Budget lacks direction on economic reforms: IBFB

Bangladesh’s macroeconomic indicators and revenue collection are under pressure due to persistent global economic headwinds, and many economic indicators of the country deteriorated steadily in recent years.

The proposed budget for FY25 however lacks proper direction on economic reforms. Good governance and proper monitoring are needed to meet the challenges of budget implementation.

International Business Forum of Bangladesh (IBFB) President Humayun Rashid made the remarks while presenting the keynote at a press conference titled “Proposed National Budget 2024-25: Expectations and Achievements,” organised by the IBFB in Tejgaon on Tuesday.

He pointed out, “It is important to ensure clear direction and planning for continuous improvement of efficiency, transparency, accountability and quality of oversight in budget implementation.

“Lack of pro-industry policies in the budget will exacerbate the crisis post-2026 LDC graduation. Advance income tax increases costs to businesses. Import duty on capital machinery in economic zones should be waived immediately otherwise it will have a long term impact.”

Stating that the country’s macroeconomic indicators and the revenue collection process are under pressure due to the difficult situation prevailing globally, he said, “The total revenue collection target has been set at 5 lakh 41 thousand crores of GDP in the proposed budget.

“While other sectors [non-NBR tax and non-tax income] are reduced, the NBR's tax revenue target has gone up. Pressure on the NBR to fulfill targets would have been further reduced if the revenue targets were not lowered, but increased in both the government agencies and corporations. Collecting this large revenue will be a big challenge for the government.”

Referring to the proposed budget as realistic and implementable, Humayun said, “Public and private sector partnerships should be strengthened to implement the budget.”

“Inflation was targeted at 6.5 per cent in the budget. But inflation stood at 9.89 per cent in May this year. Achieving this target by reducing the inflation rate is a big challenge. The rise in inflation must be curbed. If not, public suffering will increase.”

A former chairman of the National Board of Revenue (NBR) and IBFB Advisor Muhammad Abdul Majid said, “The provision of no questions asked treatment of undisclosed wealth has created a smokescreen. The opportunity to validate undisclosed income will discourage new taxpayers.”

“Bangladesh’s laws have a cross-eyed view. Instead of encouraging legitimate taxpayers, the country has provisions allowing whitening of undisclosed wealth without accountability. This will dis-incentivise regular taxpayers.”

Majid added, “It was necessary to emphasise on increasing the target of direct tax collection. It is not possible to achieve the NBR target through indirect taxes. Besides, it was necessary to speak to stakeholders before implementing The Customs Act.”