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CPD: Budget lacks mid-, long-term recovery plans from Covid-19

  • Published at 03:08 pm June 4th, 2021
CPD budget analysis 4 June 2021
Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD) speaks at the discussion on the proposed FY2021-22 national budget, at a press meet in Dhaka on Friday, June 4, 2021 Focus Bangla

The insignificant rise in health budget is business-as-usual and nothing out of the ordinary, says the think tank

The proposed national budget for 2021-22 fiscal year lacks both mid- and long-term plans for the economy to recover from the onslaught caused by Covid-19, the Centre for Policy and Dialogue (CPD) has said.

In a post-budget analysis titled “An Analysis of National Budget FY 2021-22” on Friday, experts from the independent think tank said that although the budget seemed adequate theoretically, it was not sufficient.

Presiding over the event, CPD Executive Director Dr Fahmida Khatun said: “The budget refers to the management of the Covid situation which was not the case during the first Covid budget [FY21]. However, it does not offer much in terms of concrete measures and innovative policies to combat Covid induced challenges.”

The total budget allocation for the health sector has increased by 12% – from Tk29,247 crore in FY21 to Tk32,731 crore in FY22 – which is lower than the 14% average annual increase in total budget allocation for health between FY11 and FY22.

She said that the increase in total budget allocation for health in FY22 followed a linear trend line, indicating that the rise was business-as-usual and nothing out of the ordinary, despite the fact that the healthcare sector is reeling from the shocks of Covid-19.


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Given the magnitude of negative impact on various sectors due to the pandemic, the CPD had emphasized on the need for a medium-term strategy for economic recovery.

However, the budget for FY22 had no indication on this, said Dr Fahmida while adding that this put under risk the fulfillment of the promise made in the 50th budget to move towards a resilient future by giving priority to lives and livelihoods.

Lack of clarity in budget implementation

In the budget speech, it is mentioned that health, agriculture, and employment generation have been given priority while allocating resources for the ADP.

“However, actual allocation does not reflect this as these promises have not been supported by adequate resources,” Dr Fahmida said.

She highlighted that deficit in revenue mobilization, weaknesses in government expenditure, low implementation of Annual Development Program (ADP), subdued industrial production, gradual pressure on food inflation and low credit flow to the private sector were worrying signs.

Citing the budget projection, she pointed out that it did not seem to recognize the implementation challenges, and hence, did not spell out ways to overcome those challenges and improve the economy.

On long-term Covid plan, CPD Research Director Dr Khondaker Golam Moazzem said: “Amid Covid-19, this budget should have focused on recovery and immediate response plans, such as vaccination, oxygen crisis and so on. There is no plan to initiate new projects to address the pandemic.”


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The CPD also pointed out that no significant change in the structure of ADP allocation for FY22 could be observed in alignment with the changes in allocative priorities in view of Covid-19 pandemic.

Mentioning that the 80% of Covid-related support was in liquidity form, it said that banks had played a key role amid the pandemic, and opined that another stimulus package was required to save the small and new borrowers.

Ambitious GDP growth projection

For FY22, the GDP growth has been set at 7.2%. The growth projection rate is higher than the forecasts by the World Bank (3.6%, in April), the IMF (5.0%, in April 2021), but lower than the ADB (6.8%, in April). However, food inflation appears creeping up (5.7% in April 2021)

Regarding remittance with a growth target of 15% for FY22, the CPD said that the overall outlook on migration was not very optimistic in the Medium-Term Macroeconomic Policy Statement (MTMPS).

In the eleven months of FY21, remittance inflow posted an increase of 39.5% over corresponding figure. However, overseas migration posted a decline of 59% during the same period.


Also Read - Budget FY22 Analysis: Proceed with caution


The CPD said that the proposed targets in the budget were far from reality if actual figures at the end of the ongoing fiscal year were taken into consideration.

Middle class ignored

Prof Mustafizur Rahman, CPD distinguished fellow, pointed out that the neo-poor and the middle class were offered nothing in the budget.

Due to the pandemic many people had faced job cuts and joined the service sector, taking them back to their workplace would be the biggest challenge, he added.

“The philosophy of the budget is to eliminate income inequality, consumption inequality and wealth inequality. This is what is missing in the proposed budget,” Prof Mustafizur observed.

Budget management

Towfiqul Islam Khan, a senior research fellow of CPD, stressed the need for strong monitoring, transparency, accountability and overall budget management for the future.

Actual expenditure decreased by 6% from Tk18,677 crore in FY19 to Tk17,532 crore in FY20. Total budget utilization decreased from 92% in FY10 to 74% in FY20.

Over the past several years, non-development budget utilization had been consistently higher than development budget utilization, he added.

Meanwhile, the CPD welcomed the continuation of the VAT exemption facility on import.

It said that the tariff exemption on Covid-19 test kits, PPE, and vaccine as well as the inclusion of some of the raw materials for the local production of Active Pharmaceutical Ingredients (API) in the existing concessions would be helpful for the pharmaceutical industry.

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