Sustainable steps required to meet economic challenges

budget5
budget5

The Awami League government can feel content that it did not have to face any major economic challenges in their last two terms. The country's Gross Domestic Product (GDP) growth has reached eight per cent while the increase in foreign-exchange reserves and export earnings also look promising. The inflation is quite reined in, too. The country's communication and transport sector will get a new look on completion of the undergoing mega projects, including the Padma bridge, and this will speed up the economic progress.

Despite these development projects, our economy is in grave crisis. Although there has been record rice production this year, farmers are not getting fair prices. However, the last moment government decision to purchase 200,000 tonnes more rice shall comfort the growers a bit. The farmers could have recovered the losses further if the decision was taken earlier. The cherished goal of development could not be achieved due to several obstacles, including decreased employment opportunity abroad, no increase in private sector investment and high unemployment rate inside the country.

The deteriorating condition of the banking sector has posed the greatest problem for the government. The amount of default loans has reached Tk 1108.73 billion. Though the government has provided the loan defaulters with various privileges, there has been no success in realising the loans. Finance minister AHM Mustafa Kamal, after assuming office, had announced that default loans would not increase anymore, yet these loans have increased by Tk 270 billion.

A major portion of this default loans are being siphoned off abroad. According to Washington-based Global Integrity, around $70 billion has made its way outside the country illegally in the last decade.

The Awami League government, after assuming power, recovered some of the money drained off during the BNP regime and publicised the matter on a grand scale. The people of the country too welcomed this initiative. But the government could neither recover nor take any steps to recover the money siphoned off in the last 10 years.

In this backdrop, the finance minister is to present the national budget for the 2019-20 fiscal on Thursday. The previous finance minister Abul Maal Abdul Muhith, who had placed the highest number of national budgets for the country, has warned that his successor will have to face difficult challenges. The increasing volume of the budget, realising more revenue and improving the banking sector would be big challenges for the government, he reckoned.

The non-government research institution Centre for Policy Dialogue (CPD) too said the economy of the country has been under the gravest crisis in the last 10 years. It is to be seen how the government is going to address the challenge. The organisation has made a few recommendations to establish good governance, with the finance ministry taking the lead.

There is no fundamental difference between the recommendations of Muhith and CPD over improving the banking sector.

The 18 per cent growth that has been aimed in the proposed budget is not highly ambitious. To meet the targeted revenues and to establish economic good governance, the government must take apt and sustainable steps. If not, there lie great dangers ahead.