The common people are emptying their pockets to buy daily commodities. In such a situation, the government has announced a budget of Tk 7 lakh 97 thousand crore for the fiscal year 2024-25 with the deficit of Tk 256,000 crore.
Meanwhile, the government is relying on the banking sector to meet this huge deficit. According to the country's top business organizations FBCCI, DCCI, MCCI, BGMEA, BKMEA and BTMA, it may hamper local and foreign investment and employment. Businessmen and research institute concerned said this at a separate post-budget press conference yesterday.
Mahbubul Alam, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said private investment and employment will be hampered if the government borrows more from banks. To meet the deficit, the government will take a loan of Tk 1,37,500 crore from the banking sector. This is likely to reduce investment and employment in the country.
The FBCCI president also said the deficit in the proposed budget is Tk 2,56,000 crore, which is 4.6 percent of GDP. However, the budget deficit for the current fiscal year was 5.2 percent. The government will have to take Tk 1,60,900 crore from internal sources to meet the deficit. Of this, Tk 1,37,500 crore will be taken from the banking system. At the same time, the government has to bear the burden of interest. If the government borrows more from the banking system, it creates obstacles in the flow of credit. As a result, investment and employment can be adversely affected.
To meet the budget deficit, instead of the local banking system, the focus should be on financing from foreign sources at affordable interest and with caution. The coverage of the social safety net has been increased in the budget. These initiatives will strengthen social safety net and play a positive role in social economy. However, it should be ensured that the benefits reach the real beneficiaries properly.
He added that it is important to ensure business-friendly revenue management and reform of the National Board of Revenue (NBR) to collect revenue as per the target. At the same time, it is necessary to increase the tax-GDP ratio tax base and expand the tax office up to the upazila.
Metropolitan Chamber of Commerce and Industry (MCCI) President Kamran T Rahman, DCCI President Ashraf Ahmed, FBCCI Board of Directors members and businessmen were present on the occasion.
Leaders of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Manufacturers and Exporters Association (BTMA) made the announcement at a joint press conference at BGMEA Bhaban in Dhaka's Uttara.
President of BGMEA SM Mannan Kochi read out the written statement, "We expected that there would be some policy support for the garment industry in the budget. In particular, we had and have deep expectations about reducing the tax at source to 0.5 percent and treating it as the final tax liability. Besides, the budget also expected to announce income tax exemption on incentives, keeping various products and services required for industries VAT-free, resolving HS code and weight-related complexities, reducing income tax on ERQ from 20 percent to 10 percent, tax exemption on import for fire and restoration of safety equipment, 7.5 percent VAT on garment industry and withdrawal of 15 percent VAT on recycled fiber supply which didn't come up in the budget. It's frustrating for us."
Regarding the proposed budget for the fiscal year 2024-2025, the press conference said that the contractionary budget for the fiscal year 2024-25 has been proposed with various challenges in the difficult reality. The emphasis has been on controlling inflation rather than achieving higher growth. Education and skilled human resource development, employment, agriculture, power and energy, infrastructure and social safety net sectors have been given priority in the budget. These are the positive aspects of the budget.
BTMA President Mohammad Ali Khokon, BKMEA Executive President Mohammad Hatem, among others, were present at the press conference.
Many people will be encouraged to keep black money if the opportunity to whiten black money is kept in the proposed budget of South Asian Network on Economic Modeling (SANEM).
SANEM Executive Director Dr Selim Raihan said the government's move was not appropriate. He said this at a budget review meeting for 2024-2025 fiscal year organized by SANEM, a non-government research organization, at BRAC Center in Mohakhali in the capital yesterday.
Dr Selim Raihan said that the level of concern in the economy has increased more now than a year ago. If we can't fix the macroeconomic fundamentals, will the economy get worse another year from now? If the fundamentals are not addressed now, the challenges in the economy will increase. If you are given the opportunity to whiten black money, you can make this money white later. Many people will keep black money from such aspirations. They won't be too keen on whitening.
The burden of taxes has been imposed on the lower and middle class. This will put more tax pressure on the rich among this class of people. The goods and services on which taxes have been increased are not luxury goods. They are now essential commodities. Mobile phones and SIMs are now an essential service. Increasing the tax on these products will put more pressure on the lower and middle class people. And it won't have much of an impact on the upper class. Many incomes of the rich are not subject to tax and for various reasons they are out of the tax net. If they are not brought under this, then they will not be burdened.
Mentioning that it is possible to spend 80 percent of the budget every year, he said that the allocation of many sectors is returned to the government as it could not spend it. Budget implementation should be the extent to which important projects are implemented. In the previous budget, it has been seen that all the money is not spent and the project is not implemented. If 80 per cent of the budget is spent in the next fiscal year, the economy will worsen.
Expressing apprehension about the reserve, the executive director of SANEM said, "There is nothing promising in terms of foreign exchange reserves. According to the budget, the reserve will increase to $32 at the end of the next financial year. However, it did not mention how this would be possible. That is, many such things have been estimated in the budget which is not realistic."
Dr Sayema Haque Bidisha, research director of SANEM, said incentives should be given to those who will build big industries and create employment by doing honest business. If there is an opportunity to convert black money into white by paying 15 percent tax, then honest businessmen will be greatly discouraged. This will have a negative impact on doing good business in the country, creating jobs and keeping money in the country. Then the tendency to smuggle money will increase.
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