Prominent economist Mirza Azizul Islam has described the prevailing political uncertainty in Bangladesh as the main hurdle in achieving the goals prescribed in the budget proposals placed before Parliament on Thursday. “If the present political uncertainty is not resolved, most of the goals prescribed in the budget proposals are not likely to be achieved. We do not know what would be the political situation next year. This uncertainty would cause many sectors to pull behind their respective targets.”
Mirza Aziz, also a former finance adviser to the caretaker government, pointed out that the level of investment is not likely to go up amid such a volatile political situation. He expressed doubts about the authenticity of the source of financing in the proposed budget. “I think there is a lack of authenticity regarding the source of financing in the proposed budget,” he noted.
He said the budget would create various aspirations among the people. “I hope the proposed budget would be able to fulfil such aspirations,” he added.
He emphasised timely disbursement of allocated money and implementations of various projects taken up by the government. “People want to see the allocated money utilised in various projects.” he said.
He described the government’s commitment to keep the rate of inflation around 7 per cent as highly ambitious. He observed that people would get some relief from the abnormal hike in prices of essential commodities if the government fulfils its promise.
Dr Farashuddin
Dr Md. Farashuddin, former governor of the Bangladesh Bank, termed the target of revenue collection, as set by the government, as achievable. “I think the government would be able to achieve the target,” he said.
He said the alternative dispute resolution (ADR) should be strengthened for quick disposal of revenue cases. “A recognised amount of revenue could be collected through mutual discussion under the system. As a result, businessmen would be interested in paying more taxes,” he added.
He also said that if the government could keep the rate of inflation at 7.5 per cent, it would be a great success. He further said the country requires a mild inflation (5-7 per cent) for providing reasonable prices to farmers.
He said in the face of the present global economic condition, bringing down the rate of inflation to 2-3 per cent is almost impossible. He added that prices of agricultural products should not be kept low through artificial measures.
Prof Abu Ahmed
The budget has become doubled over the last four years, but the income of people in general does not increase at all, said an economist expressing his skepticism over achieving the target of the proposed budget.
“It will not be possible for the government to achieve the targeted growth,” said Prof. Abu Ahmed of the University of Dhaka explaining the country’s macroeconomic performance over the last year.
“The government has failed to achieve the GDP growth rate over the last two consecutive years. The same target (7.2 per cent) has been set for the next year, without any improvement in any field of macroeconomic parameters. So, I don’t find any hope to achieve the target,” said prof. Abu Ahmed in an immediate reaction to the proposed budget.
“The government’s GDP target of 7.2 per cent in the new fiscal will face a credibility crisis and generate a lot of debate,” he said adding that the business environment and the overall economic situation is deteriorating further.
“I assume that achieving 7.2 per cent growth will not be possible,” the economist said adding that there is a possibility of worsening political situation in the coming days and the government might have to borrow more from the banking sector, compared to the fixed target.
“These two things will have negative impact on investment prospects,” he added.
Terming the budget for the next fiscal an unrealistic, one Ahmed, felt that though there were no concrete measures in the budget for internal revenue mobilization, he said adding that borrowing from banking system will hamper the private investment.
“Most important question is how to finance the budget. As I understand, the finance minister will not get the money… he hopes,” he said.
The DU professor also criticized the government for Padma Bridge financing, adding that a mega bridge like Padma couldn’t be constructed without foreign assistance. Funding for Padma Bridge will create ‘serious resource constraints’ in some social sector in the coming years. He urged the government for further exploration of potential concession or low-cost foreign financing for the mega project.
In next fiscal, some Tk 6,852 crore in ADP has been allocated for the Padma Multipurpose bridge.
Mustafizur Rahman
The government will face a big challenge in implementing the proposed budget for fiscal 2013-2014, especially in terms of financing,” said noted economist Dr. Mustafizur Rahman in an immediate reaction.
“The size of the budget seems to be commensurate with the need of the economy, but the major challenge is the implementation…,” said Rahman, also the Executive Director of private think tank Centre for Policy Dialogue (CPD).
“The 16 per cent increase in the size of the budget is not ambitious considering the average inflation rate and projected GRP growth rate. For this, I do not consider the proposed national
budget as ambitious,” said Rahman but expressed his doubt about achieving the targeted growth..
He said that the success of the budget mostly depends on mobilistion of fund, proper implementation of projects, especially the aid funded projects, capacity building and reform programmes.
To achieve the target, the CPD fellow highlighted the urgency of strengthening the NBR drive, utilization of more foreign aid and strengthening efforts to mobilse more resources from external sources to finance the budget deficit.
Revenue collection by the NBR has been one of the areas of the of success of the present government. But for the first time the NBR is likely to fall short of target. Lack of import, lower commodity prices in the international market, deceleration of financial institutions’ profit and unrealistic revenue from SOEs are some of major reasons causing lower NBR revenue.
If the borrowing from the banking sector rise, Rahman said, it will be difficult for the government to bring down the expenditure.
-With The Independent input
