Economists and business leaders on Thursday at a post-budget discussion said that the budget raises hope of decreasing inflation and keeping macroeconomic stability, but policies taken to do so is conflicting.
They also termed the proposed budget for the FY 2024-25 as “a budget full of good intentions but has low directions.”
They made comment while speaking a post-budget discussion at Jatiya Press Club, organised by think tank research and policy integration for development (RAPID), in partnership of UK International Development.
Dr MA Razzaque, Chairman of RAPID, presented the keynote in the event, which pointed out that in the first 11 month of FY24, the average inflation rate is already 9.73 percent and food inflation is more than 10 percent.
However, in the proposed budget, the target of reducing the inflation to 6.5 percent is a challenging one considering the possibilities of further taka depreciation, continued import control measures, and the overall current macroeconomic situation.
“It also said with the current level of inflation of 10 percent, how it could be possible to achieve the high growth rate set for FY 2024-25 at 6.75 percent. The paper also termed the 27.3 percent private investment-GDP target with the current average of 14.5 percent bank lending rates as unrealistic,” he pointed out.
And is it possible to raise the investment by 4.0 percentage points just in a year, Dr Razzaque questioned.
It pointed out that the foreign reserves have declined to $18.7 billion (as per BPM6 standards) and are expected to be much lower when measured by the net international reserve (NIR) metric.
A challenging revenue collection target of Tk 4.8 lakh crore for the NBR has been set and the Revenue Authority will have to achieve a 37 percent growth to do so, the paper said.
Despite high inflation, the allocation for Open Market sale (OMS) has been curtailed by 63.5 percent, said the keynote.
The financial sector exhibits concerning trends, including rising non-performing loan (NPL) ratios and suboptimal operational efficiency.There is no direction in the budget about addressing these critical issues, said Dr. Razzaque.
Prime Minister's Economic Advisor, Moshiur Rahman, said that inflation is not uniform across sectors, highlighting the importance of food security and advocating for lower or no taxes on unprocessed food to ensure affordable prices for the population.
He said the budget mainly focused on three topics including macroeconomic stability, loan management, and mid-term fiscal planning.
BIDS director general Binayak Sen said the government has taken a policy of adjustment based on global and internal conditions.
He pointed out that collective steps have been taken including exchange rate review, interest rate control withdrawn and fiscal expenditure.
He also expressed his disappointment over the universal pension scheme saying that there was a problem from the demand and supply sides regarding the pension scheme. The government should think about it again.
Shams Mahmud, BGMEA Director, stressed the crucial role of the garment sector in the economy.
He noted that while the sector has received incentives and performed well in exports, broader macroeconomic stability remains a concern.
He also pointed out that seven to eight importers are now mainly involved in importing commodities in the country when hundreds of traders were earlier engaged in that in Khatungonj, Chattogram.
So, the country should find out the problem with the newer system of imports and whether it is causing higher prices or not.
Dr. M Abu Yousuf, professor of development studies at DU, and Ashraf Ahmed, president of DCCI also spoke at the event.