budget
Defence budget increased by 7.1 pc
The allocation for the Defence Ministry in the proposed budget for fiscal year 2022-23, has been increased by Tk 2669 crore, a 7.1 percent increase, from that of the outgoing fiscal 2021-22.
Tk 40,360 crore has been proposed for the Defence Ministry and other services under the ministry in the national budget for the 2022-23 fiscal year.
Read: Budget FY23: Education allocation to rise by less than 2 pc of GDP
An amount of Tk 37691 crore was proposed for the Defence Ministry and other service under the ministry in the national budget for the 2021-22 fiscal year.
Finance Minister AHM Mustafa Kamal made the announcement during his budget speech at the National Parliament Bhaban on Thursday.
Besides, he also proposed Tk 45 crore for Armed Forces Division which was almost unchanged from the outgoing fiscal’s budget.
$ 80 billion planned for investment by 2030 to achieve climate resilience
Finance Minister AHM Mustafa Kamal has said that US$ 80 billion is being planned for investment by 2030 to achieve climate resilience.
Presenting his plan in parliament in his budget speech on Thursday, he said the government is going to implement the ‘Mujib Climate Prosperity Plan’, which is essentially a strategic investment framework for climate financing to move from climate risk to sustainable climate prosperity.
The investment will be funded by both domestic and external sources, he added.
He said that considering the immense importance of environmental protection, the government has made it mandatory to follow a pragmatic and inclusive environment-friendly plan in all development activities while addressing the risks of climate change.
As part of the implementation of the global carbon emissions reduction target, the country’s updated ‘Nationally Determined Contribution’ was finalised in August 2021.
By 2030, the target of reducing carbon-dioxide emissions has been set at 6.73 percent with the country’s own financing and technological capabilities.
Also read: Budget FY23: Tk5,000 crore earmarked to combat pandemic
Another 15.12 percent of this emission reduction has been provisioned subject to the availability of international funding and technical assistance.
On the other hand, the process of formulating a ‘National Adaptation Plan’ to determine the long-term integrated adaptation strategy together with an action plan to tackle the country’s climate change is at the final stage.
He said the updating of ‘Bangladesh Climate Change Strategy and Action Plan’ formulated in 2009 is in progress.
In addition, steps have been taken to make all existing industries and newly established industries environment friendly.
Following this, new decisions have already been taken on installation of 10 coal-fired power plants worth 12 billion USD with the generation capacity of 8,600 MW.
Of these plants 4 have been canceled and the remaining 6 will be renewable or gas-based, on the basis of a feasibility study. We are working on ensuring availability of 40 percent of our energy resources from renewable sources by 2041.
So far, 13 areas of the country have been declared as Environmentally Critical Areas on the basis of the finding of scientific studies aimed at conserving biodiversity and the natural environment, said the finance minister.
In the last 13 years, a total of 35 new protected areas have been created, including 9 National Parks, 18 Wildlife Sanctuaries, 3 Eco-parks, 1 Botanical Garden, 2 Marine Protected Areas, and 2 Special Biodiversity Conservation Areas, bringing the total number of protected areas in the country to 51, said the financial minister.
Bangladesh to unveil budget today
Bangladesh Finance Minister AHM Mustafa Kamal will unveil a Tk 6.80 trillion (Tk 6.80 lakh crore) national budget for the financial year 2022-2023 in Jatiya Sangsad on Thursday.
The size of the budget will be about 15% of the country's gross domestic product (GDP). GDP is the total monetary value of all the finished goods and services made in a country during a financial year.
This is the country’s 51st budget and the 23rd of the Awami League government in five terms. The budget will see special measures of tax exemptions on agriculture, food processing and small sector development, UNB has learnt.
Also read: Gender budget framework needs to be redesigned, say discussants at a pre-budget dialogue
Experts emphasise on having measures to control inflation and stabilise the country's foreign exchange rate, besides steps to ensure food security.
Tajuddin Ahmed presented the first budget as the first finance minister of the post-independence Bangabandhu government in 1972.
Also read:Russia-Ukraine war creates uncertainties: Kamal on upcoming national budget
In the upcoming budget, the target of GDP growth is set at 7.5% and inflation will be pegged at 5.5%.
Budget to include scheme for whitening black money again
Laundered money and assets abroad can be legalized by paying 10 per cent and 15 per cent tax respectively without questioning by any government agencies.
The government is going to introduce such special opportunities in a bid to bring back laundered money in the country to enhance investment and employment.
Economists have strongly opposed this planned concession as it discourages honest investors with serous injustice to domestic investors who pay tax to the state.
“The amount of money that will be brought into the country can be legalized with only 10 per cent income tax, without any questioning regarding source of income by Anti-Corruption Commission (ACC), National Board of Revenue (NBR) or Bangladesh Financial Intelligence Unit (BFIU),” a senior official at the Finance Division told UNB on Tuesday.
The official, who spoke on condition of anonymity because of sensitivity, confirmed what Finance Minister Mustafa Kamal told reporters last week.
READ: Revenue collection target to be set at Tk4.33 trillion in budget for next fiscal
Meanwhile the finance minister instructed the budget officials to include such an opportunity in the upcoming national budget for FY2021-22.
The budget proposals will be placed in the Parliament on June 9, 2022.
Dr Debapriya Bhattacharya, Distinguished Fellow, CPD told UNB that this initiative is totally immoral, unlawful and against the socio-economic development philosophy of Bangabandhu Sheikh Mujibur Rahman's Awami League.
Before introducing such a provision in the national budget, the government should shut down the regulators including ACC, NBR and BFIU, he said.
Debapriya termed it as "budget capture" by the crony influential who accumulated money in the country illegally and smuggled it out of the country illegally, and now being allowed to legalize this ill-gotten wealth located abroad by paying a nominal tax.
“This is a perverse joke with thousands of honest tax payers and hardworking entrepreneurs of the country,” said the eminent economist.
“Such an evil philosophy would neither contribute in decent tax mobilisation nor for generating productive investment. This will only help those who are now being hounded overseas for their assets as they cannot show that these assets that have been procured through legal means,” he added.
Dr. Muhammad Abdul Mazid, former NBR Chairman said that this initiative will worry those who are paying around 30 per cent tax on their legal income.
He said the tax rate on illegal income should not be below the regular tax rate in the country considering moral blow to the honest tax payers.
To take this opportunity, a person can mention the amount declared in his annual income tax return. In other words, the smugglers or laundered black money can be legalized by paying tax at the prescribed rate.
If anyone has movable and immovable property abroad in addition to cash, he can show that property in his income tax return. No question will be asked if 15 per cent tax is paid for this, sources said.
This opportunity will be given from July this year to June 30, 2023. That money can be brought to the country through banking channels. In this case, the government has to be paid 10 per cent tax before the money is deposited in the account.
At present, there is an opportunity to whitening black money with a penalty of 25 per cent on cash, bank deposits, stock market, and savings certificates with additional 5 percent tax. Apart from this, the government is going to give an opportunity to legalize the money laundered in the upcoming budget.
Digital platforms can enhance connectivity between people, budget-makers: Speakers
By ensuring effective participation of the people in the national budget making and implementation processes, pro-people and inclusive development can be further accelerated, discussants said on Sunday.
To do so, there is no alternative to increasing the extent of the exchange of views between the Parliamentarians and the citizens, they said, adding that digital platforms can facilitate such interactions.
The discussants came up with the opinions at the inauguration of the ‘Digital Budget Information Helpdesk’ programme of the non-government think tank Unnayan Shamannay.
Under this programme, parliamentarians, media professionals, researchers, and other stakeholders will be able to get budget-related research and information support from the research team of Unnayan Shamannay.
Also read: Budget to propose special VAT reduction to boost small businesses
At the same time, by using a website named ‘Amader Shangshad’ (Our Parliament), voters will be able to communicate their budget-related demands and suggestions to their respective parliamentarians.
Additionally, before and after the budget for the next fiscal year is proposed, budget-related live discussion sessions will be broadcasted via social media platforms (where people will be able to directly interact with the sector experts).
The programme was inaugurated virtually by Chair of the Parliamentary Standing Committee on the Ministry of Information Hasanul Haq Inu.
Unnayan Shamannay Chair and former Governor of Bangladesh Bank Dr Atiur Rahman delivered welcome remarks.
Dr. Rahman pointed out that the budget for the next fiscal year is going to be proposed under especial circumstances.
On the one hand, there are the demands for recovery following the pandemic; and on the other hand, there is pressure to go for a somewhat contractionary fiscal policy in the context of the national macroeconomic situation caused by the geopolitical turmoil, he said.
Stakeholders will be looking to this budget to direct towards a balanced approach. In this context, the services of the Digital Budget Information Helpdesk will be especially useful for the stakeholders- opined Dr. Atiur.
Inu pointed out that the lawmakers are especially interested to know the extent to which the budgets are aligned with the national macroeconomic aspirations.
Also read: New budget to focus on agro investment
It would be really appreciated if those responsible for the digital helpdesk can provide data and research support to track these issues, he said.
Unnayan Shamannay, for over a decade, has been providing budget-related information and research support to the honorable Parliamentarians from the Budget Information Help Desk operated from the Bangladesh National Parliament during the budget sessions.
This year, the Digital Budget Information Help Desk initiative has been launched to provide similar support to both the parliamentarians as well as other stakeholders.
The online launching event was moderated by the organization’s Project Coordinator Zahid Rahman and the closing remarks were delivered by the organization’s Emeritus Fellow and eminent sociologist Khondoker Shakhawat Ali.
Budget to propose special VAT reduction to boost small businesses
The government plans a special Value Added Tax (VAT) reduction facility for small businesses to rebound the sector from the adverse impact of the pandemic.
Though the large manufacturers have rebounded from the pandemic's impact, the small sector is struggling to survive. The government is considering reducing existing VAT from 5 percent to 1.5 percent as an incentive to boost the small sector.
The budget related official of the national board of revenue (NBR) said in the global economic context, the country's small businesses are at risk.
In the post pandemic period, they are going through various adversities including high VAT and capital crisis.
If the proposed rate is implemented, the tax burden on the retail and wholesale business sector will be reduced and goods and services will be cheaper. The consumer will be benefited.
Small traders said that 5 percent VAT is too much for them. In order to pay VAT at this rate, their business has to add at least 33 percent value addition.
Read: Traders urged to keep market stable ahead of Eid-ul-Azha
But in the current reality, the maximum value addition in this sector is 10 to 15 percent. So, VAT should be levied from this sector on the basis of what is net or actual value addition.
As per rule, the government levies VAT at the applicable rate based on the amount of value added in any business. This VAT is paid at the time of monthly return.
Dr Abdul Mazid former chairman of NBR told UNB, "The main problem of small traders is that they do not keep any account for the transactions they make. That is why no rebate or VAT is refunded from the government. If this could be done, the VAT burden would be reduced.”
Read: Inflation, unstable forex rate major challenges: BB governor
He said, "In order to increase the collection of VAT from this sector, it is necessary to automate all the eligible businesses. In that case, the collection will be many times more than at present.”
New budget to focus on agro investment
The upcoming national budget of FY2022-23 will focus on growth of agricultural production to reducing import dependency, NBR sources said on Wednesday.
The government has recently given a guideline to the National Board of Revenue (NBR) to keep a 10-years tax holiday for the investment in agriculture related 6-sectors including crops production, food processing plant, dairy, fisheries, fertilizer plant and agro-machinery and tech sector.
In other words, those who will invest in this sector by June 30, 2030, will get the benefit of this income tax exemption, said the officials of NBR.
READ: NBR slaps additional duty on 135 luxury items to discourage import
To avail the tax exemption facility, minimum investment of Tk 1.0 crore is needed with required registration with the Bangladesh Investment Development Authority (BIDA). The entire raw material must be collected from the domestic sources.
Bangladesh has immense potential in the domestic agro-based industry. Development and employment of agro-based industries is possible by creating import alternatives for agricultural products, a study on agriculture said.
The government has taken such initiatives to make the economy dynamic as well as create new job opportunities. Analysts say the aim is to create new ventures, especially in the rural economy, and to include more young people.
In the upcoming budget, Tk 15,000 crore would be given for agro sector incentives, up from Tk 9,500 crore in the current fiscal year.
Budget 2022-23: Economic self-reliance, adequate supply of commodities to be key challenges
Renowned economists and businesses opined that the Russia-Ukraine war, related supply crises, and LDC graduation would be the key challenges to the upcoming budget of the country.
They said production disruptions, supply hindrances, and economic problems related to increasing import costs will have to be identified in the next budget.
Speakers said these at ‘The Business Post’ roundtable discussion on ‘Economic Challenge and the Upcoming Budget for FY23’ held at the ‘Business Post’ auditorium on Saturday.
Besides, internal economic capacity will have to be increased to face the global economic pressure. At a time, increasing government and private investment, creating employment opportunities, and boosting the social safety net along with other facilities need to be addressed in the upcoming budget of the next fiscal year, they said.
A B Mirza Azizul Islam, former finance adviser, caretaker government, was present at the roundtable as the chief guest.
The Business Post Editor Mohammad Golam Sarwar presided over the roundtable while its Executive Editor Nazmul Ahsan moderated the programme.
In his speech, Mirza Azizul Islam said, “The main challenge of the budget is to control the inflation. The global unstable situation is the source of the present inflation. The fuel prices have soared due to the Russian invasion of Ukraine. While inflation creates because of global reasons, it would not be resisted by internal policy. In this case, the next budget should focus on how much safety they can provide to the affected. For this, social safety might be increased. However, needy people are always deprived of the facilities. Opportunists embezzle the social safety fund. This fund is also not adequate. That’s why; allocation in the social safety net should be increased in the next budget.”
Pension should be dropped from the social safety net, he asserted.
He said, every year, the size of the budget becomes small in the revised budget. The capacity of expenditure should be increased as Bangladesh expenses the lowest amount in South Asia.
Mirza Azizul also raised the question about the size and number of the budget.
The senior economist said the amount of expenditure will decrease if revenue does not increase. The tax-GDP ratio in Nepal and India is 22 percent while 15 percent in Pakistan. It should be increased by a 10 percent ratio in Bangladesh.
The government gives pressure on those who submit tax returns regularly although half of the total TIN (Tax Identification Number) holders do not submit a tax return. It should also be investigated, he added.
Mirza Azizul said at present the unemployment rate is more among the educated people. The upcoming budget should address the issue because the investment in the private sector remained stagnant in the last decade. In this case, funding and capital market problems should also be resolved.
Center for Policy Dialogue (CPD) Research Director Khondokar Golam Muazzem said the supply chain system has been disrupted during the post-Covid period. At the same time, expenditure also increased. The economic impact is prevailing in the country for the hike of fuel and its supply due to the Russian-Ukraine war.
At present, the challenge is the ‘balance of payment’. Export increased in the country but the cost of imports is higher than the export amount. Only remittance and foreign loans can level this ratio. The foreign exchange market will remain unstable in the upcoming days. The central bank should take logical measures to stabilize the money market. The price of the dollar is higher in the kerb market. If the central bank does not take action in this regard, remittance through hundi will be increased, he added.
Former chairman of the National Board of Revenue (NBR) Abdul Majid said, “We need to target a three-year rolling system. The ADP has implemented 45 percent in nine months, and the rest in three months. The next budget should have suggestions and the opportunity to introduce changes in this regard.”
Also read: Debapriya wants more allocation for social safety in next national budget
Keep provision for creating entrepreneurs in upcoming national budget: Webinar
The upcoming national budget should include a special programme to encourage new initiatives and create more entrepreneurs, speakers at a webinar said on Wednesday.
They also underlined the need for a special incentive or tax exemption facility of at least five to eight years for new entrepreneurs so educated youths can build a career in business.
Prof Dr Muhammad Mahboob Ali, Programme coordinator, Department of Entrepreneurship Economic, at Dhaka School of Economics, said both state-owned and private sector banks have to come forward with soft credit for new young entrepreneurs.
He suggested designating a day as ‘Entrepreneurship Day’ to be observed specially in educational institutions to inspire learners to take up innovative career.
READ: Webinar underlines digital innovation to boost agro production
Prof Dr Anisul M.Islam, University of Houston, Texas ,USA joined the webinar virtually as the chief guest, Prof Dr Susanta Kumar Mishra, School of Management, Centurion University of Technology & Management, Bhubaneswar, India and Prof Dr Parul, Institute of Management & Technology, Faridabad, India took part in the program as special guests.
Prof Islam called for ensuring good governance for expansion of enterprising activities in Bangladesh, which had been applied in the USA for developing entrepreneurship.
Without developing entrepreneurship Bangladesh cannot make employment for its huge educated population and would remain deprived of the skilled service of the population if they may migrate to developed countries, he said.
Sara Tasneem, assistant professor and Rehana pervin of DScE, Dr. Nadia Binte Amin, Umman Nahar Azmee and Md.Mahbubur Rahman, president and secretary of Entrepreneurial Economists, among others, spoke at the webinar.
Muhith: His footprints traverse the journey of Bangladesh
One of the country's longest-serving finance ministers, the only one who commanded the economy for 10 consecutive years, and the principal architect of the Awami League's era of development, AMA Muhith, breathed his last in the early hours of Saturday.
Muhith, 88, passed away at a city hospital at 12:56am – technically in the wee hours of Saturday – his brother Foreign Minister AK Abdul Momen told UNB.
He had been keeping unwell for quite some time. In July 2021, Muhith tested positive for Covid, but fought that back.
Then in March, he was hospitalised again as he became enfeebled in his old age.
Muhith's first janaza will be held at the Gulshan Azad Mosque at 10:30am on Saturday, followed by the second at 11:30am at the Parliament premises, Momen said.
Afterwards, his body will be taken to Central Shaheed Minar at 2pm for the public to pay their respects to one of the giants of Bangladesh's political arena, whose role stretches through the entire history of independent Bangladesh.
After that, it will be off to Sylhet for burial in ancestral surroundings for one of the region's proudest sons.
Prime Minister Sheikh Hasina, who entrusted him with authoring the Awami League's manifesto as the party charted its comeback ahead of the 2008 election, expressed deep shock and sorrow at the death of Muhith.
That manifesto underpinned the AL's era of unprecedented dominance, and his entire spell as finance minister, the most influential portfolio in the cabinet. For ten years, his seat was reserved to the immidiate right of the prime minister at weekly cabinet meetings.
As the finance minister of the Awami League government, he presented the budget in parliament for 10 years at a stretch. He had also presented it in an earlier era, as finance minister in the early days of the Ershad-led administration.
Muhith left his mark in the deliberate and strategic move towards expansionary fiscal policy, reflected in the burgeoning of the budget under his watch – from Tk114,000 crore in 2009-10, the first under the newly elected AL government, to Tk464,000 crore in his last, for the 2018-19 fiscal.
At first, his critics said he was overambitious with his budgets. His retort was that he would rather be that, than fall short on ambition. It set the tone for the AL's blueprint of governance in many ways, and continues to define it to this day.
Muhith retired from politics after serving as the finance minister of Sheikh Hasina's government from 2009 to 2018.
Birth and Early life
Muhith was born on 25 January 1934 in Dhopadighi, Sylhet.
He was the third child of Advocate Abu Ahmad Abdul Hafiz who was a leader of the Pakistan Movement and the founder of the then Sylhet District Muslim League.
His mother Syed Shahar Banu Chowdhury was also active in politics and social work.
He secured first place in the intermediate examination in the province in 1951 from Sylhet MC College.
Muhith stood first class first in BA in English Literature in 1954 from Dhaka University and passed his MA with credit from the same university in 1955.
During his service period, he studied at Oxford University from 1957-58 and received an MPA degree from Harvard University in 1964.
After joining Pakistan Civil Service in 1956, he served in different capacities in the East Pakistan government, the central government of Pakistan, and then Bangladesh.
During his service as the chief and deputy secretary of the Pakistan Planning Commission, he made a report on the disparity between East and West Pakistan in 1966 and that was the first report submitted on that issue in the Pakistan National Assembly in fulfilment of the constitutional obligation.
Liberation War and beyond
He was the counsellor (economic) at the Embassy of Pakistan in Washington DC when he joined the Liberation War effort as the first in his station to defect for Bangladesh and inspired many others to join him later on.
After retiring early from government service in the early Eighties, he embarked on a decades-long career as a consultant on economic and development matters at the Ford Foundation, IFAD, UN, UNDP, ADB and World Bank.
Muhith was also a pioneer of the Bangladesh environment movement and was one of the founders as president of BAPA in 2000.
He joined Awami League in 2001 and was elected a member of parliament in 2009 from his home constituency in Sylhet, after an earlier foray with the Gono Forum fizzled out without notable success.
Muhith was awarded the highest civil award Swadhinata Padak (Independence Award) in 2016 for his contribution to the Liberation War and devoted record of public service.
He was equally gifted as a writer and published 35 books on different subjects, including the Liberation War, economic development, history, public administration and political problems.