Speakers at a pre-budget discussion on Sunday said that the macroeconomic situation of Bangladesh is down to the "yellow zone" and the next budget should aim to curb inflation, cut public expenditure and focus on income generating projects.
They said that to bring back stability in the macroeconomic situation, a contractionary budget is a must and tax earning has to be increased through diversification and innovative taxation system to raise the government’s financial ability.
The speakers said this at a ‘Pre-Budget Discussion highlighting on Income Tax, VAT, Customs duty, Sector-wise allocation of Budget, external debt, etc,’ organized by the Institute of Chartered Accountants Bangladesh at CA Bhaban, Karwan Bazar in the capital.
Former state minister Dr Shamsul Alam was present at the event as the chief guest, while Dr Ahsan H Mansur, Executive Director, Policy Research Institute (PRI) was present as the special guest.
Dr Shamsul Alam said Bangladesh’s tax-GDP ratio is low, though the size of the economy is US $460 billion, which is 34th in the world.
He said there is much tax exemption in Bangladesh and lower FDI inflow, which is also cause of lower tax GDP, but time has come to come out from this situation.
“We collect 34 percent revenue from direct tax while 66 percent revenue generated from indirect tax. This should have an opposite scenario in consideration of taxable people in the country, which need to be changed,” said Dr Shamsul.
Dr Ahsan H Mansur said global inflation is affecting the domestic economy, so without decreasing inflation in the global arena, the domestic inflation would not come down to the desired level.
He said the situation calls for a contractionary budget through cutting allocation for unproductive mega projects.
Dr Mansur said the government borrows from the banking system around Tk1.5 lakh crore while total deposit collected by banks was Tk1.85 lakh crore. In such a situation the private sector is deprived of funding.
He believes that the government would fail to pay liabilities in the range of $2/3 billion US dollar in the next fiscal year due to the unstable macroeconomic situation. Payment of power plants bills may also be delayed to survive the economy in this situation.
Dr Ashikur Rahman, Senior Economist of PRI, said that Bangladesh’s macroeconomic situation is down to the yellow zone, and measures should be taken in the next budget to recover from the position it finds itself in.
Dr Mashrur Reaz, Chairman of Policy Exchange, Dr Muhammad Abdul Mazid, former chairman of NBR, Mahbub Ahmed, former senior secretary of finance, Aminur Rahman, former member, NBR, Md Farid Uddin, former member (customs and VAT), Abdul Haque, former president, Japan Bangladesh Chamber of Commerce and Industry, Mohammad Hatem, Executive President, BKMEA, Md Saiful Islam, former president MCCI, Mohammad Forkan Uddin FCA, president of ICAB, Maria Howlader FCA, vice president ICAB, Shubashish Bose, Chief Executive Officer of ICAB, among others spoke in the event.