Home ›› 04 Jun 2023 ›› Front
Borrowing from the central bank through printing money to meet budget deficits may further fuel the on-going inflationary pressure as the government uses printed money for non-tradable services but not for producing real goods and services, say experts.
Describing tax return preparers or private agents to boost revenue collection as a source of harassment, they stressed digitalisation and reducing face-to-face meet-ups between taxpayers and tax collectors.
The government in the budget proposal neither addressed priority-based sectors to tackle the current challenges nor outlined how it will attain the gross domestic product (GDP) growth, private credit, and inflation target, experts said at a post-budget dialogue organised by BRAC University Business & Economics Forum at the university on Saturday.
Former governor of the Bangladesh Bank Salehuddin Ahmed said the government did not address the immediate and intermediary challenges in creating an industry-friendly environment, alleviating poverty, and increasing manufacturing and exports.
“If the government borrows from commercial banks, the latter will not be willing to provide credit for small and medium enterprises (SMEs). Banks are already reluctant about lending to SMEs.”
The GDP will not abruptly grow at 7.5 per cent, he said, adding, “Will agriculture or apparel suddenly contribute more to raise the GDP size? The government has to draw a roadmap for how it wants to achieve the growth.”
He said he will be happy if the country’s GDP grows by 6.5 per cent in FY24, adding even a 6 per cent growth is good enough.
“People are already loath to file tax returns. Now that the minimum tax of Tk 2,000 has been proposed in the new budget even for those who do not have taxable income, there will be more reluctance to file returns.”
Will printing money produce real goods and services, questioned the former central bank chief. He said the country cannot develop industries.
“The economy is mostly dependent on the service sector, which is non-tradable. The government should focus on growing industries.”
Former advisor to the caretaker government Mirza Azizul Islam said the budget proposal has not detailed how the government will attain a 7.5 per cent GDP growth and around 6 per cent private investment growth in FY24.
It is also not understandable how this growth will happen amidst the current challenges, he said.
Besides, if the government borrows more from commercial banks to finance the budget, the private sector credit growth will fall, which has already declined in recent times, Azizul explained.
As a result, private investment will decrease, employment generation will be severely affected, and the number of people below the poverty line will rise in the coming days, he added.
He further said the government should focus on increasing the number of skilled migrants to bring in more remittances and diversifying exports by reducing the dependency on apparel.
Mominul Islam, managing director and chief executive officer of IPDC Finance, said the private sector is facing difficulties in opening letters of credit (LCs), which would affect private investment more.
The government does not take measures to create jobs and allocates less for the pertinent ministries, he said.
Snehasish Mahmud & Co Founding Partner Snehasish Barua said, “If the government cannot digitalise comprehensively, we will not be benefited from the new income tax law, which is likely to be passed soon.”
Also, if the National Board of Revenue (NBR) does not address the tax deducted at source issue, the cost of doing business will rise, no matter how good the new law is, he said.
“The government has to focus on curbing VAT leakages to bring retailers under digitalisation so that the NBR can get real-time invoice information,” he said, adding VAT accounts for the highest leakage.
