Preparations for Bangladesh's national budget for the 2023-24 fiscal must balance expectations in an election year with the conditions of the International Monetary Fund (IMF), and tackle inflation, foreign exchange crisis and revenue shortfall.
Balancing public satisfaction and protecting the economy is a major issue. Economists say it has been seen in the past that election year budgets often prioritise public satisfaction over the improvement of the economy.
As such, the opportunity to deliver a budget that is satisfactory is very limited, said macroeconomist and public policy analyst Dr Debapriya Bhattacharya, who is also a Distinguished Fellow at the Centre for Policy Dialogue (CPD).
He told UNB, "Before the election, all governments want to give a budget that satisfies the people. But due to the financial situation, fiscal deficit, and trade deficit, the opportunity is very limited for the government. If such a big effort is made, it will have a negative impact on the overall economy."
"It is important to remember that this budget will be implemented by two governments. In this budget, flexibility must also be preserved. Because, if the government makes any big promises, there is doubt as to how much they can implement," he pointed out.
Dr Debapriya said that the budget is coming at a time of political uncertainty in the country. Plus exit from LDC, and the Covid-19 response revival are issues hanging over the budget.
“Compared to any other year, this year's budget has to be prepared in a very complicated situation. Because earlier, there would be a deficit in terms of income and expenditure in the country, but there would be comparative relief in terms of foreign transactions. But this time it is not,” he opined.
Dr Debapriya said, "There has been a major disruption in the growth rate. It is going down further because there is no money, no dollar. There is a huge deficit in both areas to be dealt with together.”
So the government has to control imports and limit its investment program. As a result, next year's growth target should also be moderated.
"The financial structure has actually weakened," he said.
Executive Director of the South Asian Network on Economic Modeling (SANEM) Salim Raihan, also a professor of economics at Dhaka University (DU), said that in the previous election years, the economy was not in such a crisis as this time.
"As a result, no new major pressure was created in the economy despite budgeting for public satisfaction at that time. But this time, if the budget is made considering only public satisfaction in view of the election, it will create new pressure on the economy," Professor Raihan said.