National Board of Revenue (NRB) has been split before budget. The move was protested. How do you see that change and the protest? How can this decision affect revenue collection in the future?
Selim Raihan: We welcomed the move when the issue of splitting the NBR came up. The White Paper Committee had also recommended dividing the role of the NBR. The government’s intention behind the decision to split the NBR is very good; however, the design was flawed.
More importantly, it was necessary to engage key stakeholders both within and outside the bureaucracy when implementing such a critical reform. That didn’t happen, which led to significant backlash against the government’s decision.
It cannot be denied that there is an anti-reform attitude within the bureaucracy; however, without gaining the trust of the bureaucracy, the government will not be able to implement major reforms. There should have been an open discussion. The concerns raised by NBR officials needed to be addressed. The strikes and reactions we are seeing surrounding the decision to split the NBR will definitely have a negative impact on revenue collection. If this isn’t properly resolved, the negative impact on revenue collection will continue. On the other hand, if the government backs away from reform, that too would be an unfortunate outcome. I believe there is still time to engage all relevant parties in an open discussion and move forward with NBR reform.
How would you evaluate the government’s economic successes and failures over the past ten months?
Selim Raihan: The current governor of the central bank has taken a number of initiatives, which have somewhat curbed the bleeding in the banking sector. Due to some of these measures, we are now getting a clearer picture of the actual state of non-performing loans. However, we also know that the condition of the banking sector remains very fragile. It will take a long time for the sector to return to normal. For that, reform efforts must continue consistently. I must point out that the banking sector reforms are not being carried out very transparently. Key stakeholders do not clearly understand how these reforms are being implemented. I believe more transparency is needed here.
The growth in exports and remittances is certainly a positive development. The sharp decline in foreign exchange reserves has been somewhat contained. That is definitely a success. But this success alone is not enough to overcome the current crisis in our economy. The biggest crisis facing our economy right now is uncertainty—uncertainty in investment, uncertainty surrounding elections, political instability, the fear of political conflict, and a deteriorating law and order situation. In such an environment, investors are very hesitant to invest. Naturally, we’re seeing this reflected in current investment trends.
Education and health sectors are always neglected in terms of budget allocation. The trend continues this time too. Why did it happen?
Selim Raihan: The interim government had a chance to set an example of increasing allocations in the education and health sectors. Not only a jump in allocation, it had the chance to bring major reforms in these two sectors so that the allocated money is spent appropriately. The government could have suspended projects that seem important on the surface but not truly significant from the perspective of public interest, and redirected these funds to increase allocations for education, health, and social safety sectors. But that did not happen, and the reason is a conventional mindset within the bureaucracy. Those in the government also failed to take a bold stance. The stagnation that has developed in the health, education, and social safety sectors could have been dismantled by the interim government.
Prothom Alo :
Do you think the proposed budget includes any specific direction for poverty alleviation and employment generation?
Selim Raihan: Recent data show that the poverty rate is increasing. No employment is being generated in the private sector, as the state of private investment is very poor. The investment data we’re seeing raise significant questions. Without knowing the true picture in this area, we also won’t get an accurate understanding of the real employment situation.
What area should the government have focused on in the budget but failed to, in your opinion?
Selim Raihan: There are major questions regarding the data on which this budget has been based. During the previous government’s tenure, we witnessed data manipulation in areas such as the growth rate, national per capita income, and the size of GDP. We had called for an independent data commission to review such figures. A budget should be formulated based on reasonably accurate data. But we have not seen any notable initiative to reform BBS (Bangladesh Bureau of Statistics).
As a result, the data presented in the budget are still based on the distorted figures from the previous government. This is why we’re seeing that the growth rate is declining, yet the investment-to-GDP ratio is still being shown as around 31 per cent. These are inconsistencies. I believe the government had both the time and opportunity to use a transparent methodology and involve competent individuals to correct the data—but that did not happen.
Prothom Alo :
The interim government is going to place its budget within 10 months of assuming office in a new reality emerged after the mass uprising. The outline of the proposed budget has been published in the media. How is this budget going to be?
Selim Raihan: This is the first budget after the mass uprising of 2024. Naturally there are high expectations centering this budget. I think there was a necessity to massively reevaluate the current budget as we have long been criticising its structure.
But we did not see any meaningful reevaluation of that budget structure. The interim government actually had that chance. After the government took office in August last year, it could have reevaluated the budget structure within September-December. It could have fixed the structure where needed.
Because what we have heard so far about the timeframe of the election, and if it really happens, then this will be the lone budget placed by the interim government. In that case, the government had an opportunity to set example. They could have gone outside the purview of the political governments’ budgets and created an example of pro-people, discrimination-free and development-prone budget. This is our expectation on budget from this government. But, the reality is different. The interim government is walking the path of the previous government’s or the existing budget framework.
No major change is likely in budget, rather framework or allocation might see some changes. We are going to see no core change. There are also some concerns. Question arose on whether social security, education and health get importance. It has been learned from the important people of the government that these sectors are seemingly seeing no major changes.
So, the question is whether the interim government set any example on placing the budget. If the next political government could see that such a non-political government placed a different type of budget, then the political government would have a huge pressure to create a new trend. I want ask whether the interim government lost the opportunity to set an example on budget.
Budget will not reportedly reflect much of the recommendations made for reforms to economic sector. Why?
Selim Raihan: The interim government has the reports of two major committees on economic reforms – the White Paper Committee and the Task Force Committee. We filed the White Paper Committee report on 1 December last year and the Task Force Committee report at end-January. I can clear say that we saw no major discussion over these reports at finance, commerce and planning ministries, which were most relevant in these reports. We saw no initiative on formulating any work plan related to implementing the recommendations of these reports. We have highlighted specifically on budget in the White Paper report at an event at the China Friendship Conference Centre on 18 January. But my evolution is the budget is not reflecting this that much. If it does, we would see changes in budget framework. From the point of the people’s desire that led to the mass uprising, there was an opportunity to place a different type of budget formulated by the very important and competent people in the government and private sectors.
There are several reasons behind this. First: there is a question on how the much the people in government own these reform reports. Some of them surely own it. The Task Force was formed under the supervision of Planning Adviser Wahinduddin Mahmud. Second: Question also remains on cooperation from bureaucrats to ministries to implement reforms. It is also a big issue that how much the political parties and the supporting forces for reforms become vocal and interested in reform.
The government does not feel much pressure on how much the budget will reflect the recommendations of White Paper Committee and Task Force, and how quickly they will undertake reform task. This pressure can come from social and political sides. Committee members, civil societies and think tanks are talking about it, but the government does not feel that much pressure.
Prothom Alo :
Budget is said to be not only the statement of government’s income and expenditure but also an economic philosophy of the government. What is the economic philosophy of this budget? What do you think what it should be?
Selim Raihan: The main economic philosophy of this budget could have been how discrimination can be alleviated. It is necessary to take initiatives to reduce the basic grounds of discrimination including income and job disparity, as well as discrimination in enjoying the outcome of growth. We have seen poverty risk increases in some sectors. Inflation control results in temporary success, but there is no way to depend on it in the long run. Overall, private sector and foreign investment scenarios is not good. Altogether, this budget should have a pro-people, discrimination-free and progressive economic philosophy. Perhaps, we may hear such talks in the preamble of the budget, but if the budget framework does not really change, they those good talks would assure no body.
Prothom Alo :
Agriculture is one of the key sectors of our economy, have you seen any signs on giving adequate importance to agriculture in this year's budget? How much focus do you think the government has given to agriculture in the past 10 months?
Selim Raihan: Based on the data from the past 9 months, the provisional GDP figures released by the BBS clearly show that agricultural growth this fiscal year significantly declined compared to the previous year. This is very alarming. A decline in agricultural growth poses risk to our food security. If we cannot increase domestic food production and supply during high inflation, the inflation is very unlikely to fall. We cannot bring down inflation to an anticipated level through imports alone.
The agriculture sector has indeed been somewhat neglected since the current government assumed office. Otherwise, why would growth in agriculture fall so sharply? Even during the Covid-19 pandemic, we saw no such a sharp decline in agricultural growth. Agriculture supported us significantly during that tough time. It is alarming that agricultural growth has now fallen below 2 per cent. The government had a big opportunity to stand by the agricultural sector. The budget should certainly include initiatives to strengthen projects aimed at modernising agriculture beyond just providing subsidies.