Next budget set to be most challenging: Speakers

The pandemic-induced supply chain shock, compounded further by the Russia-Ukraine war while the economy was on a recovery track, and rising inflation will make next year's budget the most challenging one so far, calling for a massive revenue reform, entrepreneurs said at a seminar on Saturday.

They said that there was now pressure to reduce spending on unproductive sectors and even mega projects which are not urgently needed.

At the seminar "Macro Economy:Expectation from National Budget 2022-23" jointly organised by the Institute of Chartered Accountants of Bangladesh (ICAB) and Economic Reporters Forum (ERF), Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry, said this year's budget was being made in a situation not seen in a hundred years. Against this backdrop, he advised that the pressures on traders and consumers be taken into consideration.

He also said that if the country became a middle-income one in 2026, it will have to face many challenges besides opportunities. He also called for subsidies to keep fuel prices affordable.

Manzur Ahmed, advisor to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said the budget for the most challenging period was coming. This year's budget was even more challenging than the one in 1973, he said.

Speaking to The Business Standard on the sidelines of the seminars, he said sanctions on different countries were increasing and getting prolonged. The World Trade Organisation had taken a stand against Russia and the supply chain was not normal, said, adding that there was a need to prepare for a prolonged crisis.

Manzur said business leaders have been urging for a reduction in taxes in order to smoothly transition from Covid-19, develop local industries and make the financial sector more sustainable.

At the same time, there have been demands for easing tax payments and reducing harassment by the National Board of Revenue, he said.

The advisor said that there were problems in the banking and shipping sectors, while fuel prices were also rising, but there was a pressure to not raise energy prices in the local markets, meaning there would be a huge subsidy-spending pressure on the government.

Highlighting Sri Lanka's predicament due to excessive debt, Ahsan H Mansur, executive director at the Policy Research Institute (PRI), called for learning from the situation, especially in terms of spending on mega projects.

He said projects like Padma Bridge and the Dhaka-Chattogram Highway were fine, but there was no need for a project like Ramu-Cox's Bazar at a cost of Tk22,000 crore. Similarly, the Padma Rail and Rooppur Nuclear Power Project could also be reexamined as those would not yield a high rate of return.

Again, the government is also not able to bring expected revenue through reforms, he said.

"We [Bangladesh] are still in good shape," he said, but warned that implementing mega projects by borrowing funds without much caution could result in a situation where there would be no way of recourse but to print money.

He also called for reduction of expenditure on unproductive areas.

Pointing to the huge expenditure on the bureaucracy, he said, "Why should every secretary need a bodyguard? It doesn't exist anywhere in the world. Pajero cars are being offered. If you can't afford it, you shouldn't spend it."

He also called on the government to come out of the excess subsidy, saying that there was a subsidy of Tk35,000 crore behind fertiliser alone.

Attending the event as the chief guest, Planning Minister MA Mannan also said that high expenditure on unproductive sectors was unjust and this needed reforms.

He, however, termed such expenditure a more political than economic issue. He said it was about vested interests and everyone wanted big allocations, which the government couldn't drastically reduce all of a sudden.

Agreeing with the views of businessmen and economists on the need for comprehensive reform of the NBR, the planning minister said that it was desperately needed.

Asif Ibrahim, chairman of the Chittagong Stock Exchange, said that the war in Ukraine would increase inflation to over 7% this year.

Abul Kasem Khan, former president of the Dhaka Chamber of Commerce and Industry, blamed harassment of revenue officials for not raising the tax net at the expected rate. He said that this is the main reason for not increasing tax revenues.

The NBR thinks that all the traders are thieves so they must be caught.

At the time, he cited the example of the wide gap between the mouza rate and the market price in the sale of land in different areas of the capital, saying that due to these reasons, white money has become black. If this continues, tax compliance will not come.

Md Eunusur Rahman, chairman, Dhaka Stock Exchange Limited, said the share market was the real source of long term financing and proposed that bank lending be capped at Tk100crore in the next budget.

Among others, Rasheda K Choudhury, former advisor to a caretaker government, Shomi Kaiser, president, e-Commerce Association of Bangladesh (e-CAB), Shawkat Hossain Masum, head of online at the daily Prothom Alo, ERF President Sharmeen Rinvy and Secretary General SM Rashidul Islam were present at the programme held in CA Bhaban in the capital's Karwan Bazar.

ICAB President Md Shahadat Hossain presided over the seminar which was moderated by former ICAB president Humayun Kabir.