There is no big change in the new budget, but it has promised many new reforms and development initiatives. The 48th annual budget of Tk 5,23,190 crore up from Tk 4,64,573 crore—an increase of 12.6 percent—which is 18.1 percent of our GDP was presented in parliament yesterday. These are our initial reactions to it and more detailed analysis will follow.
The budget is targeting an optimistic growth of 8.2 percent, allocating Tk 3,20,469 crore for operation and other expenditures and Tk 2,02,721 crore for the annual development programme. In order to fund this expenditure, the government plans to collect Tk 3,77,810 crore worth of tax and non-tax revenue, of which Tk 3,25,660 crore will be collected through the National Board of Revenue, leaving a deficit of Tk 1,45,380 crore. Tk 68,016 crore of the deficit will be funded using foreign credit while Tk 77,363 crore is expected to come from domestic sources, including Tk 47,364 crore from the banking sector and Tk 30,000 crore from savings certificates and other non-bank sources.
There has been no significant change in the allocation to the education sector which has remained nearly stagnant in percentage terms. Allocation to the health sector has been set at 5.63 percent of total budget outlay this time, up slightly from 5 percent last year. Allocation to the power and energy sector has gone up significantly by 5.84 percent. Other than that, there haven’t been many other radical shifts. One point of note though is that the government has again provided scope to whiten black money, subject to investment in the industrial sector.
On the plus side, the government has proposed a two percent incentive on money remitted by expatriates to encourage Bangladeshis to send money into the country from abroad using official channels. And allocation to the social safety net has been increased.
During the budget presentation speech, it was mentioned that the government plans to focus more on our growing youth population. Yet, today we are seeing a huge percentage of our young people not involved in any form of employment, education, or training. A lot of this is due to the lack of jobs being created in the country, which we hope the government will urgently try and address. But the allocation of Tk 100 crore for young entrepreneurs is a positive step.
The government plans to reform the banking sector. However, past policies do not support this claim and we wait to see what substantive steps it takes to achieve that.
It will be a big challenge for the government to collect its targeted revenue. But if it can manage to get the ultra-rich to finally pay their share of taxes, we believe the government can succeed. That, however, remains a big “if”.
Overall, we ask the government to ensure efficient use of the budget, cutting back on wastage from previous years, which unfortunately continues to be of significant concern.