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New budget to focus on increasing investment

The government will present an ambitious budget, possibly of Tk 250,000 crore, for the next fiscal year, focusing mainly on increasing investment, Finance Minister AMA Muhith said yesterday (27 March 2014).

The government will also improve efficiency of the agencies that implement development projects, he said.

“This is the first budget in the current tenure of the government. So this will be an ambitious budget,??? Muhith told reporters after a pre-budget meeting with economists at his secretariat office in Dhaka.

The economists said the government’s biggest challenge will be to boost investment in the coming days.

Muhith said they plan to raise investment as percentage of GDP to 30 percent in five years, from around 24.5 percent now.

He also said the foreign assistance that the government now receives is about 3 percent of GDP (gross domestic product), but only 1.7 percent can be utilised.

The government will start giving cash allocation to districts and upazilas from fiscal 2015-16 to strengthen the local government, he said.

Though economists recommended giving direct allocation to union parishads, the lowest tier of local government, as well, the finance minister ruled it out.

Muhith also said they would keep the budget deficit in the next fiscal year within 5 percent of the GDP.

There were suggestions from different quarters that the government can increase the budget deficit as banks have huge idle money.

But the minister said, “I totally disagree with that. I don’t have any intention to go above 5 percent.???

Taking inflation to 15-16 percent through deficit financing is not acceptable at all, he said.

Muhith said, though the new VAT law was scheduled to be effective from 2016, it may be delayed awhile. The government also plans to introduce a new income tax law to increase revenue collection.

In line with prescriptions from the economists, two advisory committees will be formed — one for the Finance Division and the other for the revenue department, Muhith said.

Along with the budget for the next fiscal year, the government will set targets for the budgets in the next five years.

When asked, the finance minister said a mid-tem election can be held for any reason. “Though there are no such reasons now, they may arise anytime.” Though the government has drafted a revised ADP (annual development programme) of Tk 54,000 crore, the amount may be raised to some extent, the minister said.

A number of economists including Mustafa K Mujeri, director general of Bangladesh Institute of Development Studies, Zaid Bakht and Binayak Sen, both research directors at the BIDS, Ahsan H Mansur, executive director of Policy Research Institute, and Toufic Ahmad Choudhury, director general of Bangladesh Institute of Bank Management, took part in the discussion.

Source: Daily Star

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