Former finance advisor Dr A B Mirza Azizul Islam expressed on Monday his dissatisfaction over the poor attention the budget paid to address the banking sector problems.
"I am extremely disappointed at the inadequate attention paid to the banking sector," he said.
He made the remarks as a panelist at the monthly luncheon meeting of the American Chamber of Commerce in Bangladesh (AmCham) at a city hotel.
Mr Islam said the finance minister mentioned that wilful defaulters will be dealt with firmly.
"But it was not mentioned how the wilful defaulters will be defined and why the stern actions are not taken immediately."
Mr Islam also referred to the problem of falling credit flow to the private sector and said the rate came down to 12.4 per cent until March, much lower than the target set by the central bank.
"The mechanism to accelerate the private sector credit growth has not been addressed in the budget," he said.
Similarly, he said many of the initiatives mentioned in the proposed budget are not backed by adequate allocations.
Without specifying, he noted several important sectors were overlooked in the budget.
"Well, there are a number of positive steps in the budget … but the reality is: Are those supported by budgetary allocations and are there enough details of lofty goals?" Mr Islam said.
Chamber president Nurul Islam moderated the discussion on "Path to Prosperity: Reflections on the National Budget 2019-2020."
Executive director of the Policy Research Institute of Bangladesh (PRI) Dr Ahsan H Mansur and President of the Foreign Investors' Chamber of Commerce and Industry (FICCI) Shehzad Munim also attended the discussion as panelists.
Noting that statistics show a big gap between the budget size and the implementation of the outgoing fiscal year, he said, "I don't see anything in the budget document, which can help fill the implementation gap."
There is no mention about how the administrative machinery is going to make sure the next budget will be implemented well, he noted.
Mr Islam said issues that pose substantial development challenges for Bangladesh have not been addressed properly in the budget for fiscal year 2019-20.
He said the private sector investment, in proportion to the GDP (gross domestic product), remains stagnant over the last one decade.
In fiscal year 2009, the rate was 21.9 per cent of GDP, which now is 23.1 per cent, he said.
He said the budget documents mentioned that the annual rate of poverty reduction has accelerated.
But statistics show that between 2000 and 2005 the average reduction rate was 1.8 per cent, which came down to 1.7 per cent between 2005 and 2010, and further fell to 1.2 per cent between 2010 and 2015.
There is no mention about how the poverty reduction rate will be reversed, he said.
Mr Islam said the allocation for social safety net is going to be 2.5 per cent of GDP, or 12 per cent of the total budget. During FY 2009, the allocation was 2.8 per cent of GDP.
Now the allocation for social safety net has come down both in terms of GDP and the size of budget, he said.
He said foreign direct investment (FDI) does not flow to a country, if local investors do not make investments.
He said if local investors do not invest, their foreign counterparts get a message that the environment is not business-friendly.
So, raising local investments is a must to attract FDI, he argued.
Ahsan H Mansur said Bangladesh needs much bigger service delivery in terms of range and quality.
He said during the last 10 years, former finance minister AMA Muhith tried to enhance the size of budget every year by 16 to 19 per cent, but failed to do so due to shortfall in revenue earnings.
This year will also not be an exception, he said.
Dr Mansur underscored the need for changing the tax collection method.
"In Bangladesh we will never be able to get out of this revenue trap, unless we reform the National Board of Revenue (NBR) itself," he said. "The tax policy has to be completely separate from the tax administration."
He was critical of the new VAT law, saying it is not worth calling VAT law. It has become a de-facto excise law and no longer remains a VAT law.
To elaborate, he said the input credit mechanism is going to be absent in this law.
Dr Mansur also criticised the proposal for taxing capital unless dividend is paid in cash.
It will discourage the inflow of foreign investment in the country, he noted.
Shehzad Munim, in his speech, underscored the need for continuity of policies instead of changing frequently.
