The Centre for Policy Dialogue (CPD) said that most of the expenditure and revenue targets in the proposed budget were based on unrealistic assumptions.

"The fiscal framework appeared surreal, as the targets for the current fiscal year were not grounded in reality," said CPD Executive Director Dr Fahmida Khatun at a press briefing organised to give the think-tank's formal reactions on the FY 2023-24 budget on Friday (2 June).

Finance Minister AHM Mustafa Kamal set a revenue generation target that exceeded the spending rate, Dr Fahmida Khatun added.

She expressed doubt about achieving the goals of reducing inflation to 6% and increasing GDP growth to 7.5% given the current situation.

The CPD executive director pointed out that the inflation target was based on the assumption of the USD equivalent to Tk104, while it had already surpassed Tk108.

CPD said that the economy was not currently in a position to stimulate investment for achieving a 7.5% GDP growth. To reach this target, private sector investment would need to increase from its current level of below 22% to over 27% of the GDP.

However, the private sector credit growth up to April in the current fiscal year was only about 11%, falling short of the target of 15%.

Also, the government planned to borrow over Tk1.32 lakh crore from the banking sector to finance the deficit, which CPD believes would escalate inflation and create an excessive money supply.

Public borrowing from commercial banks would also reduce growth potential by decreasing private credit availability.

The CPD has urged the government to withdraw its proposal of implementing a minimum tax of Tk2,000, citing concerns over its potential implications.

It also argued that the simultaneous increase in the tax-free income limit to Tk350,000 and the introduction of a minimum tax is contradictory and could result in discriminatory outcomes.

"We suggest the withdrawal of the proposed minimum tax," said Fahmida.

Dr Mustafizur Rahman, a Distinguished Fellow of CPD, along with other researchers from the think tank were present during the event.