There’s no need for so many ministries: Ahsan H Mansur

Policy Research Institute (PRI) executive director Ahsan H Mansur has questioned having so many ministries when the government is vowing for maintaining austerity amid the prevailing multifaceted economic crises.

He said, “Do we really need the textiles and jute ministry? I don’t think so. There is no need for so many ministries if the government can think a little more openly. There are only 11 ministries in the US where we have some 50-60.”

“The sectors for government expenditures have been contracted, but not the costs. In the current economic context, the focus should be cost cutting,” he stressed.

Ahsan H Mansur made the remarks while addressing a discussion on the status of economy and the proposed national budget for 2024-25FY. The Newspaper Owners Association of Bangladesh (NOAB) and the Editors’ Council jointly organised the event at a hotel in the capital.

Ahsan H Mansur said, “We ourselves are responsible for the existing financial situation, in particular, the dilapidated state of the banking sector, driven by the 9 per cent and 6 per cent interest rates (on loans and deposits respectively). As the crises didn’t appear overnight, so will be the solution to this.”

He further said the issues of inflation and monetary policy fall under the jurisdiction of the Bangladesh Bank. These issues are not related to the national budget, though the national budget can play an auxiliary role in this regard. The budget for the next fiscal has shrunk as compared to the previous fiscal. Now the inflation will come down gradually if a contractionary monetary policy takes effect.

“The interest rate has been made market-based in recent times. If it were done a couple of years ago, then the pressure of inflation would have been much less now. As the decision to leave the interest rate on the market was delayed, the pressure of inflation will reduce slowly.”

Referring to the rise in the interest rate he said although it’s not a good news for the business conglomerates, they have to accept that considering the current circumstances.

He said, “The money transaction rate is likely to remain the same for the next few months. Now, if the decision to implement market-based interest rates is not intervened and the transaction rate remains stable, then our country too will see a drop in the inflation rate like the other countries.”

“Even after that, prices of daily commodities won’t come down, but the rate of price hike will be less than now and we can expect that by January next year if the government acts wisely. Our target is to reduce the inflation rate from 10 per cent to 5 per cent or 6 per cent. It’s not that tough and can be achieved within six to nine months,” he argued.

Ahsan H Mansur feels there are some inconsistencies in the proposed budget for the 2024-25 fiscal.

He said it was said that investments in the private sector would increase. However, the growth in deposits is not satisfactory at all. The growth of deposits won’t exceed Tk 1.7 trillion in total. If the government itself takes more than Tk 1.37 trillion from there, then what else can be taken from there as loans?

Ahsan H Mansur explained that the private sector covers 86 per cent of the economy. The public sector covers the rest. “As per our analysis, the private sector is getting only 24 per cent of the loans where the government is getting some 76 per cent. It is a major inconsistency. It just cannot be.”

He believes the government has given the power sector enough chances. “We won't progress far if we continue to pay the capacity charges and provide subsidies for this sector. We have to renegotiate with companies like the Adani Group of India or the Summit Group. This is one way of cost cutting.”

The PRI executive director also advised the government to think seriously about the banking sector. There is a scarcity of money in the banking sector. Neither the government, nor the businesspersons are getting money from the banking sector. Why is it so? Who is responsible for this? The initiatives to merge banks have been thwarted due to the pressure of the political economy.

Ahsan H Mansur further said the burden of foreign debt on the government reached this state due to the failure of only one sector – the revenue sector. The tax-GDP ratio now stands at 7.5 per cent. It’s not even possible to graduate to a higher middle income country with the existing revenue system, let alone an advanced country. It’s possible to double the revenue collection. However, there was no mention of reform of the financial and revenue sectors in the proposed budget. A decision should come from the top level.

“Why would people pay the tax, when bribery is the only means for almost all services?” he questioned.

He remarked that the government needed smartness in policy review before announcing a budget with the motto to build a smart Bangladesh.

Ahsan H Mansur said, “We want smart reform programmes in the revenue sector at every level, from the policymaking to administrative works. However, this is where we lack the most. The initiative of building smart Bangladesh must start from within the government. The people will get smart automatically in that case.”