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Dhaka, June 13 (IANS) The economists in Bangladesh are skeptical about the implementation of the massive budget proposed by the Sheikh Hasina government to stimulate the economic slowdown caused by the coronavirus pandemic.
On Thursday, Bangladesh Finance Minister Mustafa Kamal placed the proposed budget of 568,000 crore Bangladeshi Taka (BDT) in the Parliament, with a revenue collection target of 378,000 crore BDT. The deficit in the budget is 1,90,000 crore BDT.
However, economists predict that the implementation of the 'loan dependant' budget for the 2020-21 financial year will be a big challenge for the government, as revenue collection has shrunk amid the coronavirus pandemic.
The proposed budget for 2020-21 has been announced with a 'weak structure' as the resource collection target is not realistic, many believed.
The government's ambitious target of 8.2 per cent growth in GDP for the next fiscal will not be achieved as the world grapples with the Covid-19 outbreak, experts in Dhaka predicted.
Though Atiur Rahman, former Governor of the central bank of the country, Bangladesh Bank, welcomed the government's stimulus package for the pandemic-induced economic slowdown, he said it will be operated through the banking sector, which is in crisis.
It is better if the government takes any amount of loan from Bangladesh Bank, which is secure and safe, he told IANS on Friday.
"However, I think we should borrow loans from international organisations. It is negotiable for loans with flexible conditions and low-interest rates," he said, adding that there are some risk factors though.
The government, he said, is quite aware about the risk factors. "We have to wait for one year to overcome the crisis. Our debt is 34 per cent, but our foreign exchange is very strong," he argued.
Terming the proposed budget traditional, Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), a leading think-tank of Bangladesh, said that alleviating poverty, removing discrimination and creating employment should have been given priority in the budget instead of GDP growth.
The budget is "very unrealistic" and "not people oriented", according to economist Abul Barkat, who is also the President of the Bangladesh Economist Association (BEA). He pointed out that nearly 36 million people had lost their jobs in the first 66 days of the coronavirus pandemic.
The economist said that the proposed alternative budget of BEA could be implemented without any foreign support and bank loans.
He also suggested printing a limited amount of money, if needed, to fight the coronavirus pandemic. He said 59.5 million people had moved into different class structures during this period. Of them, 25.5 million people had fallen into extreme poverty.
However, the condition of the very rich (1.7 crore people) remained unchanged, the BEA chief said.
The BEA had on Monday placed an alternative budget of 13,96,00,000 crore BDT for the next fiscal. The alternative budget is 2.47 times more than the size of the current fiscal budget. The BEA, the apex body of the country's economists, proposed a revenue earnings target at 12,61,600 crore BDT and deficit at 1,35,000 crore BDT. The deficit will be financed from the bonds market, savings certificates and public private partnerships (PPPs).
Barkat said there was no need of foreign borrowing to finance the budget, arguing that 21 new sources inside the country had been identified in the proposed alternate budget by the BEA. From such sources, the government could collect 2,67,340 crore BDT from 18 sectors, he added.
"Our revenue policy should be designed for the welfare of people. It must be based on our constitution," he said, adding that the policy should be designed in such a way that it could help reduce poverty and decrease the dependence on foreign aid.
However, Atiur Rehman rejected Barkat's alternative budget, calling it 'impractical'. He insisted that in these times of crisis, Bangladesh should go for loans from the World Bank (WB), International Monetary Fund (IMF) etc.
According to the Finance Minister of Bangladesh, revenue earnings this fiscal will fall only by 29,746 crore BDT. Based on that assumption, he has come up with the proposed massive budget.
Kamal said that health, agriculture, social safety net and job creation have been given the main priority with an aim to effectively deal with the corona pandemic and resolutely overcome its fallouts.
--IANS
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