‘No timely action plan in budget to overcome crisis’

The national budget for fiscal year 2020-21 has been announced at a time when the economy is in dire straits due to coronavirus, former Bangladesh Bank governor Salehuddin Ahmed has said.

In an exclusive interview with Prothom Alo, he said, “We thought this year’s budget would not be a routine one. We expected an action plan to overcome the crisis. But we didn’t get it.”

“We hoped for long-term reform measures in the budget to determine the role of Bangladesh Bank and to identify the weaknesses in the economy and management. There is nothing about reforms of the banking sector,” the economist said, adding a routine budget remains stuck in income and expenditure.

About the revenue collection target of Tk 3,780 billion, he expressed disappointment and posed a question, “How will this target be fulfilled?”

Steps have not been taken to add new taxpayers while many businessmen at the district level are out of the tax net, Salehuddin Ahmed pointed out. The tax net has to be expanded and collection should be fully online, he suggested.

Salehuddin said the mere increase of allocation in the health sector will not do a lot to improve the health services, rather the funds have to be utilised properly.

Regarding issues like health services, Salehuddin suggested, public representatives have to be engaged. He mentioned the Indian state of Kerala which has been successful in tackling coronavirus by involving the public representatives.

The former Bangladesh Bank governor said, “We have made a mistake by running after achieving higher Gross Domestic Product (GDP) growth.”

An assessment has to be made as to who have lost jobs due to the coronavirus and have newly gone below the poverty line, he said.

Salehuddin said the government has to assist these people if they take an initiative for employment. In that case, small and medium enterprises have to be strengthened. Under the current situation, it is difficult to run a factory of 1000 people, but it is easy to run a factory of 50-100 people.

About the agriculture sector, the economist said a huge number of men and women work in the sector although the contribution of the sector to the growth has decreased.

But this sector does not get proper attention in the budget. We have to ensure the fair price of the farmers’ produce. It is a good initiative that the finance minister said farmers will be able to sell their produce online. This will build a link between sellers and buyers, driving out the middlemen.

Salehuddin Ahmed said pension beneficiaries are also there in the social safety net. The poor and the destitute do not properly receive the funds allocated for them. Wastage and corruption has to be stopped.

Genuine recipients have to be identified considering the Bangladesh Bureau of Statistics (BBS) survey which is extended to the upazila level. Everyone has national ID and cell phones. The government can provide them with assistance directly.

He said about one million migrant workers may return home. The government has to provide financial assistance so that they can arrange self-employment here, he added.

Asked about how much pressure may be created on the banking sector, Salehuddin said the banking sector will be under pressure in the next fiscal year. It would not be proper for the government to take huge loans from the banks. Rather the government can take loans on easy terms from IMF, World Bank, ADB, IDB or other financial institutions. But it would not be wise to take suppliers’ credit, he added.

The economist opposed the government’s decision to decrease the interest on savings certificates. The middle class, lower middle class and retirement beneficiaries will be benefited if the interest rate on savings certificates become higher, the former Bangladesh Bank governor observed.

He hailed the government’s decision to reduce corporate tax. In some cases, the rate of VAT and advance tax has been reduced. In it businesses and industrialists will be encouraged. He, however, criticised the scope to whiten black money as it goes against ethics. Honest businessmen, who pay tax regularly, have been punished.

Salehuddin said pragmatic steps have to be taken to revive the economy. It is a big challenge to protect lives of the people. The government has to engage all political parties, civil society and NGOs to face the challenge.

*This interview, originally published in Prothom Alo print edition, has been rewritten in English in report form by Rabiul Islam.