The budget for fiscal 2019-20 proposed by Finance Minister AHM Mustafa Kamal is just the banal continuation of the past.
In the run-up to his big day, Kamal spellbound the media with his promise to bring in something new for the next fiscal year. That sent the media speculating on what’s next. Those who follow this annual ritual closely are clearly disappointed.
The budget speech, however, shone a light on Kamal’s own ambitions, as he said his life would have “remained unfulfilled” without his new job as the country’s finance minister.
The national budget has been structured around the “spectacular achievements” of the government during the last 10 years, which “surpass even the fairy tales”, he said.
But he was conspicuously silent on mounting loan defaults, one of the fault lines in the economy. It appears the banking sector went from bad to worse after he took over as the finance chief in January. Kamal has since been presiding over the worsening conditions of the banking sector. But he vowed to punish the wilful loan defaulters and mentioned the formation of a banking commission to reform the sector.
Agrani Bank Chairman Zaid Bakht believes strategic reasons led to the lack of details on taking the banking sector out of trouble. “Not all things can be said in the budget,” he remarks.
Palli Karma-Sahayak Foundation or PKSF Chairman Qazi Kholiquzzaman Ahmad agrees but hopes the formation of a banking commission may ease the problem.
In an immediate reaction to the budget, FBCCI chief Sheikh Fazle Fahim said: "This is a continuation of the previous 10 budgets presented by the last two governments headed by Prime Minister Sheikh Hasina."
The Centre for Policy Dialogue or CPD Distinguished Fellow Debapriya Bhattacharya agreed as he found “nothing new” in the budget. “It’s a budget of continuation,” he said.
“We haven't seen in the proposed budget how things are going to be different in the coming days,” said Selim Raihan, a Dhaka University economics teacher and executive director of South Asian Network on Economic Modeling (SANEM).
Prime Minister Hasina, in a rare turn of events, took over presentation of the budget from Kamal who was struggling with his health, fumbling through the beginning of his speech before being allowed by Speaker Shirin Sharmin Chaudhury to deliver his address sitting down.
It was a new thing for the people. No head of government had earlier presented budget in parliament.
But it lacks specific instructions on treading the pathway to prosperity in the next five years of the government.
In Debapriya’s words: “The budget is not line with the electoral manifesto.”
A few plans mentioned by Kamal seem to lack any specific guideline to put an end to unemployment by creating 30 million jobs within 2030 in his speech, creating fears of losing the path.
In senior BNP leader Amir Khosru Mahmud Chowdhury’s view, the budget aims to give facilities to “oligarchs” and it fails to fulfil the people’s expectations.
“The budget they have presented and the financial activities ongoing now are to facilitate a class. A certain class has captured even budget management,” he said, blaming “an oligarchic class” for “holding the economy and politics of the country hostage”.
Economist Kholiquzzaman considers the plans to provide rural people with urban facilities, help the youth develop skills, and emphasis on education and technology are significant sides of the “fairly good” budget.
The proposed 2 percent incentive for inward remittance has impressed researcher Bakht.
“It’s a new and good thing. There have been discussions for long on giving incentives to remittance, much like export,” he said, expressing the hope that the inward flow of foreign currency will rise.
KAMAL’S LOVE FOR COLBERT
As he walked his countrymen through a taxation lesson in his budget speech, he cited a statement from Colbert: the “art of taxation consists in so plucking the goose as to obtain the largest number of feathers with the least possible amount of hissing”.
Kamal laid out a policy decision that the government is against imposing tax as a burden on taxpayers. The government will instead continue its efforts to bring in more people under the tax net and is determined to raise the tax-to-GDP ratio from its current 10 percent to 14 percent in two years, according to him.
To feed the planned expenditure of Tk 5.23 trillion with an increase of 18 percent from the current fiscal year, Kamal, a chartered accountant by training, is also banking on VAT.
He hopes VAT will contribute 38 percent to the revenue he has targeted and income tax 35 percent.
The long-awaited Value Added Tax Act of 2012, shelved in 2017, is coming into effect in the next fiscal year in a revised form, according to Kamal.
For income tax, the finance minister is relying on 40 million people, who he says have advanced to middle-income group thanks to the economic development of the country.
But Kholiquzzaman failed to find any answer to the question over Kamal’s announcement of tripling the number of taxpayers to 10 million in “the shortest possible period”.
His advice for the government is to focus on implementing the budget from the beginning. “Revenue collection must be strengthened.”
CPD’s Debapriya also has his doubts about the government’s success in achieving the huge revenue target while it has been revised down by Tk 220 billion for the current fiscal year.
“We believe there will be a deficit of Tk 850 billion. So the revenue collection target this time is not realistic,” he said.
Bakht says it will be difficult to implement the budget without developing skills and having political will.
“Yes, it’s possible. Our country has the lowest number of taxpayers. If we can change this, it’s very much possible,” Muhith told reporters outside parliament after watching the presentation from the visitors' gallery.