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Bangladesh Budget Fails To Meet Expectations

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Terming the proposed 2020–21 budget a usual one, the Centre for Policy Dialogue on Friday said that it lacked innovative measures to speed up economic recovery, address the weaknesses in the health system and the issues of poverty, inequality and job creation in the context of the coronavirus pandemic.

The budget did not try to get out of the GDP growth-centric philosophy, to focus more on poverty, inequality and employment, it said.

‘The COVID-19-induced health, economic, humanitarian and social crises are unprecedented and the FY2021 budget needed to be more innovative to address this multidimensional crisis,’ CPD executive director Fahmida Khatun said in a post-budget press conference.

But, she said at the virtual briefing, the government has mostly opted for a business-as-usual budget ignoring the impacts of the coronavirus pandemic.

The main objective of the budget should be saving lives, supporting the poor and affected people during a crisis like the COVID-19 pandemic instead of being too much concerned with GDP growth, the CPD ED added.

According to the CPD, the government appears to have prepared the budget on the assumption that the coronavirus fallout will be managed in a very short time and the economy will bounce back in FY21.

The coronavirus pandemic, however, is an evolving situation and there are significant uncertainties regarding its duration and the extent of its impact, it said.

Though the government has rightly put emphasis on sectors like health, social safety net, agriculture and employment generation, the independent think-tank commented, its promises and priorities have not been translated into innovative approaches and allocation of adequate resources.

Strikingly, the share for health, nutrition, population and family welfare in the FY21 ADP — 6.4 per cent — remained the same as in FY20 though these areas have emerged as the most crucial in view of COVID-19, it went on.

The ADP has included only one new project related to COVID-19 titled ‘COVID-19 emergency response and pandemic preparedness’ co-financed by the World Bank.

While the overall budget allocation for health has seen a 14 per cent rise, the development budget for the sector has gone up by only 1.90 per cent with the non-development budget rising by 24.37 per cent, the CPD noted.

‘Surprisingly, even the COVID-19 pandemic was not reason enough for the government to prioritise the health sector in the FY21,’ it commented.

The increase followed a linear trend and underlay a business-as-usual situation and saw nothing out of the ordinary though the health sector is reeling from the shocks of the pandemic, it said.

The budget allocation for health, it pointed out, still remained at 0.92 per cent of the GDP in Bangladesh while the allocation in at least 30 least developed countries is more than 1 per cent of the GDP.

The rising number of new poor and the widening income and consumption inequality has called for differentiated measures which the budget has not adequately addressed, the CPD commented.

The budget’s macroeconomic framework does not reflect the realities on the ground either, it said, adding that the targets were fixed without considering the situation.

The targets for GDP growth, revenue collection, export earnings, remittance, private sector investment and private sector credit growth have been set ignoring the impacts of the coronavirus pandemic, the think-tank commented.

The revenue will have to grow 50 per cent to achieve the target while a 125 per cent increase in private investment will require 16.7 per cent private sector credit growth, it said.

The ultra-rich will get the highest benefit from the income tax relief while dishonest taxpayers have been offered to legalise their untaxed money by paying a minimum tax at a time when the government requires more resources and should be tough against tax evasion, it added.

‘In view of the evolving COVID-19 situation the government should be ready, if required, to revisit the budget and undertake necessary corrective measures in view of realities on the ground,’ the CPD suggested.

CPD distinguished fellow Musftafizur Rahman, research director Khondaker Golam Moazzem and senior research fellow Towfiqul Islam Khan spoke at the briefing.

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