Budget failed to meet expectations: analysts

The proposed budget for the next fiscal year has failed to properly reflect the health and livelihoods crisis created by the Covid-19 pandemic and take enough measures to take the nation out of the catastrophe, analysts said yesterday.

Their views came at a virtual dialogue organised by the Centre for Policy Dialogue (CPD) to discuss the measures under the proposed Tk 568,000 crore budget for 2020-21.

Discussants said health, social protection, income generation and job creation should have been the main focus of the budget to fight the deadly virus and take the economy back to its higher growth trajectory.

However, instead of attaching the highest priority to these areas, the government has framed the budgetary measures in a business as usual approach centred around economic growth.

In view of the situation, analysts suggested the government take the next fiscal year's budget as a dynamic document so that it can revisit and take corrective measures during the implementation phase.

They recommended reforms in revenue administration to increase revenue collection, increased allocation for the social safety net programmes, and discarding the plan to increase supplementary duty on mobile phone usage.

Salehuddin Ahmed, a former governor of the Bangladesh Bank, said banking and capital markets were in problem prior to the Covid-19 pandemic. And those problems have deepened.

"So, we had not expected a routine budget. Many argue that the budget is a routine matter. It is okay. What was expected is a non-routine budget in the special circumstances so that we can face the Covid-19 pandemic and address other problems. But we could not do that," he said.

He said initiatives should have been taken for reforms in the banking sector, the capital market and at the National Board of Revenue to increase revenue collection.

CPD Distinguished Fellow Prof Mustafizur Rahman, while presenting the think-tank's analysis on the budgetary measures, said the risk of Covid-19 still exists and it needs a big push to face the pandemic.

"But we have not seen that attempt in the budget," he said.

He said Tk 10,000 crore block allocation has been kept in the proposed budget but it is not clear how it would be spent.

Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said two budgets -- each six months -- should have been framed instead of formulating a one-year budget.

"The first six months should have focused on Covid-19 control, social safety net particularly for those who became unemployed and stimulus packages," he said, adding that GDP growth-centric focus needed to be changed.

"It did not take place. Still, I think we should focus on Covid-19 control, livelihood support and implementation of the Tk 103,117 crore stimulus package. If we can't do so, the economy will not rebound," he said.

The former economist of the International Monetary Fund requested the government to be ready for the worst-case scenario as the coronavirus has continued to infect more people.

Reforms of the NBR have become urgent and one of the steps would be to separate revenue administration from policy instead of appointing revenue officials to frame policies, he said.

"Unless we can't shift our focus to reforms in the revenue administration and increased revenue collection, the government will have to print money to pay salaries in future in absence of fiscal space."

China focused on employment generation, not economic growth, said lawmaker Saber Hossain Chowdhury.

"Instead of focusing on GDP growth, the priority should be to save life, livelihoods and jobs," said Saber, also the chairman of the parliamentary standing committee on the ministry of environment, forest and climate change.

He echoed others for a review of the budget for every two months during the pandemic.

"The budget is not the Bible and we have to revise it if the Covid-19 lingers," said Planning Minister MA Mannan.

"We had expected that the effect of the Covid-19 would be gentler and that is why we framed the budget in optimistic and expansionary perspective," he said.

He, citing criticism over the increased supplementary duty on mobile phone usage, said it must be under review.

"This is not a business-as-usual year," said CPD Chairman Prof Rehman Sobhan.

"This is not only a life and death issue for people but also for the state of the economy and how it actually functions."

He proposed a task force among civil society organisations to monitor and evaluate how the Covid-19 pandemic is addressed and how the budget is spent to battle the disease.

"We should be monitoring the ways social protection programmes are implemented. We need a task force to monitor the work of the incentives programmes."

The review of the budget should be done at least in six months, if not three months, according to lawmaker Nahim Razzaq. "Proper implementation and monitoring of the stimulus package and massive reforms in the banking sector are needed."

Despite demands and expectations among the people for increased investment, the allocation in the health sector remains low, said Amir Khasru Mahmud Chowdhury, a former commerce minister and a leader of BNP.

"The context of the Covid-19 crisis was not taken into consideration during the formulation of the budget. I feel that it is just a little bit of a variation of the template of traditional budget," he said.

"What is cited is the lack of capacity of the health ministry to implement the budget. But why doesn't it have the capacity?" he asked, demanding ensuring accountability.

He questioned the scope to whiten black money at only nominal tax and added conditions should have been slapped that the money to be whitened should be invested in trade and industry.

Nihad Kabir, president of the Metropolitan Chamber of Commerce and industry, opposed the scope to legalise the untaxed income. "We have always opposed this because it discourages compliant taxpayers."

Changes brought to the VAT rules for the next fiscal year would hurt businesses, she said.

Withdrawal of the VAT on the internet would accelerate economic activities and offset the losses of revenue, said Syed Almas Kabir, president of the Bangladesh Association of Software and Information Services.

Kamran T Rahman, president of the Bangladesh Employers' Federation, demanded faster disbursement of the stimulus packages so that businesses can reopen and create jobs and demand.

He said domestic demand should be created. "If it is done, we will be able to retain jobs and create jobs," he said, suggesting inclusion of returnee migrant workers into non-farm sectors.

"All efforts will go in vain if plans are done ignoring the issues of healthy living of people," said MH Choudhury Lelin, chairman of the Health and Hope Hospital.

Maleka Banu, general secretary of the Bangladesh Mahila Parishad, said problems faced by women exacerbated during the pandemic.

"A large number of women from garments, returnee migrants and small women entrepreneurs are losing jobs. We had expected that there would be specific initiatives to address their issues in the budget. But we have not seen any specific step," she said.

CPD Executive Director Fahmida Khatun moderated the dialogue.

Sayema H Bidisha, professor of the department of economics at the University of Dhaka; Ferdaus Ara Begum, chief executive of the Business Initiative Leading Development; Jalal Ahmed, a former additional secretary of the finance ministry; KM Enamul Hoque, deputy director of the Campaign for Popular Education, and Nazmul Ahsan, manager of the A4I Project of ActionAid Bangladesh, also spoke.