‘Implementation constraints will challenge the proposed budget’
The proposed budget for the fiscal year 2021-22 is the 50th budget of Bangladesh. This is the second budget in the ongoing Corona pandemic. This budget was presented at a time when Bangladesh has not yet been free from the impacts of Corona. We are still feeling the impact of the corona.
During the implementation of the budget for the last fiscal year 2020-21, there have been many reactions to the corona infection. In this context, the important issues for the fiscal year 2021-22 are: development of the health sector, including addressing health risks through vaccination for all; Ensuring food security by increasing the coverage of social security; creating employment by increasing government investment; Above all, a medium-term plan for the recovery of the economy.
The fiscal year 2020-21 has seen a number of weaknesses in the macro-economy. Such as deficits in revenue collection; Weaknesses in government spending; Slow pace of project implementation; slowdown in the implementation of annual development programs; budget deficit is below the projected limit due to below government spending targets; declining industrial production, especially in small industries; slightly upward food inflation.
On the other hand, some positive aspects have also been noticed. As such, exports and imports are turning around somewhat; remittance flows upward; the balance of transactions is comforting; currency exchange rates have stabilized and foreign exchange reserves have increased.
In this context, many of the issues that were supposed to be included in the budget for the fiscal year 2021-22 were not seen. Very few special circumstances have been considered in terms of rights and corona.
The immediate response of the Center for Policy Dialogue (CPD) to the National Budget 2021-22 was given by the Executive Director of the CPD, Dr. Fahmida Khatun.
The CPD gave a brief response after the Finance Minister presented the 2021-22 national budget in the JS on Thursday (June 3).
In the next budget, GDP growth has been projected at 7.2 percent. The government is expecting a normal growth in the next financial year. If this growth is to happen, there will have to be a lot more investment in the next financial year. It is not clear where the growth will come from if public and private sector investment does not increase.
In terms of revenue collection, the tax collection target has been kept the same as in the last financial year. But we do not know how to meet this target. It is not possible for the National Board of Revenue to achieve this with the current level of capability. In terms of revenue, the measures have been targeted not at the individual but at the business. The tax and value-added discounts that have been given to them will help bring the business back to corona period. At the same time, low-interest lending is a good move for small entrepreneurs. However, in the case of individual taxes, the lower income tax limit has not been increased. Doing so would bring in money to spend and invest in the hands of the common man because the most important thing at this time is to increase the consumption of people.
A large part of the increased allocation of government expenditure is being given for public administration. In the current situation, development expenditure needs to be increased and non-development or management expenditure needs to be reduced. We will be able to invest and create employment with what will be saved from this.
In terms of expenditure, the implementation of the annual development program is less than in previous years. This highlights the weakness of implementation. The government will have to rely more on foreign debt to meet the budget deficit. However, care must be taken to ensure that the debt burden does not increase. We are now in a comfortable position to repay the loan, it has to be maintained.
We also consider the social security sector as a sector of authority. Some allocations in the social security sector have increased. However, as before, there are pensions for government employees. So it's not as big as it looks.
So in a nutshell, we didn’t notice the budget that was needed to tackle Covid-19 on the one hand and recover the economy from Covid-19 on the other. That is not a one-year budget. That budget should have a clear direction on what the health sector, education, social sector, employment, etc. will look like in the next few years and what the spending structure will be like in other sectors, how the revenue will be raised.
Overall, weak assumptions and implementation constraints will challenge the implementation of the corona period budget.
Honorary fellow of CPD, Prof. Mostafizur Rahman; CPD's research director Dr. Khandaker Golam Moazzem and CPD's Senior Research Fellow, Mr. Taufiqul Islam Khan were present on the occasion.