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Economy

Budget long on hopes, short on measures: WB

'Highway construction cost in BD world's highest'

20 June 2017,Tuesday, 23:20



Terming the proposed national budget for the fiscal year 2017-18 an ambitious one, the World Bank on Tuesday said it is 'long on hopes, short on measures'.

"The budget has many good hopes and ambitions to increase the country's GDP by raising huge revenue through implementation of VAT law. But it lacks the specific actions, especially, necessary structural reforms in the financial sector," said Zahid Hussain, the lead economist of the World Bank Dhaka office.

He said the targets are impossible to be achieved without reforms.

The World Bank came up with its observation about the budget at a press conference at its Dhaka office. World Bank country director Qimiao Fan and other officials also spoke on the occasion.

The World Bank presented a list of infrastructure cost, especially in road construction. It shows the cost of per kilometre high road construction is $2.5 million to $11.9 million in Bangladesh, which is the highest in the world.

It shows the cost of per kilometre road construction is between $35,900 and $45,600 in India, $63,100 in Nepal, $59,500 in Thailand, $40,700 in Bulgaria, $55,200 in Brazil, $60,800 in the Philippines, $73,000 in Nigeria and $85,400 in Vietnam. The cost was calculated on the basis of the cost between 2005 and 2007.

Zahid Hossain said there might be some reasons like terrain of lands and some others aspects for differences between the costs in different countries. But the major reason of such highest cost in Bangladesh is corruption.

"Due to limited competition of tender for award of works creates scope of corruption which ultimately pushes up the cost," he said.

He said 1.8 percentage points increase in the revenue in the proposed budget to GDP ratio represents the largest ever increase. "Revenue collection is dependent on the implementation of the VAT and Supplementary Duty (SD) Law."

He observed that income tax was expected to grow by 36 percent in the new budget, but there was no significant reform measures mentioned in the budget.

However, World Bank country director Qimiao Fan said VAT law is investment friendly one.

The World Bank believes despite uniformed 15 VAT on all the products it will not have much impacts on the inflation as the budget exempted many essential goods from the preview of VAT.

Responding to question on the growing rice price, Zahid Hussain said the government should open the market and ease the process to import the rice.

"But any speculation on withdrawal of import duty or any delay in duty withdrawal process will ultimately create more instability because many trucks with rice will be waiting along he boarder to enter the country. Until the duty is withdrawn, they won't enter the country," he said.

 

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