The dialogue on State of Bangladesh Economy and Analysis of the National Budget FY2011-12, organised by the Centre for Policy Dialogue (CPD), was held on 18 June 2011 at the Ballroom of Ruposhi Bangla Hotel, Dhaka. Dr Muhiuddin Khan Alamgir, MP, Chairman, Parliamentary Standing Committee on Public Accounts and Former State Minister for Planning was present as the Chief Guest while Mr Amir Khosru Mahmud Chowdhury, Former Minister for Commerce attended the dialogue as the Special Guest. Dr A B Mirza Azizul Islam, Former Advisor to the Caretaker Government; Dr S R Osmani, Professor, University of Ulster, UK and Visiting Professor, BRAC University; Major General (Retd) Amjad Khan Chowdhury, President, MCCI; and Dr Mustafa K Mujeri, Director General, Bangladesh Institute of Development Studies (BIDS) were the distinguished experts who offered initial comments at the discussion. CPD Executive Director Professor Mustafizur Rahman presented the keynote paper while Mr M Syeduzzaman, Member, CPD Board of Trustees and Former Finance Minister chaired the dialogue.
Revisiting the macroeconomic trends, Professor Mustafizur Rahman stressed the major trade-offs that would have to be faced by the government while implementing the Budget for FY2011-12. He also highlighted the missing links between various targets of the Medium Term Macroeconomic Framework (MTMF) and expressed his doubts over realisation of these targets. High dependence on borrowing from the banking system to meet deficit financing requirements may crowd out private investment, he apprehended. He also demanded more clarity and transparency with respect to providing subsidy to various sectors, particularly to power sector. To conclude, Professor Rahman identified maintaining the balance among the financing options for the government expenditures, ensuring prudent macroeconomic management, strengthening of institutions that deal with development praxis and a conducive political environment as the four defining factors that are critically important for implementation of the budget for FY2011-12.
Dr A B Mirza Azizul Islam apprehended that an increase in subsidy requirements, pressure on exchange rate and inflation might pose additional threats to the macroeconomic stability. He also doubted the realisation of external assistance expected during the next fiscal year. Addressing the dialogue, Dr S R Osmani cautioned the government that increasing domestic borrowing is pushing the fiscal sector towards an evolving debt trap. He informed that a major proportion of the country’s incremental revenue collection is now being used up for incremental debt servicing – which should be a major anxiety for any government. Major General (Retd) Amjad Khan Chowdhury opined that agriculture did not get its due attention from the proposed budget. He also found the proposed tax structure very discouraging for SME. Dr Mustafa K Mujeri observed that agricultural growth in recent years had been commendable. However, he emphasised on accelerating industrial growth to attain the growth target of 7 per cent in FY2011-12 along with the targets of Sixth Five-Year Plan. In this process, labour force from traditional agriculture sector would shift to the modern industrial sector which can help to attain the poverty reduction target, he added.
Dr Md Akram Hossain Chowdhury, MP, Member, Parliamentary Standing Committee on Ministry of Food and Disaster Management emphasised on appointing planning officers at upazila level and urged for decentralisation for better implementation of development budget. Ambassador Salma Khan, President, Women for Women did not find the budget women-friendly as allocations on gender-related activities were reduced. She also demanded higher allocation for education and health sector.
Mr Amir Khosru Mahmud Chowdhury commented that dependence on the private sector for delivering utility services such as power, water, etc. was not commendable. He also observed that despite the stock markets of Bangladesh being in a weak condition, no pragmatic measure was proposed in the budget to revitalise it. The Special Guest also emphasised on correcting the macroeconomic fundamentals of the economy. He observed that weakening Taka against USD may further aggravate the inflationary pressure. Mr Chowdhury remarked that the proposed deficit financing scheme in the budget could put further pressure on the liquidity crisis and crowd out private sector investment. He called for prudent macroeconomic management to maintain macroeconomic stability.
Dr Muhiuddin Khan Alamgir, MP noted that the proposed national budget had set some challenging targets. He emphasised on enacting new audit laws to ensure transparency in public expenditure. He also stressed on reduction in the allocation for public administration and defense. In addition to this, he called for establishing a Revenue Commission to make taxation and public expenditure more transparent. He also opined in favour of coal exploration and setting up new coal-fired power plants to boost economic growth. Dr Alamgir hoped that along with ICT developments, all educational and cultural institutions will work together in establishing Digital Bangladesh.
In his concluding remarks, Mr M Syeduzzaman recommended that ADP should be designed in line with the targets of Vision 2021 and the Sixth Five-Year Plan. He proposed to monitor the fiscal balance situation throughout the fiscal year. The Chair reminded that responsibility for implementing the proposed budget should not be laid upon the Ministry of Finance alone, rather every ministry should act responsibly to attain the targets set out for.