Finance Minister AMA Muhith plans to revise the budget for fiscal 2017-18 'much earlier' than scheduled, as he faces a deficit in revenue due to the decision scrapping uniform VAT.
Muhith set aside some time on Saturday and spoke to a group of journalists about the budget and various personal issues at his Secretariat office.
"The revised budget will come much earlier this time. I'll have to do this. We'll have to change many figures in the budget as the implementation of the new VAT law has been deferred by two years," Muhith said.
The parliament has passed the Tk 4.26 trillion budget for this fiscal year, with a revenue target of Tk 2.88 trillion.
From value-added tax, the government initially aimed to earn more than Tk 910 billion, a fourth of the total target.
Now after deferring the implementation of the VAT law, the government will face a shortfall of Tk 200 billion.
"That's why I am saying we have to make big revisions in the budget and I will do that much earlier in parliament," Muhith said, according to bdnews24.com.
Following the rules, the finance minister presents the revised budget for an outgoing financial year while proposing a new one for the upcoming year in the first week of June.
The government made the VAT law following recommendations by the International Monetary Fund.
Asked whether deferring the implementation of the law will impact the government's relations with the IMF, Muhith said he did not think so.
"We wanted to implement the law in 2016, but could not. We cannot this time too. But our failure is happening in our own reality. How can it worsen relations with them?" he said.
Analysts have suggested alternative tax sources that may help the government tackle the pressure.
Prime Minister Sheikh Hasina said in her closing speech in parliament on the budget that the Tk 200 billion deficit in revenue will have to be fixed somehow.
About managing the looming deficit, Muhith pointed to the target of Tk 851.76 billion revenue from income and corporate taxes. "Now these will be the main sources of revenue."
Muhith also said a committee on savings certificates will sit within a few days to lower interest rates on the debt instruments.
"But the new rates will not harm pensioners and middle- and lower-income groups," he said.
He noted that the National Board of Revenue issued an SRO keeping the tax at source for garments sector at 0.7 per cent. Muhith had proposed to raise the tax to 1 per cent, but backtracked on his proposal after garment exporters urged the prime minister to keep the previous rate.
"Prices of garments have dropped in the US and Europe. The exporters are facing losses. So we have considered their demand," Muhith said.
About contesting again in the next parliamentary election, Muhith said, "I don't wish to take part in the election at this age. But if the party thinks they need me, I will consider that."
Muhith had previously said he would retire after presenting the 2017-18 budget. He had said on several occasions that he would not run for any election after the government's tenure ends in 2019.
He had also introduced his younger brother AK Abdul Momen, Bangladesh's former ambassador and permanent representative to the UN, as the next candidate in the election scheduled for late 2018 or early 2019.
But recently at a programme in his constituency in Sylhet, Muhith said he was hopeful of taking part in the election.
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