Govt will offer more stimulus if needed: Finance minister
Next budget will attach highest priority to health sector; implementation of incentive packages; agricultural mechanisation and subsidies; social safety net; housing for the homeless poor, he tells TBS in an interview
The government is open to announcing new stimulus packages to deal with the impacts of the coronavirus pandemic, said Finance Minister AHM Mustafa Kamal.
"Last year, we announced 23 incentive packages involving Tk1.28 lakh crore to mitigate the economic shocks induced by Covid-19 first wave, which are continuing during the second wave of infections as well. We will take further programmes if necessary," he told The Business Standard in an exclusive interview.
Mentioning that the loan packages are revolving funds, Minister Kamal said it will be possible to give out more loans to new industries and services under those packages. Other allocations will be further increased as needed.
"We have prepared the budget taking into account all the marginalised people, big and small businessmen and entrepreneurs amid our current economic position," he said.
In view of the consequences of the coronavirus pandemic, the upcoming budget will attach the highest priority to the health sector; implementation of incentive packages announced by the prime minister; agricultural mechanisation and incentives on irrigation and seeds, agricultural rehabilitation and fertilizer subsidies; expanding the scope of social safety net programmes; housing for the homeless poor; and free/low-cost food distribution among low-income people, said the finance minister.
"In this budget, we have included everything that needs to be done to address Covid-19. We have also linked our economic reform activities to it. Reform was needed to revive the economy and a great deal of that has already taken place. I believe we have been implementing all the reform measures and policies – taken in all areas of the economy to save the lives and livelihoods of the people in the coming days – one by one," he continued.
The finance minister further added that he believes various steps undertaken by the government are improving trade and commerce and increasing investment in the country, as a result of which job opportunities are being created and people's livelihoods are being protected. "We expect private sector investment will increase, once our 100 special economic zones and 26 high-tech parks are ready."
"Our overall strategies are: prudent macroeconomic management, ensuring stable inflation rates, maintaining stable and competitive exchange rates, ensuring adequate credit flows to the private sector, development of necessary infrastructure such as creation of skilled human resources, development of power, transport and communication sectors through investment and making doing business easier.
"Based on our past experience and our current policy support for the private sector, I am quite optimistic about creating new jobs and increasing investment."
In the next budget, emphasis is being laid on increasing internal revenue to increase the tax to GDP ratio, the minister said, adding that various reform measures have been taken in the customs and revenue sector to increase transparency and dynamism in the tax administration.
"Electronic payment or e-payment system has been introduced on a pilot basis after the introduction of online VAT registration and online VAT returns submission systems. Work is underway to set up 5 lakh electronic fiscal device machines to prevent VAT evasion and increase VAT collection."
Soon a new customs law will be passed in the parliament, he told TBS, adding, "If implemented, it will facilitate the customs process and speed up the collection of tariffs. A project is being implemented to bring the customs bonded system under automation by 2021. Initiatives have been taken to bring all import-export systems under scanning machines," he said.
The finance minister further said work is underway to upgrade the income tax returns submission process.
The National Board of Revenue is conducting a survey to increase the number of income taxpayers in the coming years, he continued.
He expressed his hope that a successful implementation of the reform initiatives of the government will further increase the tax to GDP ratio in the country.