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Whitewash

In managing budget appropriations, performance based budgeting (PBB) has evolved as an essential tool for creating transparency and accountability in the oversight of government programs in many western fiscal operations.

Abduliah a. Dewan
A budget proposal presented in the parliament, until approved by the lawmakers, is essentially an all encompassing wish list -- and all wishes aren't always realisable given financing and time constraints. I lowcver, once the budget is approved, all efforts must be directed towards the realisation of all prioritised aspirations while minimising waste and inefficiency.
In managing budget appropriations whilst minimising inefficiency, corruption. and bureaucracy, performance based budgeting (PBB) has evolved as an essential tool for creating transparency and accountability in the oversight of government programs in many western fiscal operations.
The strategy of PBB is based on the assumption that presenting performance information alongside budget appropriations will improve budgetary decisionmaking by focusing funding choices on program results. A performance based budgeting approach can be tailored to scale with existing operational infrastructure, thus lowering costs and enabling organisations to:
• Direct limited resources to the most critical and important outcomes.
• Set automatic appropriation cycles to provide timely information about financial and program performance.
• Proactively administer programs, while tracking and monitoring progress against projected and published objectives.
• Get clear insights and communicate critical issues and priorities relative to budget requests and the use of resources.
• Proactively identify and resolve burgeoning performance problems before they become critical.
• Focus and start where the needs are of immediate of priority, with multiple points of entry, and realise immediate outcome.
The US congress enacted the Government Performance and Results Act of 1993 to promote a focus on improving program performance and to provide greater accountability for results within federal government agencies. At the state level, 31 out of 50 states (US) have legislated some form of PBB, and 16 additional states have formalised processes for integrating performance measures and data into the budgetary process.
What constitutes performance varies to some extent from state to state. Only two states, Florida and Texas, provide specific guidelines related to corrective actions for noncompliance. The Texas 1996-1997 General Appropriations guidelines state that "if an agency fails to meet its goals, the Legislative Budget Board and the governor may adopt a budget execution order, which may result in the reduction, elimination, restriction, or withholding of funding or transferability, in addition to possible reorganisation Florida prescribes a number of budget execution and management restrictions in the event of poor performance.
In the context of Bangladesh, many of the projects under ADP may be considered for implementation within the framework of PBB. However, regardless of the budget implementation process, most budget watchers suggest that many aspects of the proposed budget may not be implementable and may entail corruption. A budget financed in part by taxing black money is not only unethical, it Is also inefficient and self-defeating for many different reasons.
Black money whitening (BMW) and the dismissal of political corruption charges as being politically motivated - whitening black politicians (WBP) -- arc becoming acceptable norms of governance in Bangladesh.
Why is the AL government doing this after so much struggle and sacrifice for democracy and good governance? Why doesn't the government understand that this patronisation of BMW and WBP will only breed the same and become a larger and irretrievable systemic problem?
On the question of BMW, why charge only 10% tax, which will certainly encourage creation of more black money in future? Why not impose the same tax rate as applied to all honest tax-payers? Black money possessors may have already transferred a big chunk of their money to their spouses or children's foreign bank accounts. Will they really repatriate that money for investment in Bangladesh? Well, FBCCI apparently seems to think so.
While supporting the provision ofWBM in the proposed 2009-10 budget at 10% tax. FBCCI believes that it will boost domestic investment and hence the economy during the ongoing economic downturn. FBCCI shouldn't be a referee for BMW, given that a majority of this money is owned by businesses accrued through under and over invoicing imports and exports, and other related business activities.
All black money owners should be given the choice of either facing legal action and confiscation of bank accounts or amnesty if they pay taxes at the normal statuary 25% rate •- not a reward in the form of tax subsidy with lower tax rate. Investors of whitened money will enjoy an undue advantage over the honest tax-paying Investors. This may be setting a process of "bad money, driving out good money" -- a WBM-driven crowding out of existing businesses and new investment.
FBCCI President Annisul Huq's suggestion that the government, in order to minimise the crowding out of private investment, should finance its Tk. 20,000 crore budget deficit by selling publicprivate partnership bonds in the stock market instead of borrowing from banks, shows a lack of insight that regardless of the sources of government borrowing or fund raising the flow of funds originates from the savers -- unless fresh reserves are injected to the banking system through "repos" by Bangladesh Bank.
So, whether it is BMW or financing budget deficits, the government shouldn't take FBCCI's recommendations seriously — which arc mere speculations, not borne by defensible knowledge.
Dr Abdulah A Dewan. founder of poi6conomy.com, a a Professor of Economos at Eastern Michigan Unrversity.