Second ‘Quarterly Review of Bangladesh Economy’ of 2018

SANEM QRBE_June 09_01SANEM’s reflection on the National Budget 2018-2019 was presented in June 2018’s QRBE.  Dr. Selim Raihan, Executive Director of SANEM and Professor of Economics, University of Dhaka was the Lead Discussant in the QRBE. According to Dr. Selim Raihan, “This budget is not a budget to ride on the highway of SDGs”. Next 12 years’ time frame is very crucial for Bangladesh because the country needs to achieve several development goals in the coming years. If we want to achieve the SDGs, then our budget needs to be aligned with the SDGs.

The country needs big budget since we have bigger goals such as 7th FYP, SDGs and Vision 2041 to achieve. The main problem is the implementation of the budget. There has been a political economy behind the failure to implement the proposed budget. From the previous years’ experience, it has been realized that the country can attain 7% GDP growth with an 80% budget implementation. Therefore, ministries do not feel the pressure to materialize the proposed budget. However, this is a visible poor correlation between budget implementation and economic indexes.

In the coming years, the development plans which have been designed more specifically for achieving the SDGs t demands larger allocation of budget. A major portion of revenue of government comes from tax generation. Hence, we need major success in generating tax in order to implement this big size budget successfully. We have been stuck at 16% growth rate of generating tax. In this situation, the proposed 30.8% tax generation growth rate is not realistic. Though the VAT law was supposed to be implemented by 2019, there is no indication about this in the budget speech. Though there has been a highly ambitious target for tax generation, the radical improvement measures which needed to adopt are missing. Besides, the capacity improvement of the officials who work in the tax generation system hasn’t been discussed.

Size of ADP has increased a lot and it is required. We need to spend a significant amount of money both in physical and social infrastructures. It is quite urgent to implement different projects under ADP. Because it would not be possible at all to be a developed country by 2041 without this infrastructural development. The size of ADP is increasing and there is an enormous expectation in implementation. But it is a common scenario in every fiscal year that around 50%-52% of development works are being implemented in first 8-10 months. Therefore, we see a rush to complete the rest within the last 2-3 months of the fiscal year. Increasing efficiency, ensuring accountability, reward and punishment system etc. should be assured in implementing ADP. In our country, implementation of a project is measured by the amount of money spent but the reality should have been different. We should have emphasized on ensuring the quality of work instead. People who are not being able to provide the quality work should be brought under accountability.

Time and expenditure both are increasing in implementing the mega projects. This brings in a stagnation situation in implementation. This type of stagnation situation in project implementation can work as an obstruct to attract the private investment. The 10 mega projects have been declared as the fast-track project in this national budget but there is no reflection of any specific direction for implementing them.  However, the update of our running mega projects could have been attached as an annex in the budget so that people could have understood the real progress of the projects.

Since this is the election year’s budget, money disbursement for mega projects in the first six months will be higher to make these endeavors visible. The question of quality spending arises for these projects. The 80% of the allotted money may be spent, but the quality of budget implementation cannot be decided by looking at the figures of spending. The quality of spending is always necessary to ensure proper implementation. Normally in the election year, the government expenditure will be higher. We have to be careful while executing these expenditures so that we do not move away from the track.

Crisis in banking sector, lack of confidence in private investment due to volatile economic state, fail to generate enough employment are major concern that we need to address immediately. If we don’t think seriously about these issues, this will lead us to a crisis situation.

Press Coverage of the June 09 QRBE:

Arthosuchak || Amader Shomoy.com || ATN News || Boishakhi TV || Banglavision || Daily Jugantor || NTV || New Age || Dhaka Tribune || bdnew24.com || bdnews24.com || Financial Express || The Daily Star || The Daily Star || Daily Prothom Alo || Daily Prothom Alo