam Moazzem, research director of the Centre for Policy Dialogue.
“But the good thing is that the possible VAT-induced inflationary pressure will not occur.”
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