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Amid Covid-19’s adverse impact on the economy, the government is set to announce a budget for FY21. What is your opinion about it?
Bangladesh’s economy has been adversely affected by Covid-19. Regarding economic losses, the information we have now is not enough to prepare the national budget. Bangladesh Bank cannot provide a clear picture about private sector credit, reserves, and balance of payments, (BoP) due to the countrywide shutdown.
Therefore, if we prepare the national budget for FY21 with this partial or weak data it would not be acceptable or may fail to be functional.
To me, in the given situation the government should have announced an interim budget for six months instead of a year’s budget for FY21 with focus on limited issues to effectively combat the economic fallout.
Three issues, including an economic recovery plan, social safety net, and controlling the coronavirus by ensuring proper treatment for people should get priority in the interim budget.
An interim budget is the best way to focus on specific issues and if the government can do it, it will be successful in handling the crisis.
What are the government’s challenges in the upcoming budget?
There are many challenges for the country’s economy. Preparing a policy to turn the economy around from the fallout of the coronavirus is a big challenge.
Second, it is important to restructure the vulnerable health sector and see what kind of measures the government will take to control the coronavirus. In the budget, the government has to allocate enough resources and chalk out an effective proposal to restructure the health sector.
Third, the government has to allocate enough funds to feed a huge number of people, who have become unemployed. The unemployed will not be able to get back to work soon.
Although the government has already taken steps to provide financial assistance to five million families, this should at least be 1.5 crore. I think the government should allocate Tk25,000 crore for this over the next six months.
How can the government mobilize revenue?
The government’s weakest point is revenue generation, which may see a shortfall of Tk1.25 lakh crore in the current fiscal. It is totally unacceptable.
To overcome the hurdles in revenue generation, the government has to take political decisions in consultation with the business community.
On top of that, there is no alternative to automation and increasing the efficiency of the administration. These issues have reemerged as big concerns.
What is your suggestion for export oriented industries?
Demand for export oriented goods, especially apparel and leather products, are dependent on global market demands. But there is nothing to do now for the manufacturers.
Global buyers and investors are leaving China, which creates an opportunity for Bangladesh. To attract these investments and buyers, Bangladesh needs to be more welcoming with a proper infrastructure.
In the case of the garments industry, there is a strong need for structural change in terms of products. Currently, we are producing mostly cotton based goods but the global demand is for manmade fiber and recycled products.
Right now, export is highly dependent on US and EU markets but there is a huge opportunity in Asian markets as well, which needs to be explored.
The budget allocation, incentives and policy support for the export oriented industries should focus on these problems.
(DT)
