Budget Implementation: Challenges and Limitations

2 Pages Posted: 24 Jun 2019

Date Written: June 18, 2019

Abstract

Finance Minister AHM Mustafa Kamal, along with the Prime Minister Sheikh Hasina, proposed the national budget for fiscal year 2019-2020 in the Jatiya Sangsad on June 13, 2019. The proposed budget, amounting to Tk 5,231.90 billion, is the largest-ever in the history of Bangladesh. This budget will be more challenging to implement as the deficit is about 22.78 per cent or Tk 1,453.80 billion. The proposed budget has set a target to collect Tk 680.16 billion from external sources. This is also the largest-ever target set by Bangladesh in getting foreign loans. If the government can manage this, then private sector borrowing from external sources may gain momentum. Secondly, it has been proposed that the government will take a loan of Tk 473.64 billion from the local banking system. This is likely to create pressure on the banking system. As a result, banks may fail to achieve target of providing loans to private enterprises. Thus shortage of loan products may hamper private sector growth, which in turn can affect investment growth. A revenue target of Tk 3,778.10 billion has been set in the proposed budget. This is very ambitious target and will create extra pressure on the National Board of Revenue (NBR). Such extraordinary tax pressure may lead to disputes between taxpayers and collectors. It's worth mentioning that the target of revenue collection in the current budget was originally Tk 3,392.80 billion. But due to inability of collecting this sum, the target was revised to Tk 3,166.12 billion later. The same fate may be waiting for this year's revenue target as well. The government should be cautious so that the revenue collection target does not create an undesirable situation where taxpayers are harassed by tax collectors.

Keywords: budget, national budget 2019-20, implementation of national budget, Budget Bangladesh

JEL Classification: H61

Suggested Citation

Abdin, Md. Joynal, Budget Implementation: Challenges and Limitations (June 18, 2019). Available at SSRN: https://ssrn.com/abstract=3405951 or http://dx.doi.org/10.2139/ssrn.3405951

Md. Joynal Abdin (Contact Author)

DCCI Business Institute (DBI) ( email )

DCCI Building (11th Floor), 65-66 Motijheel C/A
Dhaka, 1000
Bangladesh

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