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The Financial Express

Expectations from a pandemic-responsive budget


Expectations from a pandemic-responsive budget

As the Covid-19 outbreak continues to impact life and livelihoods at an unprecedented scale, devising a pandemic-responsive budget for the fiscal year 2021-22 (FY22) will be critical to chart the way to a resilient recovery from the crisis. Several studies have indicated that economic activities and employment across the economy have taken a serious hit while millions have plunged into poverty-- at least temporarily. More than one year into the pandemic, the country is yet to reopen the educational institutes while many children are anticipated to drop out from schools, as studies suggest. Prolonged closure of the schools is expected to drive child marriages and push children into workforce as low-income households struggle with the pandemic-inflicted crisis. Despite an impressive start of the Covid-19 vaccination drive, the country is now desperately looking to source jabs to inoculate its population. Evidence from the developed countries reveal that recovery from the pandemic will be a far cry without vaccinating majority of the population.

Given the nature of the crisis, what are the expectations from a pandemic-responsive budget? First and foremost, there is a critical need to acknowledge the severity of the crisis without being complacent. Failure to contain the health hazard will derail recovery. India's recent Covid-19 catastrophe shows that the price of complacency is costing lives and we should learn from their outbreak experience. We should not let our guards down against the outbreak and devise the policy responses keeping in mind the short to long term effect of the pandemic.

Second, health sector should be given the topmost priority. Bangladesh's healthcare expenditure remains one of the lowest in South Asia, even during the pandemic. Analysis shows that despite receiving paltry allocation, budget implementation of the health services division has been just over 20 per cent until March 2021. Increasing allocation is not going to save lives and promote healthcare services. Implementation capacity should be increased to utilise the funds effectively and transparently. Besides addressing physical health issues, the upcoming budget should also have clear guidelines and necessary allocation to fight the mental health crisis that has emerged as one of the critical aftermath of the pandemic. Current proactive measures to secure vaccines from multiple sources should continue. Funds should be marshalled towards building country capacity to produce vaccines in collaboration with global vaccine makers.

Third, to address the poverty and employment impacts of the pandemic, social safety net programmes need to be ramped up - both in terms of allocation and coverage of beneficiaries. The FY21 allocation for the social safety net programmes was just about 3 per cent of GDP and 17 per cent of total budget. Although more than one year has passed since the onslaught of the pandemic, we are yet to see a comprehensive list of the affected households. Failure to having such a list is a major roadblock to implement emergency social protection response. Furthermore, the pool of 'new poor' created due to the pandemic should be brought under the social safety net.

Hence, in the next budget, there should be innovative and evidence-informed social security programmes considering urban poor, unemployed population, and returnee migrant workers - three vulnerable groups who are mostly overlooked under the current social protection interventions. Bangladesh's social protection response has largely ignored the informal sector workers whereas more than 80 per cent of the workforce are employed in this sector. This pandemic presents an opportunity to address this longstanding challenge while minimising the Covid-19 impacts on poverty and employment. 

Fourth, education budget should be increased keeping in mind the protracted closure of the educational institutes, anticipated learning loss of the students, and woes of teachers. For FY 2020-21, out of the allocated Tk 660.0 billion for education sector, education ministries could spent only some Tk. 560.0 billion. No support was extended to help private institutions which have been closed by the pandemic-inflicted catastrophe. Many such institutions were bound to shut down their academic activities while lots of people have lost their jobs. A recent survey indicates that almost 6 million primary and secondary students are at risk of learning loss due to school closures. Preventing the dropout of students while reviving the education sector will be a critical task ahead and the budget proposal should provide necessary directions in this regard.

Fifth, current support for the agriculture sector should continue and newer support measures should be introduced. Research reveals that this sector has experienced a 18 per cent growth in employment, although work hours have been reduced. During this pandemic-hit times, this sector has provided the much-needed backing for food security and employment. However, in the upcoming budget credit facilities for small holder farmers should be provided as they are mostly left out from the traditional loan and stimulus packages. Focus should also be given to promote non-farm sectors (like poultry, dairy etc.) to boost food security and enhance employment.  

Sixth, emergency support should be directed towards cottage, micro, small and medium enterprises (CMSMEs)- the largest employment provider in the economy. A closer look at the currently available stimulus package shows that almost 80 per cent of the packages are loan support from the commercial banks at subsidised rates. CMSMEs often struggle to present the documentation requirements needed to avail these packages.

Therefore, the next budget should propose alternative way(s) to benefit these enterprises who are the lifeline of the economy. Furthermore, speedy and targeted implementation of the stimulus will be critical to the ensure a resilient recovery.

Finally, institutional capacity across the government agencies should be increased to properly implement the budget while enhancing the revenue collection efforts. Current proactive measures of repriotisation and austerity measures should be continued to ensure prudent spending of funds. Moreover, springing back to normalcy and building back better of the pandemic-ravaged economy will hinge upon effective budgetary allocation and its timely implementation while protecting life and livelihoods.

 

Dr. M. Abu Eusuf, Professor, Department of Development Studies and Director, Centre on Budget and Policy, University of Dhaka & Executive Director, Research and Policy Integration for Development (RAPID).

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