Budget targets difficult to attain: AB Mirza Azizul Islam

Budgets grow over time in all countries. But in Bangladesh, it is still small in proportion to GDP. Therefore, our budget cannot be called a big one.

Overall, I find the targets set in the budget to be acceptable. But it will be difficult to attain them. 

The budget targets to bring down inflation to 6% with no clear guidance on how to accomplish it. It plans to increase the repo rate of Bangladesh Bank but such a move plays no effective role in controlling inflation.

I applaud the proposal to increase the allocation in the social security programme. But the question remains as to whether the allocations are being utilised properly.

The budget speech mentions dwindling foreign reserves but provides no solution for it. Skilled manpower must be exported abroad and export markets of diversified products must be grabbed to increase the reserve. 

Moreover, in the proposed budget, private sector investment has been increased by 6%, which is unachievable in just one year.

Besides, the target of revenue collection will not be achieved, ADP target is also not achievable.

I did not see any significant solution in the budget to mitigate the existing problems in the banking sector. In particular, there is no mention of defaulted loans, which is currently the biggest problem in the banking sector.

Furthermore, the capital market is not yet playing a role in investment financing. In that case, bank loans are needed for private sector investment.

If the government borrows more from the banking sector to finance the deficit budget, it will affect the growth of the private sector. As a result, less employment will be created.

Besides, if bank sector loans increase, the money supply increases. If production does not increase with credit, then inflation increases.

AB Mirza Azizul Islam is an economist and former adviser to the caretaker government.