Smart budget linking Bangladesh with prosperity
Finance Minister AHM Mustafa Kamal aided by Prime Minister Sheikh Hasina have announced the national budget for 2019-20 at the national parliament yesterday. It was his first budget as the Finance Minister and also the first one of the Awami League government in the third consecutive term led by Prime Minister Sheikh Hasina. However, the minister has promised the latest budget as 'smart budget' themed on the slogan 'Bangladesh on the bridge to prosperity; the time is ours.'
The nation also expects to believe and benefit from his promise. However, as for the massive Tk 5.23 trillion budget, it's time to work on the basis. With a tottering banking industry, a disgruntled private sector, wanting revenue base, edgy external balance, rising inequality and a growing population of disillusioned youth - as much as the budget is a challenge , it's also an opportunity for a clean break from the past. Moreover, the new finance minister can separate himself from his predecessor by tying the capital injection with a watertight performance agreement. And watertight is the operative word here.
The new budget is 18.1 per cent of GDP. Total allocation for operating and other expenditures is Tk 320,469 crore, and allocation for the annual development programme is Tk 202,721 crore. It's also encouraging that the new budget will introduce a special package to help new entrepreneurs while creating million new jobs. The point, however, a plethora of promises of many previous budgets yet remains unrealized.
Depending on the planned tax management steps, the total revenue collection has been estimated to be Tk 377,810 crore in 2019-20. Out of this, Tk 325,660 crore will be collected through the National Board of Revenue. The overall budget deficit will be Tk 145,380 crore, which is 5 per cent of GDP.
In financing the deficit, Tk 68,016 crore will come from external sources and Tk 77,363 crore from domestic sources. Amongst the financing from domestic sources, Tk 47,364 crore will come from the banking system and Tk 30,000 crore from savings certificates and other non-bank sources.
A big budget is inevitable for a developing country, but when the revenue earning is heavily reliant on value added tax and supplementary duty, as this budget is, it is the people across the board that will have to bear the brunt of it.
To sum it up in short, this year's budget will have to reflect a careful balancing act on the part of the Finance Minister between safeguarding growth, sustaining private sector confidence, promoting fiscal responsibility, managing debt sustainability, and protecting the poor and vulnerable.