The national budget for fiscal 2021-22 should focus more on equity, redistributive justice, protecting jobs and saving lives, and less on economic growth, according to the Centre for Policy Dialogue.
The government should address the underlying factors for rising inequality and set targets for employment and income growth at the household level rather than GDP growth or per capita income, the private think-tank said on Monday during a presentation of its regular interim review of the state of the economy and the upcoming budget.
The government should also pay particular attention to the issues of health, social protection, agriculture and food, and small and medium-sized industries, said CPD Senior Research Fellow Towfiqul Islam Khan, who presented the findings of the research.
“People are losing their jobs amid the ongoing second wave of COVID-19,” Khan said. “The aid packages the government has announced for the unemployed are not reaching the countless people who are out of work.”
The structure of the funds drew criticism in the report. The CPD says 80 percent of the COVID response funds are in the form of liquidity support, “which leaves ample room for financial malpractices” and fails to cater to the needs of the poorest and most vulnerable in society.
Khan called for the formation of a task force that included the central bank, ministries, banks and business representatives to supervise the distribution of aid to those hit by the pandemic.
“The budget deficit in the current FY2020-21 has diminished by 42 percent because tax revenue has increased by 13.4 percent,” Khan said.
That means there is ample scope for the government to use an expansionary fiscal policy to handle the fallout from the pandemic, according to the CPD.
“The government also needs to formulate a medium-term economic recovery plan in light of the continuing pandemic,” Khan said.
The CPD report states that the government opted for a business-as-usual budget for FY2020-21, believing the pandemic’s impact would be temporary.
“The government is still having difficulties implementing the current budget,” the CPD said. Only 42 percent of it had been implemented in the first nine months of the fiscal year and management activities had only progressed 50.2 percent. Only 49 percent of the Annual Development Programme had been implemented in the first 10 months, with the crucial health sector only having used 31.3 percent of the existing allocation.
The current budget had increased the allocation to the health sector to combat the challenges of the pandemic. Data reflects the weak programming of the budget and the weak administrative capacity of executing it, the CPD said.
Corruption, irregularities and mismanagement are responsible for these issues, Khan said, and called for special initiatives to increase institutional efficiency and budget implementation.
“The transparency and accountability of Bangladesh’s COVID-19 stimulus plan will be key to its successful operationalisation and implementation,” the CPD said.
The organisation also expressed concern over food price volatility. Between the pre-COVID and COVID periods, the domestic retail prices of rice have increased 27 percent and wheat 42 percent.
The CPD recommended fiscal measures, timely imports and proper management of the food stock to combat this issue, but warned that there were additional complications at play in the domestic market that could limit their effectiveness.
The CPD said, despite the government’s current initiatives, it has been difficult to reach the people who have been left behind in the crisis.
“The time has come to make significant investment in strengthening administrative preparedness and raising institutional capacity and line ministry capacities to implement the budget in due time, within stipulated cost and with good governance.”