Like fiscal year 2017-18 (FY18), increasing investment and creating jobs are likely to be the main focus when finance minister AMA Muhith presents the national budget for fiscal year 2018-19 (FY19) in the Jatiya Sangsad later this week as he has already mentioned that there will be no major change in the ‘election year’ budget.
“This is the election year. No new initiative is possible to be taken in the new budget”, said the finance minister while speaking at a meeting of the National Board of Revenue (NBR) recently.
Prime Minister Sheikh Hasina has also asked the NBR to give general people’s well-being priority in the budget for FY19.
As the budget is presented in the run-up to elections, Muhith may take into consideration the probable political instability as the country had to experience a series of violent activities ahead and after the general elections in 2014.
Rohingya issue is likely to be a major concern for the finance minister, as he has to set a considerable amount aside in the national budget especially for shelter and feeding over 10 lakh Rohingyas who fled into Bangladesh to avoid military persecution in the Rakhain state of Myanmar.
Earlier on November 14, 2017, the Executive Committee of the National Economic Council approved a Tk 2,312.15 crore project for giving temporary shelter to Rohingyas at Bhasanchar.
Despite a little scope to focus on any new area, the finance minister has to make a very conscious move to keep the economy on the growth trajectory, especially considering the country’s official graduation from the LDC category in 2024.
This year Muhith, the octogenarian finance minister, is presenting the national budget for the 12th time. The budget, however, will be the country’s 47th budget and the 19th of the Awami League government.
Muhith is also going to be the first finance minister who is placing the national budget for the 10th time in a row since 2009.
In the outgoing financial year, the country did not see any bigger trouble in the political front while economy showed strength by attaining record reserve, higher than targeted GDP growth, the lower rate of inflation, higher export earnings, healthy growth of remittances, revenue earnings and investments.
Muhith has already hinted that the budget size for the next fiscal year would be about Tk 4.60 lakh crore as the fiscal outlay would keep a provision for financing some ongoing mega projects while it would make an increased allocation for new development projects in the coming fiscal.
The minister said that the target for GDP (Gross Domestic Product) growth would be set at 7.8 percent for FY19. The target for the outgoing budget is 7.28 percent but the planning ministry expects the growth will be over 7.65 percent at the end of the FY18.
The finance minister is expected to slash the corporate tax rate responding to the call of the country’s leading trade bodies, which have long been demanding a gradual decrease in corporate tax at a progressive rate of 5 percent, 7 percent, and 10 percent respectively in FY19, FY20 and FY21.
The trade bodies said that such a reduction in corporate tax would help boost overall investments that will ultimately help create new jobs.
During a meeting with Economic Reporters’ Forum (ERF) Muhith also hinted to increase the individual tax-free income limit as the trade bodies have requested him to increase the limit to Tk 3 lakh from the existing Tk 2.5 lakh in the upcoming budget.
Like FY18, the next budget would also have some other special features, those are designed in line with the government’s target of promoting the country to middle-income group by 2021.
Expanding tax net will be another major strategy of the proposed budget as the government has planned to bring potential taxpayers under the tax net in FY19. There are now around 35 lakh e-TIN (electronic Tax Identification Number) holders and among them, over 14 lakh submit their income tax returns.
The government has a target to raise the number of active taxpayers to 50 lakh by 2021.
The National Economic Council (NEC) has already approved an overall Tk 1,80,869.17 crore Annual Development Programme (ADP) for FY19 including the organizations’ own fund laying emphasis on speeding up the implementation of the mega projects such as Padma bridge, Rooppur nuclear power plant, Karnaphuli tunnel, Matarbari power plant, Padma Bridge rail link and Dhaka metro rail.
Out of the overall ADP allocation, Tk 1,19,810.95 crore will come from the local sources while Tk 61,058.22 crore from foreign ones.
The original ADP outlay for the FY19 is 16.59 percent or Tk 24,619 crore higher than that of the revised allocation for the current fiscal year of FY18.
According to the available date, total tax revenue collection (NBR and non-NBR) during July-February of FY18 stood higher by 16.2 percent to Tk 131,224 crore against the collection of Tk 112,960 crore during the corresponding period of FY17.
NBR tax revenue collection during July-February of FY18 stood at Tk 126,355 crore, which is 15.6 percent higher than the collection of Tk 109,266 crore during the corresponding period of the previous fiscal year.
The country’s export earnings in the first nine months of the current fiscal year rose by 6.33 percent to US$27.452 billion from US$25.817 billion in the corresponding period of the previous fiscal year.
Import payment (C&F) in July-February of FY18 was 26.21 percent higher than import payments during the corresponding months of FY17.
Remittance inflows in Q3 of FY18 increased by 26.45 percent to US$3.829 billion compared to US$3.028 billion in the corresponding quarter of the previous fiscal year.
The disbursement of foreign aid in July-February of FY18 increased by 75 percent year-on-year to US$3.42 billion. In July-February of FY18, the net FDI increased by US$10 million to US$1.263 billion from US$1.253 billion in the corresponding period of FY17.
The general point to point inflation fell slightly by 0.04 percentage point to 5.68 percent from 5.72 percent in February 2018 as food prices have fallen.
The implementation rate of the Annual Development Programme (ADP) was slightly better in the first nine months of the current fiscal year as 57 ministries and divisions managed to spend Tk 719.40 billion or 45.65 percent of the total revised allocation of Tk 1,575.94 billion.
According to BB data, Bangladesh received US$10.763 billion in remittance in the 9-month period between July and March of FY18, increasing by 17.04 percent from US$9.196 billion during the same period of FY17.
Per capita income rose to $1752 in the current fiscal year, up $142 from the last fiscal year’s $1610.
According to the latest survey results, the poverty rate in rural areas was 26.4 percent, while urban poverty was 18.9 percent. The current rate of extreme poverty is 12.9 percent, compared to 17.6 percent six years ago.
The poverty rate in the 2010 survey was 31.5 percent. In rural areas, the poverty rate was 35.2 percent and in urban areas 21.3 percent.
Overall poverty came down to 24.3 percent from 31.5 percent and extreme to 12.9 percent from 17.6 percent.
Life expectancy had increased from 65.4 years in 2006 to almost 72 years now.