‘Achieving GDP target for FY 2020-21 almost impossible’

If the government borrows too much from private banks, it will affect the inflow of funds into the private sector and investment, said AB Mirza Azizul Islam, an economist and a former adviser to the caretaker government.

The government has targeted borrowing Tk 85,000 crore from the banking sector to meet the deficit in the proposed budget for the fiscal year 2020-21.

However, this will hamper flow of money to private investors who are already in a crunch due to the coronavirus outbreak, the economist said. 

Azizul also said achieving 8.2 percent GDP growth during this pandemic is almost impossible as GDP growth and revenue collection will be lower this year because of slow business.

The noted economist said this while talking at a virtual meeting on budget and economic development arranged by the American Chamber of Commerce in Bangladesh (AmCham) yesterday.

AmCham President Syed Ershad Ahmed moderated the discussion.

During the course of the meeting, the economist also said the government should reduce unnecessary spending like foreign travel and focus more on farm mechanisation, effective implementation of social safety net programmes, and spend more on rural development and industries, he said.

Drastic reduction of corruption, improvement in ease of doing business, bureaucratic efficiency and the rule of law are needed to attract both domestic and foreign direct investment.

The Anti-Corruption Commission should improve its efficiency, Mirza Azizul added.

"We need to be realistic and pragmatic in budget proposal," said Ahsan H Mansur, executive director of Policy Research Institute (PRI).

The government must bring drastic reforms in tax administration, the PRI executive director also said.

The government will also have to do something about feeding nearly 50 lakh people who have either lost their jobs or are in financial trouble because of the pandemic.

Md Mosharraf Hossain Bhuiyan, former chairman of National Board of Revenue, suggested that the government not increase tax on mobile talk time and not impose tax on use of reconditioned cars as many lower income people use such cars.

"We need to facilitate SMEs to increase the contribution of this sector to 40 percent of the national GDP," said Aftab ul Islam, former president of AmCham.

Planning Minister MA Mannan said the government has been working to protect people's jobs by introducing different stimulus packages. The government's target is to bring down poverty level to 20 percent from 35 percent, a number that increased due to the coronavirus pandemic.

Fazlul Hoque, former president of Bangladesh Knitwear Manufacturers and Exporters Association and Shams Mahmud, president of Dhaka Chamber of Commerce and Industry, also spoke during the video conference.