Proposed budget balanced, optimistic: Atiur Rahman

The proposed budget for fiscal 2023-24 is balanced, optimistic, futuristic, and reform-oriented, said Dr Atiur Rahman, former Bangladesh Bank governor on Saturday.

"Many people think the budget is ambitious, but we don't think so. It can be identified as optimistic and reform-oriented," he said at a post-budget press conference organised by the Unnayan Shamannay in Dhaka.

Atiur, also chairperson of the Unnayan Shamannay, said the targets in the proposed budget, including keeping inflation at 6.5%, lowering the ratio of GDP to budget deficit, increasing allocation for subsidies, and implementing various tax proposals, are realistic and achievable.

"On one hand, there was pressure to create a contractionary budget due to the macroeconomic reality caused by geopolitical instability, while on the other hand, there was an urge to increase allocations to populist initiatives ahead of the national elections.

"Initially, it seems that the main goal of the proposed budget is not to give an election-oriented populist budget, but rather a long-term sustainable economic plan," he added.

He also said the budget did not steer away from providing social security and ensuring programmes for the underprivileged. "Rather, efforts have been made to provide more support to that sector," he said.

Explaining the reasons for calling the proposed budget a balanced one, he said, "I call it balanced because the government often forgets the long-term measures as well as the short-term measures. Many times in the election year, we only talk about what products will get more votes this year. The long-term reforms e.g. how many new measures have been taken to increase revenue like registration fees, and asset fees are not usually taken in an election year. But this time they [the government] have thought about it in the long-term."

He further explained that the budget's emphasis on the agriculture sector and VAT exemptions on various products aimed to build a balanced economy.

He emphasised that it was essential to view the budget as part of a series of successive budgets from previous years, rather than in isolation.

Atiur said, "Whether the 7.5% growth target can be achieved is debatable. But now is not the time to debate on growth. Instead, more policy attention is needed to control inflation."

Although the target of maintaining inflation at 6.5% in the coming year appeared challenging, he argued that it was not unrealistic due to stabilising product prices in the global market.

Atiur Rahman called for coordination between budget and monetary policy to control deficit financing and inflation.

In the context of macroeconomic pressure, he emphasised the need to prioritise resource redistribution in sectors such as subsidies and social security.

He urged a review of some tax proposals in the proposed budget and said, "Increasing the tax limit on the wealth of the rich from Tk3 crore to Tk4 crore, and keeping students and workers under additional tax on foreign travel, some tax proposals deserve to be reconsidered."

"A minimum tax proposal of Tk2,000 for non-taxable persons can also help in raising revenue and tax-paying culture," he said, referring to the tax proposals as sensitive to reality in general.

Among others, Khandaker Shakhawat Ali, emeritus fellow of Unnayan Shamannay spoke at the event.