South Asian Network on Economic Modeling (SANEM) on Saturday said the proposed budget for 2020-21 is not COVID-19 responsive “to the extent required.” Rather, it too said the budget “followed the traditional path”, that the Finance Minister disputes.
"The proposed budget is not COVID-19 responsive to the extent that it was required to be. It has followed a rather traditional way and therefore is not in line with the extraordinary demands of the current situation," SANEM Executive Director and Professor of Economics at University of Dhaka Dr. Selim Raihan said in a webinar while delivering the organisation's reaction to the proposed budget for the next fiscal year.
Led by Dr. Selim Raihan, the expert panel included Professor of the Department of Economics, University of Dhaka and Research Director of SANEM Dr. Sayema Haque Bidisha, Lecturer of the Department of Economics of University of Dhaka and Research Fellow of SANEM Mahtab Uddin and SANEM Research Associate Eshrat Sharmin.
Around 70 participants including economists, professionals, development practitioners, researchers, journalists, and students joined the webinar through the video conferencing app ZOOM, according to a press release.
Dr. Raihan acknowledged the challenges of designing a budget in the current context of COVID-19.
He also said while it is commendable that allocation in health, education, agriculture, and social protection has been increased, it is not enough to meet the challenges of the crises induced by the pandemic. Given the past record, there is reason to be skeptical about the proper implementation of the budget.
In that regard, he said that regular updates on the implementation of these allocations, especially in the case of the health sector, should be given. Also, a high-powered expert committee might be able to make proper utilisation of the increased allocation for the health sector.
"While the budget does not address the mismanagement, corruption, and institutional weaknesses existing in the health sector, availability and accessibility of COVID-19 vaccines have also been left out of the discussion," he said.
Dr. Selim Raihan said certain provisions in the budget indicate inconsistencies in facts and data; this should be dealt with cautiously as incorrect assessment can lead to overconfidence and wrong policy choice.
The newly poor have not been addressed in the budget and in this regard measures like cash assistance, food distribution and unemployment benefits should have been incorporated, he added.
Referring to the whitening of the black money, SANEM Executive said that while this measure has not been effective in the past, it discourages honest people. Also, whether such provisions are in line with the constitution is a question.
He further explained that the budget focuses on the RMG sector too much and other export-oriented sectors have not been given importance in the same manner.
Reflecting on the crises of the banking sector, Dr. Raihan remarked that the banking sector faces the pressure of partially financing both the stimulus packages and the budget.
"Whether the crises ridden sector is up to this task is a question and the budget should have had recommendations regarding the challenges of this sector."
Given the nature of the current situation, increasing budget deficit will not be a problem, he however said, for financing, it must be realized that the revenue target is unrealistic and therefore it is necessary that Bangladesh enters into negotiation with World Bank, IMF, and other international organizations for loans with low interest and flexible conditions. Cutting finance of unnecessary megaprojects is also a necessity in this regard.
Dr. Raihan also proposed delaying Bangladesh’s LDC graduation by three years. Graduation from the LDC group comes with losing certain preferences that may prove handy in the face of upcoming economic challenges.
Dr. Sayema Haque Bidisha said that the budget does not address the floating urban poor and the measures taken for youth and SMEs is not enough.
"Bureaucratic complications often stand in the way of these measures, which should be taken into consideration."
She said that despite incentives and stimulus packages for the RMG sector, workers have been laid off. She also noted that the proposed budget does not contain specific and definite measures for women, especially for those distressed by the current crisis.
"Strong measures for tackling increasing domestic violence, have not been considered in the budget. Given the newly emerged situation, incentive, and stimulus for online businesses and facilitation of mobile usage was important."
Explaining the economic impacts of the pandemic on the education of middle-income and low-income families, Mahtab Uddin remarked that after the pandemic, there might be a rise in drop-out rates.
Eshrat Sharmin said that there should be stricter measures against the creation of black money, rather than loosening restrictions to allow its whitening.