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Budget lacks plan on how to achieve growth: Economists

Mir Mostafizur Rahaman | Published: June 14, 2019 09:15:33 | Updated: June 14, 2019 16:25:26


Picture used for illustrative purpose only — Collected

Economists noted on Thursday the action plan on how to achieve the targeted growth is missing in the budget proposed for the next fiscal year (FY).

They made the observation in their instant reaction to the budget proposed by Finance Minister AHM Mustafa Kamal for the FY 2019-20.

Former finance minister AMA Muhith who was also present in parliament during the presentation of the budget by his successor, noted that if macroeconomic balance cannot be maintained while implementing the budget, it may push up inflation.

"The budget document presented today is shorter than those presented by mine. I used to present a long budget to give details to the people so that they could get the answers of many of their queries," Muhith told a group of newsmen while he was departing from the gallery.

He has the record of presenting the budget for a record 11th time.

Dr Debapriya Bhattacharya, Distinguished Fellow of the Centre for Policy Dialogue (CPD), said the budget proposed for the FY 2019-20 does not reflect the overall reality as it lacks a specific roadmap for attaining the goals pledged in the election manifesto of the government.

The finance minister in his budget for the next fiscal mentioned about many ambitions but he did not mention how the ambitions would be fulfilled, Dr Bhattacharya said in an instant reaction.

"The budget envisages plan to create 30 million jobs in the country by 2030, but the document has not mentioned how these would happen. Whether it will be in the public sector or in the private sector?" he said.

The finance minister said that a 'Banking Commission' would be created to strengthen the banking sector, but he had not given any timeline for it, he elaborated.

Professor Dr Quazi Kholiquzzaman sadi that he expected that the finance minister would detail the issue of corruption prevention, particularly in the banking sector but these were absent in the budget.

"He talked about the formation of Banking Commission but he had not said what steps he would take against the bank defaulters," he added.

Chairman of the Policy Research Institute of Bangladesh (PRI) Dr Zaidi Sattar felt that the budget was ambitious in line with the future growth target of the country but he also expressed his dismay over the absence of any policy directives on global trade integration.

"No country has achieved over 9.0 per cent growth without integrating its economy with the global market and without export diversification. The budget says about achieving 10 per cent growth in 2024 but to achieve that the country must have the mechanism to accelerate the process of global trade integration. Unfortunately, policy directives are missing in the budget," Dr Sattar said.

He also pointed out that the targeted growth cannot be achieved only relying on the domestic economy.

Dr Sattar, however, praised the government for achieving the growth rate targeted in the current five-year plan.

"This is the most successful five-year plan in the history of the country. In the current fiscal year we have achieved 8.1 per cent growth and in the FY20, which is the last fiscal of the current five-year plan the government targeted 8.2 per cent growth. In the past we had not seen such success of any five-year plan," the economist said.

In his instant reaction, Dr Selim Raihan, Professor of the Economics Department of the Dhaka University, said the proposed budget is an ambitious one.

"We expect clear guidelines and plans from the government on how this budget is going to be implemented, given the fact that weak implementation of budget has become a norm in recent years. It is important to highlight how the performance of different ministries will be improved to implement this budget," he mentioned.

However, he said this budget has taken a number of positive initiatives, for example, pension scheme for all, bringing govt employees under insurance coverage, wealth tax, additional tax on the registration fee for vehicles, incentives for remittances, and tax office in every upazila.

However, like in the past, there is no assessment why different positive initiatives proposed in the past budgets did not pay off. Therefore, it is important that there is a mechanism in place to evaluate the implementation of the positive initiatives proposed in the budget. Otherwise, many of these initiatives will remain only in papers.

There are few initiatives which can be counterproductive. Investment amnesty proposed for black money, without any punitive measures and political patronage and poor monitoring can make this initiative unsuccessful. It is imperative that the overall business environment of the country is improved significantly which will lead to the much-needed acceleration of private sector investment, he said.

Given the current practice of slow progress in implementation and costly ventures, speedy and cost-effective implementation of the mega-projects, SEZs and other development projects under the ADP is very important. "We haven't seen in the proposed budget how things are going to be different in the coming days," he added.

For export diversification, which is very critical for Bangladesh, the non-RMG export-oriented sectors should receive much higher priority than the RMG sector, which is not there in the proposed budget. Also, with the poor structure of the tax system and laws, it is not possible to increase the tax-GDP ratio significantly within the next couple of years, as mentioned by the Finance Minister, he observed.

Two other areas didn't get desired attention: the much-discussed fragile banking sector and the agricultural sector, especially how the crisis in agriculture can be solved through effective government interventions, he added.

mirmostafiz@yahoo.com

 

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