Budget conservative, rather than ambitious: CPD, Dream of middle-income country can’t be achieved

Civil society think tank the Centre for Policy Dialogue (CPD) yesterday termed the proposed national budget for fiscal year 2009-10 conservative rather than ambitious one in terms of growth-target achievement.
Briefing media to express CPD’s view on the budget, its Research Fellow and former Executive Director Dr Debapriya Bhattacharya said, “The country achieve 5.9 per cent GDP growth in the current fiscal under a worst situation, how come the growth for next year can be targeted at 5.5 per cent. This is really surprising. We don’t understand how such a target was fixed when a better and healthy situation is prevailing in the country.”
“We believe the country has the capacity to achieve 6 per cent-plus growth if the strength of the economy is fully exploited. There is scope to be more ambitious,” he noted. Debapriya was of the view that the ambition for becoming a middle-income country will not be achieved due to the conservative budget outlook.
CPD executive director Dr. Mustafizur Rahman and other research fellows were present at the briefing held at the Brac Inn Centre in the city’s Mohakhali area.
CPD identified five challenges for the government to implement the new budget. These are boosting public and private investment, consolidating agriculture, protecting domestic industries, strengthening public finance and reviving public administration. Boosting investment should be the centre point of all challenges as this is related with the Government’s plans for infrastructure development, according to CPD.
It said that all the election pledges and priorities were reflected in the new budget. But its implementation will be the main challenge.
The CPD believed that 80-85 per cent of the new budget might be implemented under the present set-up of bureaucracy, which has become shaky following the changeover of the 1/11 because of wrong handling by the past caretaker government.
There must be a dynamic microeconomic management to put a balance between bureaucracy and investment by public and private sectors.
“The administration must be taken into confidence and its capacity has to be increased to implement the budget,” Debapriya Bhattacharya said.
The CPD, however, said that the budget did not spell out clearly the allocation of funds for different sectors. Even, it was not clear how much money will be spent as subsidy for which sectors.
“In this regard, the new budget lacks transparency,” Debapriya said in his maiden analysis of the new national budget.
He said that it was apprehended in the budget that the private sector investment might not be adequate and the capital investment will decline.
He observed that there is no mention of savings in the budget while it’s not clear whether the internal deposit will continue to decline or not like in the current fiscal.
According to the CPD, the attainment of targeted GDP growth will heavily depend on the industry and other modern sectors.
Mentioning the foreign financing in the budget, the CPD research fellow said if the government fails to receive foreign funds, then it will have to borrow from the banking sector, which will eventually squeeze the credit for private sector.
He said the budget proposed the foreign funding at US$ 2.60 billion. But the country never receives such a big amount of foreign funds in any fiscal.
Supporting the government’s measures for increasing the revenue earnings, the CPD said the budget correctly set the strategy to raise income and income tax.
But it observed that the government has to spend about 14 percent of the budget for paying interest on the foreign borrowings.
The CPD appreciated the government’s priority on the energy and power sector giving a more than Tk 4000 crore allocation and set aside Tk
2500 crore as special allocation for public-private partnership (PPP) project implementation.
But the civil society think-tank warned that if this fund is not properly and timely utilised, it would lead to a serious indiscipline in the economy.
Criticising the budgetary measure to allow whitening the black money, the CPD said that the holders of the smuggled money and illegal drugs will then get the opportunity to whiten their money as well under this measure.
The CPD further observed that there is no allocation for the small and medium enterprises (SME) sector. Even there is no allocation for the state-owned enterprise (SOEs), it said.

Courtesy of The New Nation