• Tuesday, September 30, 2014

Mega projects the mainstay

Budget to get 16pc bigger than outgoing fiscal year's

Rejaul Karim Byron

With renewed focus on its development ambitions, the government will unveil the budget for fiscal 2014-15 tomorrow, giving precedence over the high-profile projects announced in its last term.
In what will be his eighth budget speech, Finance Minister AMA Muhith will place an outlay of around Tk 250,510 crore, 16 percent bigger than the current fiscal year's revised budget.
The budget will particularly focus on the resource-intensive big infrastructure projects like Padma bridge, Rooppur nuclear power plant and the Dhaka-Chittagong expressway, all the while keeping the deficit within 5 percent of GDP, a paramount condition of the IMF for its $1 billion credit.
The projects, announced in the ruling Awami League's past term along with a host of others, will directly contribute to the country's economic growth and benefit the people.
They did not get much momentum until now due to fund constraints, corruption charges and habitual delay in implementation, which drew a lot of criticism.
To fund the relatively large budget, the government will go after the wealthy, who tend to get away with paying less tax than they should, instead of annoying the middle- and low-income groups.
“It will be a traditional budget in every sense but with one eye on completing what we started in the last term and rectifying the wrongs,” said a high official of the finance ministry, asking not to be named.

“This budget will pave way for what the government wants to achieve this term, which is visible progress for the country. The objectives for the term will be articulated this time and will be followed through in the remaining four budgets,” he added.
Zahid Hussain, lead economist at the World Bank's Dhaka office, welcomed the government's thought process behind the budget.
“It is good to see that the government has given more allocation to the ongoing high priority projects. The first part of the job is done,” he told The Daily Star.
“Now the public wants to see the much-needed administrative attention such that the projects are implemented quickly.”
Around Tk 80,315 crore will be allocated to the Annual Development Programme (ADP), 32 percent of which will go to 26 big projects.
The much-talked-about Padma bridge project, which will connect the impoverished south-western districts with the capital, will receive Tk 8,100 crore, the highest allocation for any single project.
The bridge is expected to add between 1 and 2 percentage points to the GDP.
The Rooppur Nuclear Power Plant project will get Tk 2,006 crore, while Tk 4,557 crore will be allocated to nine big public sector power plants.
The long-delayed Dhaka-Chittagong four-lane project, said to be the economic corridor of the country, will get Tk 600 crore.
Another Tk 1,000 crore will be earmarked for the Metro Rail and Elevated Expressway projects, both of which will not only make the city dwellers' lives better but also contribute to economic growth, as traffic congestion eats up a huge amount of time and money.
The five water treatment plant projects in Dhaka, Chittagong and Rajshahi cities will get Tk 2,200 crore and the Dhaka-Mymensingh four-lane project Tk 400 crore.
Meanwhile, the size of the non-development budget is expected to rise 9 percent from the current year's revised budget to Tk 170,195 crore.
A finance ministry official said there would be nothing new in terms of non-development expenditure: the bulk of the allocation will be for salary and allowance for government staff, debt servicing, social safety net schemes and subsidies.
Interest payment will increase in the new fiscal year, as the government is borrowing more from domestic sources at high interest rates although $19 billion of cheap funds from development partners are lying in the pipeline.
However, the spending on subsidy will be cut this year in a bid to keep budget deficit within the International Monetary Fund's limit. Electricity and fuel price may be hiked to cancel out the subsidy cuts.
The government has set the revenue collection target at Tk 183,535 crore, 17 percent higher than the current year's revised target.
The National Board of Revenue (NBR) is trying to collect about 81 percent of the target, which would be 20 percent more than this year's revised target.  
The government will look to income tax and value-added tax to gear up revenue collections, with the two expected to rake in 76 percent of the desired sum.
The rich and the super-rich will be relied upon to hit the income tax collection target: the budget will introduce a new slab for high levels of annual income, where 30 percent tax would be imposed.
The NBR will also take special initiatives to collect more taxes from individuals owning more than one car and one house.
The budget will introduce 15 percent VAT in a number of areas as part of its preparation to impose the same amount of tax in all sectors from July 2015.

Published: 12:01 am Wednesday, June 04, 2014

Last modified: 9:48 pm Wednesday, June 04, 2014

TAGS: government Finance Minister AMA Muhith GDP IMF Budget Projects top priority current fiscal year.

Leave your comments | Comment Policy