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The Financial Express

First step towards meeting 'new normal'

Published: June 12, 2020 21:10:58 | Updated: June 14, 2020 22:30:55


First step towards meeting 'new normal'

There is literally a mixed bag of reactions, not in the ordinary sense of the phrase, to the just-announced national budget for 2020-21 fiscal. Apparently criticism has outweighed praise. But all critiques converge on one point, namely that the budget is too ambitious and unrealistic and therefore may fall way short of implementation. If one were to be sweepingly critical of the budget's assumptions and projected targets, why should one grill the formulator who is entitled to a certain aiming at the sky to reach the tall tree? First, despite the run of 'ambitious budgets', and varying degrees of implementation  shortfalls of past budgets the country has sustained an upward growth trend, beholden to an appetite for pushing the envelope every time budget making came around. Secondly and more importantly, not all the basic data had come home to roost in February. The Covid-19 was just about raring its head spawning scary apprehensions and the cyclone Amphan coming about disrupting some of the agricultural, indeed existential calculations. So where were the collated  data and figures to base the budgetary projections on a sound footing? With these constraints in mind, let alone many topflight countries enduring the prospects of negative growth could we perhaps be more realistic and modest?

Since, however, the government in its best wisdom has set higher targets, it devolves on it to carry out necessary reforms and place the right implementation machinery in each of the ministries to deliver the goods.  There is no shrugging off the argument also that the dual challenge of saving lives from Covid-19 and efficiently and credibly charting a course for economic recovery throws open a window of opportunity for injection of momentum into investments, both local and foreign, here. Lest we forget, in a competitive world it is never a low lying fruit orchard to gleefully pluck from, a country has to work hard to deserve it. If Vietnam with slightly lower GDP size than Bangladesh's could draw in FDIs worth US dollar 220 billion because of its favourable investment climate why should potentially resourceful Bangladesh lag behind with much less to showcase?  

Revenue target of Tk 3.78 trillion (3,78,000 crore) will be difficult to reach in light of the NBR's performance last year and the Covid fallout. A point has been made that the government may resort to borrowing from  market rather than the banking system; the latter is supposed to exert credit squeeze on the private sector.  The business community has hailed the individual tax-free threshold and corporate tax reduction. The CPD while  welcoming the raising of tax-free slab added the tax rates for both rich and poor have been set almost similarly. The move doesn't cater for the need for reducing inequalities in personal incomes.

The two macroeconomic pillars such as garments industries and remittance earnings have received blows from Covid; in fact, the earnings  on both counts had been declining since February this year. The wage earner returnees from host countries and the retrenchment from the RMG sectors will spike the numbers of jobless requiring a costly rehabilitation exercise underpinned by fresh skill training to refit them for the post-Covid job market.

Allocations to health sector have been raised to more than Tk 34,000 crore comprising   1.02 per cent of the GDP for the first time! It is still the lowest in the region. There have been incremental demands  for  allocations in  agriculture, education, social safety sectors. And these have been heeded to in varying degrees; especially expansions in social safety net programmes and agricultural mechanization topping the list of priorities. A valid point has been forcefully made about poor money utilization capacities which in the case of health sector stood in full public glare, thanks to the pandemic. Thousands of doctors, nurses and technicians are being recruited; but their deployment is being problematic. The otherwise existing impressive number of health complexes remain merely as buildings without life in it. Most of these are short of basic inventories  of sitting arrangements, appliances and equipment and all the rest. It is unacceptable that a proper dynamic has not been set in motion for utilization of allocated money, a good part of which tends to be returned back to the ministry at the yearend. Ironically even in that peculiar context corruption is rampant. What's more, it is brandied about as a reason for not making further allocation of money. Lack of absorption capacity needs urgent rectification. A chamber leader's suggestion for allocating money to health sector under the annual developing programme in view of the Covid situation may find resonance.

Evidently agriculture is pivotal to the economic recovery and food security of people. Its importance as a sort of lifeline has been vindicated by the relative quiet composure with which one greets the blessing of food self-sufficiency in times of strains and stresses like these - not having to look over  the  shoulders at a looming famine condition. The other day a combined harvester in Dinajpur was a symbol of hope embedded in fuller agricultural mechanization! But only the total outlay for agriculture ministry has been proposed in the current budget to be slightly raised to Tk 164.37 billion compared with an allocation of Tk 140.04 billion in the outgoing budget.

So far as the largesse of stimulus packages goes, certain points need to be borne in mind: First many of the intended recipients belong to informal unorganized sectors. They are short of documents to lay a claim for loans. The conditions for them to receive loans should be relaxed; recommendations from locally reputed individuals sufficing for the purpose. Secondly the list of recipients should be carefully drawn so that none of the truly eligible persons is left out.

Two of the talking points of the experts have been that the subsidy to rental power plant and the money saved through decline in international  oil prices may be diverted to equally, if not more, worthwhile sectors.

Some more things will have to be kept on a tight leash. For instance, government debt servicing liabilities including payment of interest on both domestic and foreign loans may mark a significant rise in the upcoming year. These will be due to a substantial increase in government's borrowing target both from internal and external sources. A concern that can be dovetailed to the entire scenario relates to maintaining a healthy balance of payment situation. Thankfully, the IMF and ADB are providing budget support but they will seek reforms. The country's foreign exchange reserve is in a  good shape for  import coverage but when trade resumes in full-swing import bill is likely to be  hefty.

In this context, it is of utmost importance that the policymakers immerse themselves in crafting the negotiating capabilities both in public and private sectors to garner grants and credits at concessional rates.

In times like these for the nation any patriotic Bangladeshi would emphasize  the urgency of exertions at appropriate levels to significantly curb the flight of capital that in a sense is bleeding the country white. It is a monetary black-hole  sloshing in all sorts of unearned incomes. The budget offers scope to whiten black money on payment of 10 per cent penal tax. This has been tried before , but with limited success. Economists are against it on ethical and unalloyed economic grounds, saying that the genuine tax payers feel hard done by. NPL may be linked to it. So by a well-thought-out intervention against misinvoicing and other forms of capital flight  the nation stands to benefit by regaining huge wealth that really belongs to it.

Could Covid-19 as a leveller help a sea change in the mentality of those who can still prize other countries over their motherland? 

 

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