MIZAN RAHMAN

Challenges facing the budget
IT cannot be said that the national budget for the next fiscal year (FY 2010-2011) at around Tk132.17 billion, which is 16.9 per cent of the proposed Gross Domestic Product (GDP) worth Tk 780.29 billion, is too ambitious given the overall size of the economy and the population. And compared to the revised budget for the outgoing fiscal (2009-10), it is only 35 per cent higher. From considerations of novelty, there is, however, not much to write home about except that it is a continuation of the earlier budget in terms of the emphasis given on human resources development, agriculture, power and energy and rural development. However, with extra thrust on infrastructures like power and energy on which the proposed allocation has been increased by 61.5 per cent, the new budget promises to facilitate investment better than before.
Looking at the upbeat performance of import and export in the last fiscal and an optimistic prediction on global economic recovery next year, the growth target has been fixed at 6.7 per cent. But challenges still remain since the envisaged power generation will take a long time to materialise and the external demand may hit some snags (as the scenario of instability and sluggish growth persists in the Eurozone countries which are the major importers of our RMG and other major exportable goods from Bangladesh).
Considering these factors the economic think tank Centre for Policy Dialogue expressed the view that the target of 6.7 per cent growth for FY 11 will be challenging. On the other hand, a growth rate between 6.0 and 6.5 per cent may be more realistic, it suggested in its analysis of the national budget for FY 2010-11.
The National Board of Revenue (NBR)'s success in achieving a 16.5 per cent revenue growth target in the outgoing fiscal has increased the expectation that the 18.5 per cent revenue growth target set for the next year might be an achievable one, especially considering the record of last financial year's best performers like income tax, Value Added Tax (VAT) and supplementary duty. However, the current trend of revenue collection by non-NBR and non-tax components demonstrate that they may lead to a shortfall. That calls for achieving a growth rate of around 20.4 per cent, which is higher than that projected at 16.8 per cent in the budget for FY11.
The biggest challenge will be to implement the projects (910 in total) taken up under the Annual Development Programme (ADP) for FY11. The emphasis should be laid on the sectors that have high proportion of the carried over projects and those to be completed by FY11. To accelerate the rate of implementation, the finance minister in the past (in FY10) promised to take some reform measures and use the Critical Path Method for monitoring project implementation. But nothing more of it could be heard since.
However, what is vital to look for in the ADP implementation is the quality of the projects implemented more than their number so that the whole exercise serves the economy better.
In view of the taxation measures, particularly VAT spread, it may exert a pressure on prices in general. The government may have to be watchful over pressure building up on prices.
About involving the private sector more intensely in the economy along with the public sector, it is commendable that in the proposed budget the share of the Public-Private Partnership has been set at 2.2 per cent of the budget. However, to make it attractive to the private sector, the government will need to clarify further their stakes and the profit they may draw from the ventures.
However, the success in reaching the targets as envisioned in the proposed national budget requires that the administration is transparent and accountable while development administration can deliver efficiently