Implementation found to be a major challenge
A leading economist of the country said that the success of the proposed budget for fiscal 2012-13 mostly depends on proper implementation of projects, increase capacity building and continue reform programmes.
"Some of the issues touched upon in the budget which have dominated the pre-budget discussion implicate recognition that the original budget faces problem during implementation,” said Dr Debapriya Bhattacharya, distinguished fellow of the Centre for Policy Dialogue (CPD). In an instant reaction given to The Independent the CPD fellow also stressed the need for early correction of the issues which he said necessary for smooth implementation of budgetary measures.
He also put emphasis on mobilising more revenue to support the deficit budget. “The macro-economic framework shows the need for generating more income than the expenditure,” he said adding that incremental expenditure has to go to the Annual Development Programme (ADP) projects.
He, however, cautioned the government about its complacence over some of the sectors, like energy, which does not commensurate with reality.
“If we are to achieve the 7.2 percent GDP riding on the achievements of economic expansion in past years, we must focus more on implementation,” said another CPD fellow Mustafizur Rahman, terming it a major challenge for coming fiscal.
He also stressed the need for expediting implementation of the Annual Development Programme (ADP), especially the foreign funded projects. The government should identify and remove the barriers in the implementation of ADP and increase use of foreign aid.
The CPD executive director also put emphasis for maintaining quality investment as well as proper implementation of projects in country’s physical infrastructures, like – power, gas, transport, communication and ports etc.
“Due to lack of proper implementation, the projects become delayed and require more financial involvement, especially the subsidy and put more pressure on internal resources.
Both the CPD fellows, however, appreciated the new form of presentation of the budget where the finance minister explained the background situation, reform programmes and indicated future guidelines and measures how to face the challenges.
Former finance adviser to caretaker government Dr AB Mirza Azizul Islam said the government will face a big challenge in implementing the proposed budget for fiscal 2012-2013.
“I think, the government will have to face a big challenge in implementing the budget, especially in terms of financing,” the noted economist told the media.
Mirza Aziz also expressed doubt over achieving the targeted 7.2 percent GDP (gross domestic product) growth in the coming fiscal. “I assume that achieving 7.2 percent growth will not be possible.”
The economist said there is a possibility of worsening political situation in the coming days and the government might have to borrow more from the banking sector compared to the fixed target. “These two things will have negative impact on investment prospects.”
He also said the implementation of Tk 55,000 crore ADP (annual development programme) will not be possible if political scenario worsens further. “Administrative weaknesses and political instability will have a negative impact on the ADP implementation process,” he added.
Dr Binayak Sen, research director of Bangladesh Institute of Development Studies (BIDS), has described the proposed budget as far from being ambitious, in terms of GDP growth rate, and also in comparison to the size of the previous budgets.
“The 18 per cent increase in the size of the national budget is not ambitious, as the average inflation rate stands at 10 per cent, vis-a-vis the GDP growth rate of 6.32 per cent. For this, I do not consider the proposed national budget as ambitious,” he told The Independent, in his preliminary reaction to the budgetary proposals placed by finance minister AMA Muhith in Parliament.
In terms of a developed country, our public expenditure is lower than the GDP ratio, he observed.
Sen expressed doubts about achieving the projected 7.2 per cent GDP growth, as export growth in the next fiscal remains uncertain, following the deteriorating global economic scenario, mainly because of the tumultuous situation in the Euro Zone.
About the budget deficit, Dr Binayak observed that in general, the fiscal deficit of 5 per cent of GDP could be managed, as 2 per cent of it could be obtained from foreign aid, while the rest could be harnessed from domestic resources.
For non-availability of foreign aid and budgetary support, the government had to borrow from domestic sources, which had its bearings on the private sector, reflecting on the investment, Sen noted.
Reflecting on subsidies, he said the government has to pay attention to the rural people.
He attributed the current fuel price hike to volatility in the world market, saying that it has forced the government to adjust the fuel prices in line with the international market. “Most of the subsidies will go to the power sector to import furnace oil. But, the government has to ensure fertiliser and diesel oil subsidies for the poor, as well,” he observed.
Prominent economist and the chairman of a non-government think tank, Policy Research Institute (PRI), Dr Zaidi Sattar said, lack of any initiative for bringing radical changes in the existing trade regime is the negative feature of the new budget proposal, he said giving his instant reaction on the proposed budget.
The Foreign Direct Investment (FDI) would not come with the existing restrictive trade policy. “The trade policy should be more liberal to achieve a targeted 7.2 per cent GDP growth,” he pointed out.
He also did not find any massive change in the duty structure. “There should be some radical changes in duty structures instead of polices on ad hoc basis.”