The Centre for Policy Dialogue (CPD) sees budget preparation for the next fiscal year and its execution as the government’s greatest challenge in the wake of a looming financial crisis and its impacts on the Bangladesh economy.
“Resource collection and its distribution will be the major challenge for the next budget,” Mustafizur Rahman, executive director of the local think tank, told a press briefing on the recommendations put forward by 500 participants in a recent conference in Dhaka.
The CPD organised this two-day meet on “Development with Equity and Justice: Immediate Tasks for the Newly Elected Government”.
Rahman said how the energy crisis and the budget deficit should be dealt with is another challenge for the government.
“The government must see where the money is needed. It won’t be wise to keep the budget deficit rigidly within 5 percent,” said the CPD official.
Although Bangladesh has not been hurt much by the ongoing global recession, the economic indicators, such as exports, imports, remittances and domestic demand are declining in recent months casting a shadow on the country’s overall economic growth.
World Bank and Asian Development Bank have already reset Bangladesh’s economic growth projection at 4.5 percent and 5.6 percent respectively for this year from previous year’s 6.2 percent, mainly due to the crisis fallout.
Uttam Deb, CPD’s head of research, made a presentation on the recommendations, divided into two parts: Immediate and medium-term tasks.
These recommendations dwelt on macroeconomic management in the face of global challenges, food security and containing inflation, energy sector, ICT for development and the 100-day employment generation programme.
On the macroeconomic management, it said the government should be ready to live with the deficit of around 5 percent of GDP in view of allocating additional resources to mitigate the adverse fallout.
The central bank should pursue more proactive policy to reduce the spread of interest rates, the CPD said, suggesting creation of an Export Stabilsation Fund, which could provide credit support to the sectors, adversely affected by the crisis.
It also advised the government to up the present amount of Tk 1,050 crore, earmarked for the cash compensation scheme in the budget.
On domestic demand stimulation, it asked the government to up private consumption through public expenditure.
Opposing any devaluation to the local currency, the CPD remarked that the move would not help reduce commodity prices.
It recommended an increase in the supply of inputs to raise food production. It also said the government should formulate an integrated strategy to promote non-cereal production.
On energy issue, the CPD asked the government to resolve the disputes on maritime boundary with India and Myanmar so that it can expedite the process of offshore gas exploration.
“Adopt a coal policy on an urgent basis,” it said.
To resolve electricity crisis, it advised, the government should supply adequate gas for power projects. It also suggested a proper maintenance of plants, equipment and machineries to sustain efficiency.
It also asked for revising the national energy policy 1996.
Suggesting immediate doables for developing the ICT sector, the CPD said the government should formulate a comprehensive master plan for 12 years, in addition to a five- year plan, for Digital Bangladesh.
A joint taskforce could be constituted to advise on proper utilisation and monitoring of the 100-day employment generation programme.
“The programme could be introduced for the whole year giving flexibility to address the needs of the local people,” it said.
CPD senior officials were present at the briefing.
Source: The Daily Star, 05 April 2009