Economists question logic behind growth projection

A local think-tank Saturday questioned the justification behind setting the economic growth target for the upcoming fiscal at 8.2 per cent.

In a virtual post-budget analysis on Saturday, South Asian Network on Economic Modeling (SANEM) said export and remittance, the two major pillars of the economy, have already been affected by the coronavirus pandemic, and such unexpected reality is likely to prevail in the coming days also.

Simultaneously, higher deficit projection coupled with poor revenue earning activities will undoubtedly put abnormal pressure on the struggling banking system, thus further squeezing the available sources of formal credit to the private sector.

The private sector, the engine of growth, is battling hard to survive the impact of a pandemic. It is staying away from investment expansion, which is again putting a negative impact on employment growth, it noted.

"Under such circumstances, the projected 8.2 per cent growth in the upcoming fiscal is highly questionable," SANEM Executive Director Dr Selim Raihan said.

He opined that certain provisions in the budget indicate inconsistencies in facts and data. This should be dealt cautiously, as incorrect assessment can lead to overconfidence and wrong policy choice.

The budget has not addressed the existing mismanagement, corruption, and institutional weaknesses in health sector. Besides, the government skipped the issues concerning availability and accessibility of COVID-19 vaccines.

Regarding reforms and effective institutional capacity building, Dr. Raihan noted that the government mentioned various steps, taken to this effect. But it did not clarify what the steps are, and how it will execute those.

SANEM has been proposing to defer Bangladesh's LDC graduation by three years, as the country will lose preferences (in the post-LDC regime), which might be detrimental in the face of upcoming economic challenges.

Referring to the whitening of black money facility, he added that while this measure has not been effective in the past, it comes as a disincentive for the honest taxpayers. Also, the question remains whether such provisions are in line with the constitution or not.

Talking about the budget proposals, Professor Dr Sayema Haque Bidisha of Department of Economics at Dhaka University said the country's apparel sector witnessed job cuts and non-disbursement of salaries, although it has been offered special incentives due to the corona outbreak.

"The government should have imposed some conditions to avert such an unexpected scenario," she said.

Dr. Bidisha said the budget does not address the plight of the floating urban poor, and the measures taken for youth and SMEs are not enough. Bureaucratic complications often stand in the way of these measures, which should be taken into consideration.

SANEM Research Fellow Mahtab Uddin remarked that after the pandemic, there might be a rise in drop-out rate in schools and child marriage, while affecting the life of university students.

"These concerns have not been reflected in the budget," he added.

SANEM Research Associate Eshrat Sharmin also spoke on the occasion.

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