Finance Minister AHM Mustafa Kamal yesterday said the government did not formulate the national budget for the fiscal year 2023–2024 based on the instructions from the International Monetary Fund (IMF).
“When the IMF lends to a country, they also come with some prescriptions to maintain macroeconomic stability. We accepted as much from their prescription as we felt fit to take for us,” he added.
The minister was responding to questions from the journalists at a post-budget press conference in the capital, a day after he placed the national budget of Tk7,61,785 crore in parliament.
On January 30, the IMF approved a loan of $4.7 billion for Bangladesh. After that, an IMF team visited the country in late April and sat with officials before it left on May 7, discussing the country’s progress in meeting loan conditions and receiving updates on economic indicators.
Earlier, Bangladesh formally requested the IMF for $4.5 billion in loan assistance in July 2022.
The IMF discussed with Finance Minister AHM Mustafa Kamal and Bangladesh Bank Governor Abdur Rouf Talukdher on the sidelines of the board meeting in July.
As per the discussion, an IMF team led by Rahul Anand visited Dhaka from October 26 to November 9, 2022 to discuss the IMF’s support for Bangladesh.
The minister said that the IMF’s duty included more than just visiting Bangladesh; it also involved carefully examining the financial statements, revenue accounts, and income-expenditure ratios of the countries it works with.
“Working with the IMF has helped many countries in achieving success,” he added.
He also said that in today’s interconnected world, all is interconnected and no one can live in isolation.
“Whether it’s import or export, we’ll always need someone,” he continued, saying that this interdependence is a good thing, and since it not only offers financial support but valuable suggestions.
Kamal also said that the IMF offers recommendations for completing projects quickly and effectively, which is advantageous.
He also said that the budget is in line with the government’s goal of building a happy, prosperous, developed, and “Smart Bangladesh” by 2041.
Responding to a question, he said that the proposed budget is all for the poor people of the country.
“The middle-income population in this country is high, but they don’t pay taxes. If all of them pay tax then others would have to pay less tax. I think now is the time for everyone to pay taxes,” he added.
Stock market dilemma
The proposed budget has not included anything regarding the stock market.
On this front, the finance minister could not say anything. He could not even find out who would explain this later on.
Then he passed it to the finance secretary — but she also expressed incompetence and passed it to the governor of Bangladesh Bank.
After that, he said that there were several problems with the stock market within the central bank and the Bangladesh Securities Exchange Commission (BSEC).
“We talked to the chairman and members of the BSEC regarding the policies to solve these. Our capital market has two parts: equity market and bond market. The work is underway to develop the bond market,” he added.
‘Plans to tackle inflation soon’
The minister admitted that the government is concerned about the country’s rising trend in inflation, which is also seen across the world mainly owing to the Russian invasion of Ukraine.
“We’re apprehensive about inflation, but it is not beyond our control. We cannot stop feeding the people,” he said.
“We are working in a flexible way to control the inflation,” he added,
He said the government is approaching in a flexible way to contain inflation. Through social safety-net programmes, the government has been providing food to poor people.
“We’re trying to identify the reasons for inflation and address those. If we need to give any concession, we will do that,” he said.
Regarding how to tame inflation, the finance minister said that the whole world is facing inflationary pressure due to the Russia-Ukraine war.
Bangladesh Bank Governor Rouf, who also attended the press meet, said that the details policy on taming inflation will be presented in the next monetary policy.
The finance minister said that he is committed to creating employment for 20 million people and they created employment for 24.5 million.
“Our achievement is mentionable. Slowly our employment is increasing and the scope of employment has also increased. We have taken various steps to create employment,” he added.
On the question of whether it was an election-centric budget, Agricultural Minister Dr Muhammad Abdur Razzaque said that they formulate the budget in such a way as to please the common people.
“So, I don’t think it is wrong to give a budget based on elections. In the past budgets since 2009, we’ve fulfilled all the promises we made,” he added.
Black money to stay illegal?
Talking about keeping no opportunity in this budget to whiten “black money” like that in the last one, the finance minister said that no one utilized the scope last year.
“In the last budget, I said that if someone brings undisclosed money to the country, he/she will have to pay no tax for that. Despite such an opportunity, no such money has come to Bangladesh as yet,” he added.
So, this year’s budget has not kept the opportunity to whiten black money, he added.
TIN, BB lending issues
Responding to a question on the Tk2,000 mandatory tax of a TIN holder to avail 44 government services, NBR Chairman Abu Hena Md Rahmatul Muneem said anyone having a TIN (Taxpayer Identification Number) has to file a return and tax of Tk2,000 has to be paid on filing the return.
“Here we need to see who has TIN. Those who do business or import-export in our country and who use TIN have to file returns. Along with that, they have to pay a tax of Tk2,000,” he added saying that this will be applicable to those who do business using TIN.
On the government’s bank borrowing, BB Governor Rouf said taking this borrowing will not cause any problems in the private sector.
He said: “The central bank has sold about $20 billion in the market to deal with the dollar crisis, meaning Tk2 lakh crores have entered the central bank from the budget.
“If this money was available in the market, there would have been no problem for the government to take a loan of Tk1 lakh crore. Now that there is a liquidity crunch in the market, the government is taking through bonds,” he added.
He also said that there is no possibility of increasing inflation if new money is printed and released in the market.
“Upon withdrawing Tk 2 lakh crores and leaving Tk70 thousand crores, the supply of money (castle out) still remains less,” he added.
They also discussed ADP, non-performing loans, social safety networks, bank commission formation, agriculture, education, energy and power, and other issues.
Commerce Minister Tipu Munshi, Industries Minister Nurul Majid Humayun, Planning Minister MA Mannan, LGRD Minister Md Tajul Islam, Education Minister Dipu Moni, Economic Advisor to the Prime Minister Dr Mashiur Rahman, State Minister for Planning Dr Shamsul Alam, and Finance Secretary Fatima Yesmin were also present at the event.