Budget should be more investment-friendly
The upcoming national budget should focus on creating more investment-friendly environment in a bid to achieving the GDP growth target of over 6.5, said an economist.
“The investment would have to be increased to a great extent. Otherwise, it would be difficult to achieve the targeted growth of GDP,” said Dr Mustafa Kamal Mujeri, the director general of Bangladesh Institute of Development Studies (BIDS).
In an exclusive interview with the news agency, the BIDS chief said investment in the country has remained stagnant at around 23-24 percent over the last few years, citing energy and power crisis as the main barrier.
The nagging energy and power crisis is affecting the country's economic activities, he observed, stressing the need for utmost priority in this sector in the upcoming budget.
Dr Mujeri said the government should take practical steps to overcome the barriers that create stagnation in investment.
The present situation in the energy and power sector was not created over a short period, he said adding due attention was not given to this sector in the past.
“It won't be easy to overcome the situation… The government will have to go for short-, mid- and long-term solutions.”
Asked about the estimated government subsidy in the next budget for the rental power plants, the BIDS head said the government would have to buy per unit electricity at a higher rate. So, they will have to subsidise.
“If the power tariff increases, the mid and low income people will be under pressure while the cost of production goes up,” he said adding that steps would have to be taken to supply power to the national grid to meet the demand.
On the upcoming budget size of over Tk 130,000 crore and the Annual Development Programme (ADP) of over Tk 38,000 crore already announced by the finance minister, he said these are ambitious, but there is a need for such increases.
“If we want to achieve GDP growth of 7-8 percent in future, the role of public sector should be more on education, health and agriculture… The size of the ADP should be bigger,” Dr Mujeri said.
He stressed increasing budget implementation capacity, which is now on the declining trend. “The planning cells of different ministries should be made functional.”
On the Public Private Partnership (PPP) initiative - a special feature of the current budget, which is yet to see the light, he said the PPP cells and guidelines should be finalised immediately.
“We must start the PPP with small projects taken on experimental basis where amendments could be made on the results of the projects.”
On the provision for whitening black money, the BIDS DG was of the view that there is no such need to maintain the facility as it is giving a wrong signal. “The government should be strict on the issue and will also have to address the increase of black money.”
He believed there is an ample scope for widening income tax net and VAT net to increase the revenue collection.
Dr Mujeri also stressed making the habit of tax submission, creating friendly atmosphere and simplifying the submission system.
On inflation, he said it is likely to continue in the ensuing fiscal and the government would have to make utmost efforts so it rises slowly.
The BIDS chief also emphasised strengthening the Bangladesh Bureau of Statistics (BBS) and the Implementation Monitoring and Evaluation Division (IMED).
“The evaluation system of IMED is limited and it should be widened. The IMED should give more emphasis on impact evaluation or the output instead of just focusing on implementation of fund,” he said.
On the BBS, he said the government has already taken some steps to reorganise the bureau so that it could fulfill the demands of time.