It is a severe understatement when one says that formulating Bangladesh's budget for the next one year -- while the stressed economy is reeling under growing, yet uncertain, devastating impact of the Covid-19 (C19) pandemic -- will be a "challenging" exercise. For me, it is the closest to the mentioned impossibility theorem!
In fact, the budget for the Fiscal Year (FY) '21 will have to link up at least four linear segments of the task at hand. These are: connecting short-term perspectives to mid-term recovery; the growth-equity trade-offs; design a credible financing plan; and measures for enhancing the delivery capacity.
It is well-recognised by now that for Bangladesh economy to recover and rebound from the debilitating impact of C19 will take a couple of years, to say the least. In the absence of a realistic assessment of the impact of the pandemic, without a credible three-year macroeconomic framework and with an incomplete five-year planning exercise, the annual budget will be seriously handicapped in linking short-term emergency measures with mid-term rebound and recovery strategy, with an eye on those who are left behind. It is to be seen how the best of the intentions of the budget-framers take us beyond rhetoric in this regard.
Again, as the Covid-19 pandemic is going to accentuate the pre-existing structural disparities within the country and also create new vulnerabilities for certain groups of people, it is to see how and to what extent the next budget can overcome growth paranoia to give way to distributive fiscal policies.
It may also be safely assumed that the budget deficit figure for FY '21 will be higher than the trend rate. A large part of the incremental deficit has to be underwritten by accessing new sources of external finance, including budgetary support. However, if that derived estimate is not based on reliable income-expenditure figures, then the whole fiscal framework will suffer from credibility gap, subsequently weakening the strength of other policy pronouncements.
Finally, the capacity deficit affecting full and faithful implementation of its fiscal commitments had been the Achilles' heel of Bangladesh's budgetary programmes. The next budget has to come with a well-thought-out implementation plan, desirably with a set of time-bound interventions indicating the authorities responsible for them.
Dr Debapriya Bhattacharya is a Distinguished Fellow at the Centre for Policy Dialogue (CPD).
Read the full analysis titled 'Circling the Square: What is the golden ratio for Budget 21?' https://thefinancialexpress.com.bd/views/reviews/circling-the-square-what-is-the-golden-ratio-for-budget-21-1590681899