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Download PDF Finance Adviser Mirza Azizul Islam yesterday said there are no immediate remedies to the budget implementation crisis unless long-term investment is made in the public sector.
“We need to import an angel if we want an immediate solution to the problem,” he said at a dialogue styled “State of the Bangladesh economy and an analysis of the national budget for FY2008-09″ organised by Centre for Policy Dialogue (CPD) at Sonargaon Hotel.
Mirza Aziz made the comments following questions raised by discussants including politicians, economists, business leaders, civil society members and donors on the government’s poor administrative capacity for implementing the budget.
Prof Wahiduddin Mahmud welcomed the increase in allocation for the social safety nets but said implementation of the allocation is a real problem.
“Coordination and mechanism have to be put in place to ensure implementation. Let the money be spent for the poor,” he said.
On June 9, the finance adviser presented a heavily indebted budget of Tk 99,962 crore for the FY2008-09. The budget has a deficit of around Tk 30,580 crore, which will be met with foreign and domestic borrowings.
The government is set to borrow Tk 13,498 crore from banks in the coming fiscal year, which the businesses fear would create a crowd-out situation for the private sector.
Participants at the dialogue said financing the huge deficit would be a major challenge for the caretaker government.
Mirza Aziz, however, defended the budget deficit, saying it is still lower than that in other countries including India. “I do not think the increase in bank borrowing will be a serious problem for the private sector,” he said.
The budget deficit is estimated at 5 percent of GDP, which is 4.8 percent in the revised budget for the current fiscal year.
“The private sector credit growth was 17 percent during July-March of the outgoing fiscal year compared to the same period of FY2006-07 despite Tk 2,000 crore more borrowing from the banks by the government,” Mirza Aziz said, denying a possible crowd-out situation for the private sector credit needs.
Responding to a query on poor performance in the energy sector, he said around Tk 800 crore more has been allocated for the sector in the coming year compared to the revised figure of the current budget.
He said the GDP and revenue growth projected in the budget are not ambitious. “It is by no means unrealistic,” he said, adding that 9 percent inflation rate is also a realistic estimate.
On food security, Mirza Aziz said the government has set to create a stock of 31 lakh tonnes of rice for the next fiscal year to address the increasing threats in the food sector.
Fertiliser price is still low considering the international market price and the production cost in the domestic market, he said.
Responding to the criticism that the budget aims at overcoming the short-term crises, he said the government has tried to address some priority areas like agriculture, rural development, energy, transportation, health and education considering medium-term benefits.
Mirza Aziz said measures including tax reduction and tax holiday have been taken to boost domestic industries. He rejected the plea of enhancing the ceiling for tax-free income from current Tk 1,50,000.
Prof Wahiduddin Mahmud raised a question on the higher price of rice in the domestic market despite a bumper Boro production. He said rice traders are stockpiling the produce thinking it would be profitable.
On the overall budget, he said this is a budget that needs to be reviewed continuously. “There might be a trade-off between public sector investment and additional resources devoted for the short-term measures in the budget,” Prof Mahmud said.
Eminent jurist and politician Dr Kamal Hossain asked the government to devise innovative ways to ensure support for the poor in food insecurity. He also asked it to address deficiency in the energy sector.
In his concluding remarks, former finance minister M Syeduzzaman expressed concern over a drop in public investment and national savings. He appreciated the caretaker government for its well-intentioned short-term measures but said the budget is totally silent on infrastructure issue.
CPD Executive Director Prof Mustafizur Rahman presented the keynote paper at the discussion.
Former education minister and BNP leader Dr Osman Faruk, former state minister Abul Hasan Chowdhury, Awami League leader Dr Abdur Razzak, Jatiya Party leader GM Quader, Workers’ Party President Rashed Khan Menon, International Monetary Fund representative Jonathan Dunn and the country’s leading businessmen also took part in the discussion.
October 10th, 2008 at 11:12 am
the finance advisor’s comments is not satisfactorily. as a poor country we have to be conscious on every comments & doing.