Economists Respond to Budget, Deficit, and FY22 Implementation to Remain Top Challenges
From left to right: Professor Selim Raihan, Executive Director of the South Asian Economic Modeling Network (SANEM), Dr Muhammad Shahadat Hossain Siddiquee, Professor in the Department of Economics at Dhaka University, and Dr Khondaker Golam Moazzem , research director of the Center for Policy Dialogue (DPC)
Noting that 75% of the budget was executed in the last fiscal year, they claim that the FY 22 budget does not contain any plan on how to strengthen implementation.
With the 2021-22 budget finally passed by parliament on Wednesday, economists say deficit resolution and implementation will now be the main challenges.
Professor Selim Raihan, executive director of the South Asian Economic Modeling Network (SANEM) and professor of economics at Dhaka University, said he had not noticed anything in this budget that is intended for economic recovery .
âOverall, it seems to us that this budget was poorly estimated and the implementation constraints will challenge us,â he added.
Although the title of the budget talks about life and livelihood, it has nothing to do with reality, he added.
âAs the exact picture of all the problems was not highlighted in the budget, we did not get a solution to the coronavirus situation. However, the goodwill of the government was not lacking.
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Noting that 75% of the budget was implemented in the last fiscal year, he said the FY 22 budget does not contain any plan on how to strengthen implementation.
“The budget should have increased spending on health, education and social security,” he added.
Economic analyst Nazrul Islam told Dhaka Tribune that much of the budget allocated for the last fiscal year could not be executed due to the pandemic.
Even the health sector could not use large sums of money; but the lessons learned from this experience are not reflected in this budget, he added.
He also noted that a clear projection and an execution plan are lacking in the budget for fiscal year 22.
The vaccination allowance may require more in the coming days. However, returning to regular economic activity is the biggest challenge, he added.
âThe government has taken no action to increase tax collection. We must be careful to close the budget deficit, otherwise investment and employment will be hampered, âadded Islam.
Dr Muhammad Shahadat Hossain Siddiquee, professor in the Department of Economics at Dhaka University, said most countries budget for the deficit – this is the biggest challenge.
âDue to Covid-19, it will be difficult to earn income from cash vouchers and loans from foreign and local sources,â he explained.
The International Monetary Fund (IMF), the World Bank and other bodies will not be able to provide such huge sums of money to all of these deficit countries, he said.
Another option for the government would be to print more money, but that could increase inflation, Siddiquee added.
Dr Khondaker Golam Moazzem, research director of the Center for Policy Dialogue (CPD), said the sector budget allocation could have been broadened.
âIn the midst of the coronavirus crisis, job creation is focused on private industry. But many government projects require a mass of labor that job creation should be focused on at this time, âhe said.
The immunization and social safety net sectors also need more emphasis, he added.
Citing the ease of money laundering, the economist recommended that an integrated financial system be needed to stop this.
Bodies like the National Board of Revenue and the Bangladesh Bank should form a system to stop black money.
“Provide this [money-whitening] the reach only benefits a certain part, not the whole economy, âhe added.
With an expenditure of Tk 603,681 crore, AHM Finance Minister Mustafa Kamal proposed the national budget for fiscal year 2021-22 to parliament on June 3.
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The new budget represents about 17.4% of GDP and about 12% more than the revised budget of the previous year.
The size of the total expenditure was estimated at Tk 603,681 crore, or 17.5% of GDP.
The total allocation for operating and other expenses has been set at Tk 378,357 crore, while the allocation for the Annual Development Program (ADP) is Tk 225,324 crore.
Total revenue collection has been set at 392,490 Tk crore, of which 330,078 Tk crore will be increased by the National Board of Revenue (NBR) 16,000 Tk crore will come from the non-NBR sector and 43,000 Tk crore will come from sources non-tax.
In addition, Tk 3,490 crore will come from foreign aid, grants and loans.
The overall budget deficit for fiscal year 2021-22 will be Tk 214,681 crore, or 6.2 percent of GDP.