Shawdesh Desk:

Independent think tank Centre for Policy Dialogue said on Friday that the proposed budget for the financial year 2024–25 failed to offer concrete measures to overcome the ongoing economic challenges.

Many of the budgetary targets for FY25 would be missed as the government did not take the current economic realities into account, the think tank said in its formal reaction to the national budget for FY2024–25 at a media briefing at the Bangabandhu International Conference Centre.

CPD said that the projected economic indicators for FY25, including the inflation rate, GDP growth, and investment, were overambitious.

The private think tank strongly criticised the provision of legalising undisclosed money and assets with a 15 per cent tax in the proposed budget.

It expressed concerns over the indemnity for people who gained undisclosed wealth, saying that it was a punishment for honest taxpayers.

According to the proposed provision, no authority can raise any question if a taxpayer pays a flat 15 per cent tax for immovable properties like flats, apartments, land, and other resources, including cash, irrespective of the existing laws of the country.

CPD executive director Fahmida Khatun presented the post-budget review at the event, saying that the measures for curbing inflation and bringing relief to the poor and fixed-income people were inadequate.

She termed the proposed budget for FY25 an ‘ordinary budget during an extraordinary time.’

‘Due to the inability to acknowledge the nature of the ongoing economic challenges, the proposed budgetary measures are inadequate and weak,’ Fahmida said.

As per the budget proposal, the private investment-GDP ratio will improve dramatically to 27.3 per cent in FY25 from 23.5 per cent in FY24, but there is no clear indication of where the investment will come from, she said.

According to the CPD analysis, the private-sector investment projection for FY25 differed from the earlier estimate.

Noting the estimated exchange rate for FY25 at Tk 114 per dollar in the proposed budget, CPD said it was an indication of the government›s plan to appreciate the taka.

If the government appreciated the taka against the dollar, foreign reserves would not grow, CPD said.

The CPD analyses indicated that the macroeconomic targets set for FY25 were overly optimistic and failed to acknowledge current realities, similar to the approach taken in the FY24 budget.

It stated that the revenue collection target in the proposed budget required the government to collect 27.3 per cent more than the actual collection in FY24, which is unfeasible.

Fahmida said in her presentation that CPD had strongly argued against this type of provision of legalising undisclosed money on the grounds that it was morally unacceptable.

This would discourage honest taxpayers from paying taxes on time, creating moral hazard, she said.

‘CPD thinks this type of provision undermines the rule of law and goes against the spirit of good governance. Rather, tax-dodgers must face accountability and be made to pay for their misdeeds,’ the presentation read.

CPD Distinguished Fellow Mustafizur Rahman said that the provision for legalising undisclosed money contradicts the spirit of the Awami League›s election manifesto, as the ruling party had promised zero tolerance for corruption in its manifesto.

‘The new government and its new finance minister have failed to show proficiency in formulating budgets. Rather, the new government presented an old budget,’ he said.

The CPD›s research director, Khondaker Golam Moazzem, said that the government had been shifting the responsibility of adopting austerity measures to the people and increasing public expenditures.

He said that the proposed budget would fuel non-food inflation further as VAT was imposed on many goods and services.

Moazzem claimed that, in most cases, Bangladesh’s tax policy was formulated to serve the interests of vested groups and influential individuals.

Regarding mega projects, Moazzem said that it was time to question whether these projects had truly created opportunities for a mega economy in the country.