BUDGET 2005-2006
 

Saifur places Tk 64,383 crore pre-polls budged keeping key focus on rural development

Pace of reforms to be stepped up, good governance essential prerequisite

A Tk 64,383 crore ambitious budget for 2005-06 fiscal was placed in parliament Thursday by Finance Minister M Saifur Rahman targeting to achieve more than 6 percent GDP growth.

Proposing a revenue income target of Tk 49,027 crore, the new budget will have an overall deficit of Tk 18,661 crore. The deficit was proposed to be reduced to Tk 15,356 crore with foreign grants.
 

The budget, showing 15.7 percent rise over the revised budget of the current fiscal, include Tk 24,500 crore on Annual Development Programme (ADP) and Tk 773 crore on non-ADP food for works programme. It also includes allocation of Tk 790 crore on development programmes financed from revenue budget and Tk 491 crore on employment generation programmes.

Finance Minister M. Saifur Rahman is delivering his budget speech in the Parliament on Thursday.

Thus, Saifur said, the total development-related expenditure will come to Tk 26,554 crore, 17 percent higher than the current year's figure for the same.

Non-development expenditure is estimated at Tk 38,082 crore. He proposed to meet the deficit by borrowing from the banks and internal sources.

The Minister estimated revenue receipts at Tk 45,722 and foreign grants Tk 3,305 crore. The ADP will be financed 48 percent from foreign assistance and the rest 52 percent from domestic resources.

Prime Minister and Leader of the House Begum Khaleda Zia along with senior ruling alliance leaders, ministers and lawmakers of smaller opposition groups were present during Thursday's budget presentation in the House.

But lawmakers from the main opposition Awami League, which had been boycotting the parliament session for long, abstained from the house also during Saifur Rahman's 100-minute budget speech, punctuated by applause from the treasury bench members.

President Prof. Dr. Iajuddin Ahmed, who later signed the appropriation bill, witnessed the presentation of budget from his special enclosure. Senior civil and military officials and foreign diplomats were also present in the VIP galleries.

About the high expectation of revenue income, the Finance Minister admitted, "We as a nation are extremely reluctant to pay taxes. But on the other hand our urge for development is enormous."

He assured the House that the government would undertake various steps, methods and efforts for mobilization of internal resources.

For the first time, the budget placed in Parliament was free from jugglery of figures given in the taxation part. The budget speech was also brief and made in one part.
 

Finance and Planning Minister M Saifur Rahman is addressing a post-budget press conference in the city on Friday where he faced furious questions over black money whitening issue.

The Finance Minister did not propose too many fiscal measures but depended wholly on efficient collection of taxes by plugging loopholes for evasion. He disagreed with the speculators that his budget might give rise to inflation beyond control.

"I firmly believe that with growth trend in agriculture along with other sectors continuing, the inflationary pressure will ease and inflation will remain within tolerable and manageable limit," he assured the House.

Saifur made a passionate call to the nation: "Let all of us come forward with all our spirited efforts, intense patriotism and deep commitment to unlock the potentials of our nation. Let us build a poverty-free, exploitation-free, developed and prosperous Bangladesh."

Highlights of the proposed budget

Following are the highlights of a Tk 64,383 crore national budget proposed for the fiscal 2005-06:

- Total outlay Tk 64,383 crore, including development and revenue budget
 
- Tk 6,383 crore allocation for rural development and infrastructure

- Income-tax exemption ceiling raised to Tk 120,000

- Tax holiday extended for 18 industries for three years

- Brickfields brought onto income tax net

- Tycoons got another year to wash their black money white, only paying 7.5 per cent income tax

- Public-sector loss shot up

- Education gets highest allocation in the new budget

- Agriculture to get Tk 1200 crore in subsidy

- Tk 4,270 crore allocated for power and energy sector

- Budget proposed two new funds for seasonal unemployment and for fully retarded people

- Tk 4,600 crore for poverty reduction, employment generation

- New budget to provide Tk 200 crore for generating employment, 281 crore for micro-credit programmes

- Tax-exemption period extended in few areas

- Four strategic blocs, four supporting strategies to implement PRSP

- Corporate income tax for the non-listed companies rose to 40 percent

- Defense budget increased

- Tk 508 crore more for Health and Nutrition

- Tk 57 crore for Prime Minister's office

- Digital Telephone in all Upazilas within next fiscal year

- Tk 29 crore for Election Commission

- Duty on fuel import reduced

- 5 per cent cash subsidy to exports

- Inflation stood at 6.71 per cent in March

Prices up, prices down

The budget for fiscal 2005-06 proposed to reduce import duties on 36 categories of products while raise on 40-a measure that should result in down and upturn in their prices.

It also proposed to waive the supplementary duty on 31 categories of products now having 15 percent duty and jack up the duty on 24 categories from zero to a range between 20 and 65 per cent with a view to protecting local industries.

Following are some of the items to be costlier due to the budgetary effect:
:: Mobile telephone SIM card
:: Imported Mineral Water and fruit juice
:: Imported prepared fish and other food preparations
:: Iron ore
:: Drawing and coloring books
:: Angles, shapes and sections of iron
:: Low-lift pumps for swimming pools
:: Trucks and self-propelled trucks
:: Motor vehicles in knocked-down condition
:: Scrap vessels
:: Detergents
:: Imported stainless steel blades and other safety razor blades
:: Imported electric ceiling or wall-lighting fittings and other electric lamps and lighting fittings.

** Following are some of the items prices of which should come down as an aftereffect of the budget:

:: Fertilizer and agriculture machinery
:: Dairy and poultry feed and poultry medicines
:: RMG machinery
:: Mobile telephone set
:: Salt
:: Base metals
:: Hollow bars
:: Ballpoint pen
:: Refined oil
:: Pocket-size cassette player and other sound-producing apparatuses in CKD condition.

Pace of reforms to be stepped up, good governance essential prerequisite, says Saifur

Finance Minister M Saifur Rahman Thursday said the pace of reforms would be stepped up for efficient utilization of resources to achieve economic progress and reduce poverty.

"Good governance in all spheres is an essential prerequisite for utilization of resources," he said in his budget speech in Parliament.

Saifur Rahman said the government is taking steps to introduce robust system of monitoring implementation of poverty reduction strategy and to carry out ex post evaluation of the outcomes as strong monitoring and evaluation is a must for establishing transparency and accountability in each sector.

On the Anti-corruption Commission, he said the preparation of organizational structure of the Commission was underway. He hoped that the Commission would soon be able to play its effective role in curbing corruption.

The Finance Minister said preparation of relevant guidelines is at the final stage to further improve public expenditure management and establish internal control and internal audit in all ministries. The Public Expenditure Tracking Surveys will be conducted to study the impact of public spending.

He told the House that the process of transforming of the "Public Procurement Guidelines", introduced this year, into a law is at the final stage. This will ensure further transparency and accountability in public procurement.

"Relevant law is being framed to create an oversight regulatory body to improve the quality of accommodating and auditing in the private sector," he said.

On law and order situation, Saifur Rahman said adequate logistics, including vehicles, ammunition and equipment, has been provided to the police forces and RAB to improve the law and order situation.

He said required reforms are being implemented with the support of development partners to enhance efficiency and to bring in transparency in the activities of law enforcers.

The Finance Minister said new laws are being framed and old ones amended to ensure speedy trial, women empowerment, protection of children's rights, legal aid to the poor and socio-economic development.

Good governance at the national level presupposes good governance at the sector levels, he said. "Our aim is, therefore, to improve the quality of governance in every sector."

Education & ICT sector gets highest 15pc allocation

The proposed budget for 2005-06 fiscal laid much emphasis on the human resource development providing the highest 15 per cent budgetary allocation in Education and Information technology sector.

In the current fiscal the sector was also at the top in getting 13 percent allocation of the national budget.

Development and non-development budgets taken together, payment of interest get the second highest allocation of 10.9 per cent, followed by transport and communications 10 per cent, local government and rural development 9.9 per cent, energy and power 6.7 per cent and health 6.7 per cent.

Agriculture gets 6.4 per cent, defence 5.8 per cent, social security and welfare 4.8 per cent, public order and security 4.8 per cent and public administration 4.6 per cent, pension 4.2 per cent, subsidies 2.6 per cent, miscellaneous non-development investment 1.3 and other 6.4 percent of the total outlay.

However, in the current budget, payment of interest was also the second highest accounting for 11 percent that followed by transport and communications 10 percent, local government and rural development 9 percent, energy 8 percent and health 7 percent.

Education sector received the highest allocation of Tk. 9,686 crore for the 2005-06 fiscal budget proposed by Finance Minister M Saifur Rahman in the parliament Thursday.

The allocation that constitutes 15 per cent of the total proposed outlay is Tk.1827 crore higher than the allocation of the previous fiscal year.

The allocation includes a provision of Tk.3360 crore as development outlay for implementing 78 projects.

"We are ensuring with due importance the implementation of strategic goals, programmes and priorities identified in the PRSP," the Minister said in his budget speech.

"The government has taken up two important projects with an outlay of Tk. 5,000 crore for Primary Education Development Programme-II and another involving Tk. 400 crore for 'Reaching Out of School Children' programme", he added.

Proposing the new budget, the Finance Minister informed the House that 53 per cent of the students now enrolled at secondary level are girls and the pass rate of girls is higher than that of the boys.

The Finance Minister expressed his satisfaction that the number of female teachers in the primary schools has almost doubled to 40 per cent due to the policies adopted by the present government.

Saifur Rahman informed that nearly 55 lakh children are receiving primary education under the "Primary Education Stipend Project" with an outlay of Tk. 520 crore financed from domestic resources.

He also mentioned the government's other development programmes like stipends for girls up to class 12, tuition waiver, financial assistance for girls for purchasing books and participating in public examinations.

The Finance Minister said that in the secondary and higher education sub-sectors, the government will spend Tk. 400 crore during the 2005-06 fiscal to provide stipends to 29 lakh female students.

Saifur Rahman proposed to increase the number of scholarships at different levels between primary and secondary stages by 10 per cent.

He informed that the government has taken steps to extend technical and vocational education to nearly 25 per cent of secondary and higher secondary level students.

The Finance Minister reiterated the government's commitment to further encourage women education at bachelor's degree level.

He proposed to increase the monthly stipend from Tk. 225 to Tk. 250 for both boys and girls at the higher secondary level. At present about 5,000 female students, on the basis of their HSC results, receive monthly stipend of Tk. 225 each.

The Finance Minister, in his new budget, proposed to award monthly scholarships of Tk. 200 to an additional 10,000 female students pursuing studies in specialized subjects at graduate honours level in public universities, government colleges and MPO-listed non-government colleges.

Female students studying at public technical and specialized colleges and universities will also come under the purview of this programme.

Tk 6383 allocation for rural development and infrastructure

An allocation of Tk 6,383 crore, revenue and development budget combined, has been earmarked for local government and rural development sector in the proposed budget for fiscal 2005-06.

The figure is Tk.1,481 crore more than the allocation for the same sector for the outgoing fiscal year.

Finance and Planning Minister M Saifur Rahman in the new budget for fiscal 2005-06 has proposed Tk. 120 crore for carrying out development of the Union Parishads.

To strengthen the local government institutions and to provide support to Union Parishads, he also proposed an allocation of Tk.100 crore in the revised budget for current fiscal year.

Saifur Rahman informed the House that the government has introduced a special programme titled 'Development Support Through Gram Sarker' and proposed an allocation of Tk. 60 crore for the next fiscal year to support the programme.

During fiscal 2005-06, about 10 thousand kilometres of paved roads and 9,500 kilometres of kutcha roads will be constructed or rebuilt by the Local Government Engineering Department (LGED) under the rural infrastructure programme, he said.

The Finance and Planning Minister told the House that 346 Union Parishad complex buildings, 20 cyclone centres and 435 growth centres will be developed during the next fiscal year.

Under flood rehabilitation programme, 570 kilometres of roads together with drainage system will be constructed, he said.

"These programmes will create employment opportunities for a huge number of male and female workers," he pointed out.

To meet the additional demand for drinking water in arsenic-affected areas of the country, the government has established one lakh fifty thousand new water sources across the country, the Minister said.

Availability of safe drinking water rose to 80 per cent in rural areas, he added.
Reminding that the government has declared to provide sanitation facilities for all families by 2010, Saifur Rahman said development of sanitation has been included in ADP as a priority.

He informed the House that there is an ongoing Char Livelihood Project with an outlay of Tk. 475 crore to provide livelihood during lean seasons to the communities living in the char areas encompassing 150 poverty-stricken Unions along the banks of the Brahmaputra.

The Finance Minister also mentioned the rehabilitation programme to house 65 thousand landless and uprooted families being implemented successfully by the Prime Minister's Office through the "Abashan Prokalpa" having an outlay of Tk. 447 crore.

Saifur Rahman also proposed an allocation of Tk. 2,214 crore from revenue and development budget to the Ministry of Fisheries and Livestock, Ministry of Social Welfare, Ministry of Women and Children Affairs, Ministry of Labour and Manpower and Ministry of Youth and Sports to implement 113 projects to accelerate development of the rural non-farm sector and to create additional employment opportunities in the rural areas.

Tk 1200 core subsidy for agriculture

Agriculture sector will get Tk 1200 core subsidy and support in the new fiscal against Tk 600 of the outgoing fiscal to reduce production cost.

Finance Minister M Saifur Rahman said this while unveiling the budget for fiscal 2005-06 in parliament today.

He said the programme that was introduced in 2004-2005 fiscal for giving 25 per cent subsidy for import of Urea, DAP, MOP, TSP fertilizer will continue in the new fiscal year too.

The government introduced 25 per cent subsidy on imported MOP, DAP and TSP fertilizer in 2004-2005 fiscal year.

The Finance Minister proposed for allocation of Tk 2213 crore, revenue and development budget combined, for 2005-2006 in the agricultural sector. It is Tk 436 crore more than the original budget of the outgoing fiscal year.

He said the programme for agricultural extension, research, field training, production, preservation and distribution of HYV seeds, storage and marketing of agriculture produces and irrigation will be further strengthened in the next fiscal year.

Saifur said the Bangladesh Agricultural Development (BADC) would be restructured and the corporation's work of seed production, preservation and distribution will be expended further.

Agricultural loan for production of pulse, mustered seeds, spices and maize will enjoy two per cent interest from the existing 8 per cent from the next month. The repayment period of the principal amount has been extended to March 30, 2006 year which was originally fixed up to March this year.

The proposed budget waived the connection fees for all machines that are using for the irrigation purpose and it will take effect in July next. Besides, the 20 per cent subsidy bills of Palli Bidyut Samities (PBSs) for electricity use in irrigation will continue.

The 30 per cent subsidy introduced last year for export of agricultural commodities, vegetables and fruits will continue in the new fiscal year. The 20 per cent subsidy on electricity use in agro-based industries will also continue in the next fiscal.

The proposed budget said that in the next fiscal Bangladesh Bank would provide refinancing as required to relevant banks at 5 per cent interest rate to enhance the agricultural credit flow.

Up to April 2004 of the current fiscal, Tk 4200 crore was disbursed as agricultural loan which is 47 per cent higher than the disbursement of the corresponding period in the last fiscal year.

Tk 4,600 crore for poverty reduction, employment generation

Finance Minister M Saifur Rahman Thursday proposed Tk 4,600 crore from the non-development budget for the next fiscal year for targeted poverty reduction, social safetynet and employment generation programmes.

He said that under the Old-age Allowance Programme the monthly allowance would be enhanced from Tk 165 to Tk 180 and the beneficiary coverage would be up from 13.15 lakh to 15 lakh from July next.

He proposed to raise the monthly allowance for the widowed, deserted and destitute women from Tk 165 to Tk 180 and increase the number of beneficiaries from 6 lakh to 6.25 lakh.

Apart from this, the number of beneficiaries under Honorarium Programme for Insolvent Freedom Fighters will be enhanced from 60,000 to 70,000.

The Finance Minister said Tk 75 crore would be allocated additionally for the Fund for Mitigating Risks due to Natural Disaster where Tk 20 crore to the Fund for Rehabilitation of the Acid-burnt and the Physically Handicapped and Tk 75 crore for the Fund for Housing the Homeless.

For the VGD, VGF, Food for Works Programmes, Test Relief and Gratuitous Relief, he proposed to give 10.32 lakh tons foodgrains in this fiscal year while it was 8.7 lakh tons in the pervious year.

The allocation in Food for Works Programme (Cash) will be raised from Tk 264 crore to Tk 300 crore.

Ministry of Food and Disaster Management will get a lump allocation of Tk 100 crore to meet the emergencies due to natural disasters.

Saifur also proposed to introduce two new programmes entitled "Allowance for the Fully Retarded" and "Seasonal Unemployment Reduction Fund" in the next fiscal year in addition to the ongoing social safetynet programmes.

A programme for paying monthly allowance of Tk 200 will be introduced to provide subsistence to 1.04 lakh fully retarded person. Tk 25 crore will be needed for the programe.

Besides, a fund of Tk 50 crore will be raised in tandem with development projects to mitigate the miseries and generate employment opportunities for the marginal poor of some specific areas in Bangladesh who remain unemployed per force for certain period in a year owing to natural and geographical constraints.

An allocation of Tk 30 crore and Tk 20 crore to the special funds introduced in 2004-2005 will be made for Retaining and Employment of the Voluntarily Retired/Retrenched Employees/Labourers and Retraining and Employment of Workers/Employees of Readymade Garment Industries respectively.

Tk 200 crore for generating employment, 281 crore for micro-credit programmes

Finance Minister M Saifur Rahman today proposed Tk 200 crore from the revenue budget to the micro-credit fund for generating employment and Tk 281 crore to the Palli Karma Shahayak Foundation (PKSF) to implement micro-credit programme through NGOs in next fiscal.
 
Since its establishment in 1994, the PKSF has so far distributed micro-credits amounting to Tk 2,125 among 54 lakh poor people through 225 large and small
NGOs. More than 90 per cent of the beneficiaries are women.

Of the Tk 281 crore proposed for PKSF, Tk 100 crore will be allocated to the Special Fund for Employment Generation of the Hard-core Poor.

Apart from this, Tk 50 crore will go to the PKSF's existing Fund for Development of Micro-enterprises in the Rural Areas.

The Finance Minister also proposed to allocate Tk 100 crore as credit support to promote agrobased industries.

The government in the current fiscal year provided credit support of Tk 100 crore to the agrobased industries through Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, BASIC Bank and Karma Sangsthan Bank.

On the other hand, Saifur sought an allocation of Tk 150 crore to "Equity Entrepreneurship Fund" being operated by Bangladesh Bank for development of agrobased industries, food processing and computer software.

Investment assistance amounting to Tk 730 crore has so far been sanctioned to 212 projects from this fund.

Four strategic blocs, 4 supporting strategies to implement PRSP

Finance Minister Saifur Rahman today spelt out in his budget speech four strategic blocs and four supporting strategies to implement the Poverty Reduction Strategy Paper (PRSP), an international recipe for national development in poorer countries.
 
Firstly, he said, poverty can be reduced by creating extensive employment opportunities. Government's basic principle would aim at increased economic growth to create jobs for the poor to that end.

Second task is to accord priority to growth-oriented sectors like rural farm and non-farm sectors, SMEs, communications and rural electrification sector.

In third place comes implementation of targeted poverty reduction and social safety-net programnme for the poor, specially the poor women, and the fourth bloc comprises augmenting investment in sectors like education, health and nutrition to reduce human poverty.

To support these four blocs, the Finance Minister told parliament, four strategies are being implemented.

These include ensuring participation in economic development and empowerment of the distressed, marginalised, disadvantaged and the retarded section of the poor, especially the poor women.

Secondly comes promotion of good governance by establishing transparency, accountability and the rule of law and ensuring sound allocation of resources.
Thirdly comes support for improving the quality of service delivery to meet the basic needs of the people, the poor in particular, and fourthly, ensuring sustainable development and environmental balance.

Increased defence budget proposed

Finance Minister M Saifur Rahman today proposed a defence budget of Tk 4,168 crore for fiscal 2005-06, an increase of Tk 168 crore over the outgoing fiscal year.
 
Of the Tk 4,168 crore, non-development revenue is Tk 2,978 crore while non-development capital is Tk 1,190 crore.

For FY 2004-05, Tk 3,800 crore was proposed for the defence sector, but in the revised budget it was further increased to Tk 3,999 crore.

Under the development expenditure, Tk. 75 crore has been proposed for 2005-06 as against Tk 35 crore in 2004-05. In the revised budget for 2004-05, the amount was Tk. 48 crore.

Govt borrowing from banks rises 38.55 per cent in FY 2004-05

Government borrowing from the banking system rose 38.55 per cent to Tk 3,601 crore in the outgoing fiscal from original target of Tk 2,599 crore due to failure in achieving the revenue earning target.

Despite the target of tax revenue collection by the National Board of Revenue (NBR) during the current fiscal was Tk 32,190 crore, the achievement was Tk 30,500 crore.

The shortfall in achieving revenue target prompted the government to borrow additional funds from the banks to finance the deficit.

In the new budget for fiscal 2005-06, Tk 3,640 crore was proposed for borrowing from the banking system.

$40 million fund for the post MFA action plan

Finance Minister M Saifur Rahman Thursday while proposing budget for 2005-06 fiscal earmarked $40 million dollar fund titled ""Post-MFA Action Programme".

He informed different development partners would provide the money for the fund.

Saifur said, "Consolidation and expansion of markets for readymade garments to be required a strong complementing textile sector with enhanced efficiency and increased productivity."

He said, "Following the abolition of Multi-Fibre Arrangements (MFA) from January I 2005, the government actions, coupled with unrelenting efforts of the entrepreneurs of garment industries, is playing a vital role in making our ready-made garments industry competitive in the world market."

"That is why we have taken the initiative of action plan to extend our products' competitiveness," Saifur said.

The government has following a range of initiatives of the government at bilateral and multilateral levels, we have been able to gain duty-free access for our exports to European Union and also to a number of countries like Canada, Australia, Norway and New Zealand.

The export earnings of Bangladesh from RMG products stood at $5686.09 million in 2003-04, compared to $4912.09 million in 2002-03.

RMG sector gets massive attention

Finance minister M Saifur Rahman Thursday in his budget proposal gave a massive attention to the country's highest export earning apparel sector in the quota free regime.

Extended tax holiday, complete withdrawal of duties and taxes on some textile machineries and spare parts, hundred percent VAT exemptions from electricity, gas and WASA bills in factories in EPZ areas are the new package given by the Saifur in his budget proposal to boost the export in the coming fiscal.

Despite a decision to abolish cash subsidy to textile exports from the next fiscal, the finance minister did not withdraw the cash subsidy in the sector.

BGMEA (Bangladesh Garment Manufacturer and Exporters Association), BTMA (Bangladesh Textile Mills Association) and BKMEA (Bangladesh Knitwear Manufacturer and Exporters Association sought some of these facilities during the pre-budget meeting with the finance minister.

"We reconsidered our earlier decision and I now propose to continue the current provision of five percent cash subsidy on export in the interest of country textile," Saifur said in his budget proposal.

Saifur in his proposed budget 2005-06 announced tax holiday on textile, high value readymade garments, textile machinery, boilers and compressor up to June 30, 2008 to promote the garments sector.

He also proposed concessionary rate of customs duty for some dyes and chemicals essential for these sectors and also proposed complete withdrawal of duties and taxes on some machinery and spares required by the apparel sector.

Saifur said 100% exported oriented industries have been enjoying VAT exemption to the extent of 80% on gas and electricity and 60% on WASA bills.

The exemption will be extended to the 100% deemed exporters and the industries within EPZ.

They have been also exempted from VAT payable on the services rendered by insurance, C&F agent, freight forwarders, shipping agent and port services both at the import and export stage.

Introduction of duty drawback at the rate of 80% on gas and electricity and 60% on W ASA bills at the production level for 100% export industries and 100% on Insurance and C&F Agent and 60% on Telephone both at the import and export stage.

The export earnings of Bangladesh from RMG products stood at $5686.09 million in 2003-04, compared to $4912.09 million in 2002-03.

Tk. 4,270 crores for power and energy sector

The government has allocated Tk 4,270 crore for the development of power and energy sector in the fiscal 2005-2005. This is 17 per cent of the total development allocation for the coming year.

With this proposed allocation, the power and energy sector will receive the second highest allocation under the development outlay following the local government and rural development sector which will receive 20.8 per cent of the total development budget.

Of the allocation, power sector will receive Tk 3,270 under development head while energy and mineral resources sector will get Tk 1000 crore for development programmes.

According to budget documents, the proposed allocated funds for power sector will be utilised for completion and commissioning of Barapukuria 250 MW power plant, construction of 137 kms transmission lines, 59,705 kms distribution lines to connect 9,14,000 consumers and reduction of system loss.

Ten per cent growth rate in power generation has been targeted in the new fiscal 2005-2006.

On the other hand, the development funds for energy sector will be used for development of gas field at Srikail by Petrobangla, development of gas field at Bangura under joint venture with international oil companies and gas production from Fenchuganj, Mouilvibazar and Shangu gas fields.

Making this allocation, Finance Minister M Saifur Rahman said the government has adopted a long-term strategic plan up to 2015 for development and expansion of the power sector. If the planned projects are implemented, it would be possible to generate an additional 1,910 MW electricity in the next three to five years.

He said the government has decided to allow installation and operation of 10-50 MW power plants entirely by the private sector.

The Finance Minister mentioned that over the last three years, power generation has increased by 1,020 MW, transmission lines increased by 180 kms and distribution lines by 50,000 kms. Besides, 9,000 new villages have been electrified.

About the energy sector, Saifur Rahman said with the commissioning of three new gas fields, some 1,690 million cubic feet (mmcf) gas will be produced per day in the next fiscal year.

He said it would be possible to extract 10 lakh tons of coal following implementation of the Barapukuria Coal Mine Project.

Taka 508 crore more for health and nutrition

The government has earmarked in the new budget a total of Tk 4240 crore, both revenue and development budget combined, for the health sector.

Unveiling the new budget in parliament today, Finance Minister M Saifur Rahman said the allocation for the health sector it exceeds the budget of the outgoing fiscal year by Tk 508 crore.

He said the government is implementing 'Health, Nutrition and Population Sector Programme' (HNPSP) with an outlay of Tk 9500 crore in consistence with the PRSP.

He mentioned the government's plan to increase the number of beds from 31 to 50 in each Upazila Health Complex, 50 to 100 in new district hospitals and from 100 to 250 in old district hospitals.

Saifur Rahman said Shaheed Ziaur Rahman Medical College along with a 500-bed hospital in Bogra and another medical college with equal number of beds in Dinajpur are being built.

In his budget speech, the Finance Minister said the present government has recruited 3000 health assistants while recruitment of 3200 doctors, 2000 nurses and 800 nursing supervisors is in progress.

"Post graduate courses have been introduced in government medical colleges across the country to enhance opportunities for specialized medical treatment and provide higher education to doctors," Saifur said.

A Revised National Drug Policy 2005 has been formulated to modernise and expand pharmaceutical industries, and attract increased foreign investment, he added.

Referring to the National Nutrition Programme, the Minister informed that nearly three crore people are receiving nutritional service through 24000 nutrition centres in 105 upazilas since 2004.

Government reduces duty structures on fuel import

The government announced to cut down duties on petroleum products, particularly the refined and crude petroleum, but the consumers would get no benefit or loss out of the measure.

It will have no impact on the retail level-the dividends would go to the exchequer as the government holds the monopoly of petroleum import.

The government imports crude and refined petroleum through state-run Bangladesh Petroleum Corporation.

According to announcement made in the proposed budget 2005-2005, the customs duty on crude petroleum has been knocked down to 7.5 per cent from earlier structure of 25 per cent. The customs duty on refined petroleum oil has been reduced to 15 per cent from previous 25 per cent.

And the supplementary duty of 15 per cent on refined petroleum products will be completely withdrawn.

"This rationalisation will have no negative impact on retail price of petroleum products," said Finance Minister Saifur Rahman in his budget speech.

He said in order to address the fluctuations in prices of petroleum products, the government needs to reduce the total tax incidences to rationalise their tariffs.

Digital telephone in all upazilas within next fiscal year

All the 507 Upazilas of the country will come under digital telephone network within next one year. This was announced in the proposed budget for fiscal 2005-2006.

Presently, digital telephone and Internet services are in place in all the 64 districts and 175 Upazilas across the country.

Making an allocation of Tk 1,426 crore for the post and telecommunication sector under revenue and development heads, Finance Minister M Saifur Rahman said the country will soon be connected with the global information superhighway through submarine cable.

He mentioned that over the last four years the telephone capacity of state-owned Bangadesh Telegraph and Telephone Board (BTTB) rose to 10 lakh from 6.75 lakh.
Meanwhile, Teletalk, a subsidiary of the BTTB has already launched a project for providing 10 lakh mobile telephones across the country.

Another year reprieve for black money holders

Tycoons got another year to wash their black money white as the government in the proposed new budget extended up to June 30, 2006 the provision for bringing the undisclosed money in their legal accounts by paying 7.5 percent income tax.
 
"We are given to understand by different quarters that there is still a huge amount of undisclosed income in the country," Finance and Planning Minister Saifur Rahman told parliament in his budget speech today, announcing the extension of the provision.

Existing opportunity of investing such income without any explanation expires by the end of this month.

"We presume that a good number of people is holding such undisclosed income, who, for some reasons or other, could not avail themselves of this opportunity," said the minister.

Income-tax ceiling raised to Tk 120,000

The ceiling of tax exemption on individual incomes has been raised from Tk 100,000 to Tk 120,000 in the new budget placed in parliament today.

The new ceiling of the tax-free income would be applicable for the income year 2005-06 and the assessment year 2006-07, Finance and Planning Minister Saifur Rahman told the House while presenting the budget.

He proposed to keep unchanged the rates of taxes for different slabs have been kept unchanged, but enhanced the limit of total income, which comes under the highest tax rate of 25 per cent, from Tk 900,000 to Tk 10.20 lakh.

On the next income of Tk 2.50 lakh above the ceiling (other than the exempted income), the income tax would be 10 per cent while on next income of Tk 3.00 lakh the rate is 15 per cent and thereafter on Tk 3.50 lakh the rate is 20 per cent.

Minimum payable tax has been raised to Tk 1800 from the current figure of Tk 1500.

Saifur proposes expanding tax base

Finance Minister Saifur Rahman proposed certain measures to expand the tax base, and simplify tax collection and payment procedures in his budget speech in Parliament today (Thursday).
 
The proposals are:

a) To allow banks to make provision for bad and doubtful debts up to one percent in place of two percent of the total outstanding loans till assessment year 2006-2007;

b) In lieu of the present provision of dividend distribution tax, it has been proposed to withhold advance income tax @ 10 percent on dividends, making it taxable in the hands of shareholders;

c) Rate of advance income tax applicable to profits from approved Securities and Bonds to be reduced to 10 percent from the prevailing 20 percent;

d) To deduct tax @ 4 percent on freight charges of resident ocean going ships as final settlement of tax liability;

e) To deduct tax @ 10 percent on the profit or interest paid on deposits by non-banking and other deposit collecting financial institutions;

f) To deduct tax at sources @ 0.25 percent on total export proceeds of knit-wear and readymade garments as final settlement of tax liability;

g) At present, the rates of advance income tax applicable to "Royalty and Technical Know-how Fee" and "Professional and Technical Service Fee" are 10 percent and 5 percent respectively, which very often causes confusion because the "fees" are of same nature. In order to remove this confusion, the rates of tax for all these fees have been re-fixed at 10 percent;

h) To deduct tax at source @ 0.015 percent on the transaction value of shares for members of stock exchange as final settlement of tax liability;

i) To collect tax for sale of apartments @ Tk 175 per square meter and for land @ 2.5 percent on deed value at the time of registration from persons engaged in real estate business as final settlement of tax liability;

j) To collect tax on the basis of production capacity from brick fields at the time of issuance and renewal of license to brick fields;

k) To enhance tax rate on the value of bandrole of hand made cigarettes from 3 percent to 4 percent;

l) To introduce a reduced rate of tax @ 10 percent on the income from computer software business. This facility will continue up to 30th of June 2008.

5 per cent cash subsidy to exports to continue

Current provision for five per cent cash subsidy and other incentives for readymade garments (RMG) and other exportable products will continue during the new fiscal year 2005-06.

Finance Minister M Saifur Rahman made this announcement while placing the national budget for the coming fiscal.

Earlier, there was a decision to abolish cash subsidy to textile exports.

The Finance Minister said the government has decided to reconsider the earlier decision in the interest of the textile exports.

"I propose to continue the current provision of five per cent cash subsidy in the next fiscal (2005-06) and also propose to continue the existing cash incentives to other exportables", he said.

Economic growth for current fiscal expected to be 5.4 per cent

The country's economic growth for the current fiscal year is expected to be 5.4 per cent, according to the Finance Minister's budget speech in Parliament today.

"Current provisional estimate suggest that there will be a negative growth of 3.3 per cent in crop and vegetables sub-sector this year compared to a positive growth of 4.27 per cent last year owing to adverse effect of flood," he said.

Presenting the new budget for fiscal 2005-06, Saifur Rahman said the adverse effect of flood might limit economic growth in the vicinity of 5.4 per cent this fiscal year.

The growth in the manufacturing sector is expected to be 8.43 per cent while export will grow as targeted, he said.

The Finance Minister said the overall budget deficit for the current fiscal year would remain within 4.5 per cent of GDP.

The foreign exchange reserve will continue to remain at the level of US $ 3 billion mark and the macro-economic fundamentals will remain stable, he said.

Public sector loss shot up

The loss of the state owned enterprises is estimated at Tk 2,989.34 crore during the current fiscal year compared to Tk 549.50 crore last year.

Bangladesh Economic Survey-2005 placed in parliament today attributed the reasons for the remarkable increase in losses to high price of petroleum in the international market and shrinkage of Taka value to US dollar.

It said Petroleum Corporation alone is to sustain a loss of Tk 2,792.40 crore during the year. Others who incurred loss are Jute Mills Corporation Tk 177.52 crore and Sugar & Food Industries Corporation Tk 18.51 crore.

Dhaka WASA, Forest Industries Development Corporation, Chittagong Development Authority, Land Port Authority, Oil, Gas & Mineral Resources Corporation have earned marginal profits.

The survey said 44 state owned enterprises are burdened with a total bank loans of Tk 8,739.18 crore till the end of March. Nine per cent of the loans are defaulted.

Inflation stands at 6.71 per cent in March

The average money inflation in the country stood at 6.71 per cent in March this year.
 
The upward trend of inflation was attributed to the sharp rise in oil price in international market and "unusual prices hike of some important items", according to the Economic Survey-2005.

The survey, however, said that it would be possible to keep the inflation at tolerable state following the rescheduling of tariff measures along with other steps, restrained revenue policy and cautious monitory policy.

Brickfields brought under income tax net

Brickfields have been brought under the income tax net in the proposed budget for fiscal 2005-06.

The tax will be collected on the basis of production capacity at the time of issuance and renewal of licenses to brickfields.

The amount of tax will be Tk 7,500 for one section of brickfields, Tk 10,000 for one and half sections of brickfields and Tk 15,000 for two sections of brickyards.

Tk 57 crore proposed for PMO in next national budget

An amount of Tk 57 crore has been proposed in the next national budget for the Prime Minister's Office (PMO), which is Tk 10 crore less than the outgoing fiscal year (2004-05).
 
The Finance Minister proposed the amount as non-development expenditure for the new fiscal year beginning July 1.

However, Tk 345 crore has been proposed as development expenditure during FY 2005-06, an increase of Tk 134 crore over the revised budget for FY 2004-05.

Tk 29 crore proposed for Election Commission in next budget

The Finance Minister today proposed Tk 29 crore for the Election Commission in the next budget for fiscal 2005-06.

During the outgoing fiscal (2004-05,) Tk 26 crore was originally proposed, but later revised to Tk 30 crore.

Tax holiday extended for 18 industries for three years

The government proposed to extend the tax holiday for 18 industries for another three years up to June 30, 2008 in view of the present state of socioeconomic development, export business and for employment generation.
The existing budgetary provision for tax holiday expires by the end of this month.

Textile, high-value RMG, pharmaceuticals, melamine, plastic products, ceramics and sanitary wares, steel from iron ores, fertilizer, insecticides and pesticides, computer hardware, residential hotels having three stars or more, petrochemicals, basic raw materials of drugs, chemicals and pharmaceuticals, agricultural machinery, ship building, boilers and compressors, textile machinery and physical infrastructure will enjoy the extended tax-breaks.

Physical infrastructure would include sea and river ports, container terminals, internal container depot (ICD), container-freight station (CFS), LNG terminal and transmission line, CNG terminal and transmission line, gas pipeline, flyover, large water-treatment plant and supply through pipeline, waste-treatment plant and export- processing zones.

The tax-holiday period depending on location would be refixed 4 and 6 years in place of 5 and 7 years respectively.

In the proposed budget for 2005-06, it was also been proposed to continue the existing facility of accelerated depreciation allowance for a new industry up to June 30, 2008.

Saifur proposes extension of tax exemption period

Finance Minister M Saifur Rahman today proposed extension of the period of tax exemption in few areas.

According to his proposal, tax exemption period on income of hospitals, formed under the Companies Act, will be extended from 30th June 2005 to 30th June 2008.

Besides, the tax exemption period on income from poultry, dairy firm, poultry feed production etc will also be extended from the prevailing 30th June 2006 to 30th June 2008.

Corporate tax raised in budget

The proposed new budget raised corporate income tax for the non-listed companies from 37.5 per cent to 40 percent for the assessment year 2006-07.
 
Stock markets have long been pressing the government to widen the corporate tax between the listed and non-listed companies for development of the country's capital market.

With the new proposal, the tax-gap between the two categories of companies would stand at 10 per cent from 7.5 per cent as the listed companies enjoy reduced corporate tax rate of 30 per cent.

Stock-market insiders believe that the non-listed companies would be encouraged to have their companies listed with the stock exchanges due to the budgetary measure.

Budget proposed two new funds

Finance Minister M Saifur Rahman in his budget on Thursday proposed creation of two new funds for reduction of seasonal unemployment and fully retarded persons.

He said 1.04 lakh fully retarded persons would be given a monthly allowance of Tk 200 from July. For this he earmarked an allocation of Tk 25 crore.

Saifur said marginalized poor of some specific areas in the country remain unemployed per force for certain periods owing to natural and geographical constraints.

He proposed to create a fund of Tk 50 crore in tandem with development projects in those areas. He hoped this would mitigate their miseries and create employment for them.

The Minister did not, however, identify the section or profession that will benefit from the fund.

Remittance rose to US$ 3.8 billion

Remittance from expatriate Bangladeshis is estimated to stand at US$ 3.8 billion in 2004-05 fiscal year, Finance Minister Saifur Rahman informed parliament on Thursday.

The Minister in his budget speech noted with satisfaction at the consistent increase in remittances from the expatriates and said the amount was 47 percent of the country's total export earnings.

He also appreciated the role of expatriates in upholding the image of the country through hard work, efficiency and honesty.

Saifur said the armed forces continued to bolster the reputation of the country abroad by participating in UN peacekeeping missions. They have served in 19 peacekeeping missions and are currently involved as peacekeepers in 11 countries.

Saifur for changes in the Customs Act, 1969

Finance Minister M Saifur Rahman today proposed some changes in the Customs Act, 1969 (Act IV of 1969) reducing the time limit for final assessment of provisionally assessed goods and clearance of goods brought by sea, air and land route.

The existing time limit for final assessment of provisionally assessed goods is 150 days and for clearance of goods brought by sea and land route 45 days while Saifur Rhaman proposed to reduce the limit to 120 days and 30 days respectively.

Meanwhile, he also proposed to reduce the existing time limit for air cargo from 30 days to 21 days.

Additional budget provisions

Some additional measures proposed by the Finance Minister in his budget 2005-06 speech are:

1) Tk 1115 crore has been provided for implementation of new pay scale

2) Tk 174 crore provided for repair and maintenance of rural roads, highways, bridges and culverts, public buildings, hospitals, schools and colleges, vehicles and equipment of the government

3) Tk 74 crore higher than the previous year allocated to accommodate additional requirements under social safety nets.

4) Tk 25 crore is allocated for newly launched allowance for fully retarded disabled persons

5) Two lakh metic tons foodgrains is earmarked for vulnerable group development (VGD), 1.5 lakh tons of foodgrains for Test Relief and 64,000 tons of foodgrains for gratuitous relief.

6) Tk 500 crore allocated for micro-entrepreneur development fund, special fund for employment generation for hardcore poor, equity and entrepreneurship fund, NGO foundation, support to credit schemes for agro-based industries and special fund for retraining the voluntarily retired and retrenched employees.

7) Tk 50 crore allocated for newly created fund for reduction of temporary unemployment.

Cabinet approves revised and proposed budgets

The cabinet in a special meeting at the parliament building today approved the revised budget of 2004-05 fiscal and the proposed budget of 2005-06 financial year.

Prime Minister Begum Khaleda Zia presided over the special cabinet meeting, an official handout said.

The meeting also approved the collection and management of taxes, duties and other sources of revenue for 2005-2006.

Cabinet ministers and concerned state ministers attended the meeting.

Cabinet secretary and concerned secretaries were also present.

President authenticates national budget for 2005-06

President Prof Dr Iajuddian Ahmed Thursday authenticated the national budget for fiscal 2005-06 before it was presented in the parliament by Finance and Planning Minister M Saifur Rahman.

He gave the authentication from the President's Office at the parliament.

Earlier, the new budget was approved by the cabinet at a special meeting with Prime Minister Begum Khaleda Zia in the chair at cabinet room at the parliament building.

Revised budget for FY 2004-05 reduced to Tk 55,632 crore

Finance and Planning Minister M Saifur Rahman Thursday placed the revised budget of Tk 55,632 crore for fiscal 2004-05, Tk 1,616 crore less than original allocation of Tk 57,248 crore.

The revenue target originally budgeted for FY 2004-05 was Tk 41,300 crore, but reduced to Tk 39,200 crore in the revised budget placed in Parliament Thursday.

The Finance Minister said the revenue target had to be scaled down due to reduction of tariff on some imported goods as well as disruption of economic activities owing to the floods.

The size of the Annual Development Programme (ADP) was originally Tk 22,000 crore for the current fiscal year, but slow rate of use of project aid in a number of foreign aided projects forced downward revision of the ADP to Tk 20,500 crore.

--UNB, BSS, BDNEWS