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Budget bold, challenging

Financing, implementation major challenges, says MCCI

Staff Correspondent
The proposed budget for fiscal year 2009* 10 is a "bold and challenging one" as the government will face up to financing and implementing the budget astutely, said Metropolitan Chamber of Commerce and Industry (MCCI) yesterday.
"Financing and implementing the budget will be the two major challenges," the chamber said in a written reaction to the budget.
It also came down on the government for keeping the provision of whitening undisclosed income and that for three years.
Finance Minister AMA Muhith presented a Tk 1,13,819 crore budget to the nation on Thursday.
The budget's net outlay is to be financed by 56.2 percent from tax revenue, 13.6 percent from non-tax revenue, 12.1 percent from foreign loans and grants, leaving the gap to be met from domestic sources, of which borrowing from banking system will be the main component
"The projected borrowing will be significantly higher compared to the previous year's budget," the MCCI said.
The government's borrowings from banking sector were Tk 4,420 crore in FY 2006-07, Tk 10,960 crore in FY 2007-08 andTk 10,698 crore in FY2008-09.
"There must be a cap on the government’s borrowings from banks, and
instead, it should seek a fair share of the financial package due to be made available to the developing countries in pursu once of the decision taken at the G20 summit recently," the MCCI said.
The chamber also expressed disappointment as income tax rates for banks, financial institutions and insurance companies are still discriminatory. "Their tax rate should be reduced gradually," it said.
The allocation of Tk 4,278 crore for energy and power sector is inadequate and is less than that of the previous year in absolute terms, the chamber said, adding. "Thus, it does not address the critical power needs of the country.” The MCCI said the budget framed against the backdrop of global recession attempts to stimulate local demands, provide appropriate protec. lion to domestic industries and deliver a wider range of social safety measures aimed at ameliorating the economic condition of the people.
It said the generous allocations made for education and IT, health, local government, human resources develop ment, agriculture, rural economy ano social safety nets arc commendable.
The chamber demanded issuing guidelines for the private sector to obtain financ ing and participating in PPP (public-private partnership) projects. "Ideally, such funds should be raised from the capital market but the reality is that response for- 'Greenfield' projects is uncertain and varies from project to project," it said.
Welcoming the announcement ofTk 5,000 crore stimulus package for the recession-hit sectors, the MCCI said there is every likelihood that the economy will be hit by the second wave (through impact on credit) and the third (through impact on consumer economy) of the international recession.
"The allocation should be increased and also cover sectors such as RMG and textile," the chamber advised.
It also hailed the initiatives taken for automation of government administration, which will improve efficiency, transparency and service delivery.
The MCCI appreciated the government for its idea of utilising the local government bodies. "In future, nongovernment organisations can also be involved as front-line service providers," the cham-bersaid.