The budget for the 2020-21 fiscal year should focus on the health sector and social safety net to fight the economic fallout and tackle shocks of the Covid-19 pandemic, according to experts.
Dr Zahid Hussain, former lead economist of World Bank, Bangladesh, said: “In the health sector, there is a deficiency in all aspects, including testing facilities, infrastructure, and equipment and trained human resources. Budget allocation for the health sector is very low, only 0.9% of GDP.”
“So there is no alternative to increasing the allocation for tackling the coronavirus health risks. For the next few budgets, the government should keep big allocations for the sector,” he added.
Through reallocation, the sector should be on the frontline and proper utilization of funds should be ensured.
Former World Bank lead economist in Bangladesh Zahid Hussain | Mahmud Hossain Opu/Dhaka Tribune
“The future of our economy will remain uncertain if we cannot improve the management system related to stopping the spread of coronavirus and if we cannot ensure a planned reopening,” Zahid said.
On the other hand, the government should keep track of non-Covid-19 diseases, an area which remains unfocused and is at risk now.
On top of that, the government also has to give priority to reopening educational institutions ensuring social distance and safety measures. “As a result, this sector needs more allocation than in previous times,” the economist added.
Focus on limited issues
“In the present context of Covid-19's devastating impact, I think the government should focus on limited issues to effectively combat the economic fallout,” said Policy Research Institute's Executive Director Ahsan H Mansur.
There are many challenges for the country's economy. Preparing a policy to turn the economy around from the fallout of the coronavirus is a big challenge.
Second of all, it is important to restructure the vulnerable health sector and see what kind of measures the government will take to control the coronavirus. In the budget, the government has to allocate enough resources and chalk out an effective proposal to restructure the health sector, he said.
Policy Research Institute (PRI) Executive Director Ahsan H Mansur | Mahmud Hossain Opu/Dhaka Tribune
Third of all, the government has to allocate enough funds to feed a huge number of people, who have become unemployed. “The unemployed won’t be able to get back to work soon,” Mansur said.
Although the government has already taken steps to provide financial assistance to five million families, this should at least be 15 million. “I think the government should allocate Tk25,000 crore for this over the next six months,” the expert added.
The government's weakest point is revenue generation, which may see a shortfall of Tk1.25 lakh crore in the current fiscal. It is totally unacceptable, he said.
To overcome the hurdles in revenue generation, the government has to take political decisions in consultation with the business community.
On top of that, there is no alternative to automation and increasing the efficiency of the administration. These issues have reemerged as big concerns, he observed.
Focus on revenue mobilization
There were challenges in the country's economy, which has aggravated by the outbreak of coronavirus. With the outbreak, economic activities of the country were closed, which would cast a negative impact on the GDP, says another expert.
Centre for Police Dialogue (CPD) Research Director Khondaker Golam Moazzem said: “In the next budget, the biggest weakness and challenge for the country will be resource availability and predictability as the government has to offer more on social safety, health and bailout packages.”
Centre for Policy Dialogue Research Director Khondaker Golam Moazzem | Courtesy
In increasing the revenue, the government can use the fiscal policy to boost domestic demand, while focus should be given on automation on taxation collection systems.
In addition, the government has to take measures to stop all types of tax evasions and illicit financial flows (IFF) and bring back the laundered money, the expert said.
“Beyond the domestic sources, government should seek assistance from the external sources such as World Bank, IMF, and Asian Development Bank (ADB) as Bangladesh currently enjoys a robust debt sustainability index as the public-debt-to-GDP ratio is around 34% and it could afford a couple of additional percentage of fiscal deficit, perhaps up to 7-8% of GDP,” Khondaker said.
On top of that, Bangladesh should take advantage of the decision of the G-20 in regards to providing low income countries with funds at zero or low interest to combat Covid-19 pandemic, as it suggested.
‘For health, social safety and job revival'
This time the highest allocation should be in the health sector, especially for fighting the coronavirus pandemic. Our healthcare infrastructures including hospitals need to be upgraded and developed, echoed another expert.
The second most allocation should be for the social safety net so that marginalized people can survive with their basic needs fulfilled, said Asif Ibrahim, founder chairman of the Business Initiative Leading Development (BUILD).
The third most important allocation should be for reviving jobs and resuming people’s livelihood. Employment generating sectors should be promoted through the government bailout packages.
Asif Ibrahim, founder chairman of the Business Initiative Leading Development (BUILD) | Collected“The budget must address the vulnerabilities of the overall economy, especially keeping export oriented industries afloat. Beside this, small and cottage industries need special attention as they are at risk of closure. All other industries including large ones are also important to be cared for in the budget,” said Asif.
The government should plan to mitigate domestic demand anyhow, for which it needs to promote local businesses with more fiscal and non-fiscal support, he added.