Bangladesh National Budget 2019-20: Overall stance remains pro-growth
10:19 PM, June 13, 2019 / LAST MODIFIED: 10:27 PM, June 13, 2019

Overall stance remains pro-growth

It has become a tradition for the budget to be increased every year by 17-18 percent so this year, there was no reason to expect this to change. Generally, Bangladesh’s budget has maintained a sectoral balance in its stance, giving priority to education, agriculture, infrastructure and social sector expenditures.

The bulk of subsidies goes to agriculture while significant costs have to be borne for the losses sustained by public sector banks. While it is easy to disagree with sectoral or specific priorities, the root of the problem lies in three different types of weaknesses: (a) Weakness in revenue collection and generation; (b) Low efficiency and high costs irrespective of sector; (c) Poor expenditure management leading to poor quality outcomes.

On the positive side, the government has behaved responsibly in terms of keeping to a sustainable debt burden. What has become important now is to have a clear reform strategy that articulates how various targets are to be met in terms of addressing the above three points noted.

The overall stance remains pro-growth which is actually very important to maintain. We must remember that the impact on poverty reduction and positive social sector outcomes (e.g. health and nutrition) could not have been possible without broad based growth. Thus the focus must be on delivering sustained, broad-based growth which requires major progress in the reform agenda.

I would have preferred a gradual withdrawal of subsidies to RMG which does not seem to have happened. The expansion of social safety nets (SSNs) in my view is not productive – it would be much better to throw resources at making SSN more efficient.

While tax ceilings on individual and corporate taxes have remained unchanged, it would have been good to start scaling these rates down (these are some of the highest in the world) and improve on collection.

I don’t get a sense of core focus yet – it may emerge upon a closer look. It’s good that a small amount of money has been thrown at football. Similarly, there are many such areas that could have been encouraged. For example, I would dearly like to see the emergence of one international standard research university specialising in science and technology.

The writer is director general of the Bangladesh Institute of Development Studies (BIDS)

 

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