‘Unrealistic targets in budget will impede economic recovery’

Setting impractical targets in the national budget without identifying the actual problems during the current economic slowdown caused by the coronavirus pandemic will frustrate the economic recovery process.

Besides, the government's target to achieve around 50 percent growth in revenue collection amid weakening economy will increase pressure on compliance taxpayers.

Economists, businessmen and experts said this at a discussion styled "CPD Budget Dialogue 2020" organised by the Centre for Policy Dialogue in the capital on Saturday.

Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said Bangladesh's economy like all other economies of the world is going through a crisis in the wake of the coronavirus outbreak and everyone is striving to save their lives and livelihoods amid the pandemic, but the proposed budget for the fiscal year 2020-2021 shows no reflection of the present crisis.

"In the budget, there must have been a specific roadmap to save people's lives taking into account the current economic scenario. Apart from giving utmost priority to the severely week health sector, the budget must have had announcements for rehabilitating the jobless, foreign returnees and the poor," he said. 

However, like every year, the finance minister in his budget proposal for next fiscal year presented various figures of income and expenditures, including GDP growth, revenue collection growth, export growth, implementation of development projects and non-development expenditures, Dr Ahsan H Mansur added.

The noted economist also argued that instead of framing a budget for the entire fiscal year the government could have given two budgets – one under the title "rehabilitation" for the first six months and the other styled "recovery" for the second half of the fiscal year. This would ease the economic recovery process, he opined.

The finance minister has announced the budget for the forthcoming fiscal setting GDP target at 8.2 percent, export growth at 16 percent and import growth at 10 percent. He has fixed a revenue target that is 8 percent higher than that of the current fiscal.

The CPD, however, apprehended that this revenue growth target for the next fiscal will cross 50 percent since the revenue collection target for the outgoing fiscal has suffered a major blow due to the pandemic.

Former governor of the Bangladesh Bank Dr Saleh Uddin Ahmed also feel these lofty targets set in the budget alongside the government's expectation to take out Tk84,000 crore in loans from the banking sector will slow down the economic recovery process.

"The prime minister has announced various packages to give easy bank loans to the private sector to face the crisis. In this circumstance, if the government takes out huge amount of loans, the banks will not be able to provide loans to the private sector," he explained.

A revenue growth target of about 50 percent will cause more suffering to compliance taxpayers, said Barrister Nihad Kabir, president of Metropolitan Chamber of Commerce and Industry (MCCI).

"We have always witnessed in the past that whenever there was a pressure for increasing revenue collection, the National Board of Revenue increased pressure on compliance taxpayers," he said, adding, "In order to meet revenue deficit the NBR imposed additional taxes on compliance taxpayers and harassed them in the name of auditing."

Former commerce minister Amir Khasru Mahmud Chowdhury said the proposed budget shows no reflection of the present crisis of the economy.

"The budget appears to be a typical one. This is because the economic, health-related, humanitarian and social crises that have emerged in the wake of the coronavirus outbreak are unprecedented. However, in the proposed budget no measures have been announced to address these issues."   

Mentioning that the budget lacks innovative measures, he said, "This is not a time to think about economic growth. This is a time to think about how we will recover the economy by mitigating the pandemic fallouts."

Saber Hossain MP also said at present the government should not think about GDP growth. "A country like China has not thought about GDP in its budget, instead it has focused on creating employment," he added.

"The government thinks the economic indicators that have fallen sharply amid the pandemic will again go up in a similar fashion. But, nobody knows when the crisis will come to an end. It is also not clear how much economic damage it will do.

"In this situation, the budget might need a revision and the government should be prepared for that."

Earlier, Dr Mustafizur Rahman, distinguished fellow of CPD presented the keynote paper at the discussion programme presided over by Dr Rehman Sobhan, chairman of CPD Board of Trustees.

CPD Executive Director Dr Fahmida Khatun moderated the programme attended, among others, by Nahim Razzaq MP, BASIC President Almas Kabir, representatives from various trade bodies and economists.

Dr Rehman Sobhan said, "From the analysis of the proposed budget, we assume that the government has had determined the economic variables under the mid-term budget structure and this was done before the coronavirus outbreak. However, it did not want to make changes to those in the budget."

But now the government has to go cautious in implementing the budget, he said, adding that it has to pay highest attention to health and social security curtailing unnecessary expenditure apart from ensuring maximum transparency.