The government of Prime Minister Sheikh Hasina did not relinquish the idea of making an ambitious budget for the fiscal year 2020-21 despite the implication of century’s most devastating pandemic, which has reduced the scope of export, import, demand and supply equally.
Bangladesh is efficiently and effectively fighting to contain the fallout of coronavirus or COVID-19 like other nations since its outbreak in December 2019 and the budget for the next FY is going to be a budget for national salvation as the country is facing one of the toughest economic shocks due to the disruption of production and supply chains with global trade and commerce facing a debacle.
A big budget is inevitable to fight coronavirus backlash and keep the development pace. It is clear that the public spending will be increasing in the days to come as the government has already announced a huge stimulus package.
And side by side with the short, medium and long-term plans for the resurrection of the country’s economy, the government appears to be very attentive to mobilisation of domestic resources. Moreover, the pace of work of the ongoing mega projects is getting momentum and foreign investors and the government of Bangladesh are working in this regards.
The most inspiring aspects for Bangladesh in overcoming the pandemic is the vast majority of the rural population, who boast resilience as they have experience in fighting recurrent droughts and flooding in the past. It is a fact that people living in slum and rural areas have proved themselves less prone to coronavirus.
Another inspiring aspect is that the characteristics of human capital in Bangladesh are quite different from that of developed nations. Bangladeshis are more resilient but less influenced by consumerism.
The recovery from the coronavirus pandemic would be a bit easier for Bangladesh and keeping that in mind the government have formulated an ambitious budget of estimated Tk 560,000 crore (5.6 trillion) for FY 2021 as it has extra expenditure in stimulus package for the recovery from corona fallout. Government expenditure will automatically increase with the implementation of this ambitious budget.
The government has recently announced a scheme under which financial institutions will distribute loans to cottage, micro, small and medium enterprises (CMSMEs) and agriculture sector at 9 percent interest of which the government will pay 5 percent. It means the borrowers have to pay only 4 percent interest under the scheme, which will certainly attract investors.
There is a good piece of news that remittances, pouring in from around the world where our wage earners are working, have recently taken the foreign exchange reserves to a new height and are maintaining an upward trend though coronavirus has affected those countries.
The stake of capital market in the economy needs to be increased if economic growth is to be sustained. And accordingly the government has planned to inject a big chunk of fund into the capital market.
The national output can be increased if there is an increase in the quantity and quality of inputs to the production process. Fluctuation in the level of GDP growth has been caused by demand and supply side shock. The government and its machineries have to be more efficient and effective in their performance to attain the target.
The government is constantly keeping in touch with foreign investors to ensure a free flow of foreign investment in different mega infrastructure and other projects for the country’s overall development as well as for meeting the urgent need of achieving the target of economic development in a stipulated period.
Agriculture is a major player in the country’s private sector. Standing crops have been successfully harvested this year despite the devastating coronavirus pandemic.
If the government can effectively and efficiently handle the country’s economy during and after COVID-19, the implementation of the budget will not be impossible.
The ICT department has already come forward with a device to trace the people infected with coronavirus. It will certainly help combat the disease and limit its impact.
Agriculture, healthcare and education should be included in the priority sectors to bring the vast population in the rural areas out of poverty while social safety net should be expanded.
The impending global economic downturn will not affect our economy at that scale as the social and economic pattern of Bangladesh is quite different from western nations. It is relevant to mention here that the Asian economic crisis in the late 90s did not affect Bangladesh economy.
With a view to offsetting the impact of the current pandemic, healthcare, education and social safety net issues should be at the forefront. Government expenditures will have to be continued and increased for employment generation.
The country is already on the development highway as the present government has undertaken quite a number of mega projects, which are playing a key role in creating job opportunity, and accordingly huge funds have been allocated for country’s infrastructural development projects.
The faster the projects will be implemented, the faster they will boost economic activities and contribute to the country’s development. That is why the government should give greater attention to the projects while executing the budget for the next fiscal year.
Sharif Shahab Uddin is Editor-in-Chief, Bangladesh Post.
