Former Bangladesh Bank Governor Dr Salehuddin Ahmed said the next budget would have to be pragmatic and should focus more on domestic resource mobilisation as well as attracting Foreign Direct Investment (FDI).
“You see a few of our previous budgets were too ambitious…when the budget becomes that ambitious it also becomes tougher to implement. Successful implementation of a budget is very important,” he told UNB while expressing his views about the next national budget to be put to parliament on June 6.
The next budget will be the last one for the present Awami League-led alliance in its five-year term, but it will not get the full fiscal year (2013-14) to implement it.
Dr Salehuddin, now a Professor at North South University's business school, said that the next budget is likely to be an election budget, but it should still focus on ensuring economic development.
“If there are political motives, then it would be unfortunate,” he said.
The former central bank governor opined that apart from domestic resource mobilisation, attention should also be paid to attracting foreign investment, which will raise the GDP to investment ratio above the current levels of 24-25%.
in the new Annual Development Programme (ADP), he suggested not taking less important projects or those that have no positive long-term effects.
He also called for measures to improve the efficiency of executing agencies by developing skills, deflecting political interference, avoiding cumbersome bureaucratic procedures and ignoring the influence of pressure groups.
Dr Salehuddin said the next budget should emphasise on expanding the manufacturing sector alongside agro-processing industries and SMEs to create more employment opportunities.
He listed countrywide strikes and shutdowns that hurt the economy among the major challenges for the next budget and said any kind of political uncertainty would affect the investment climate and shrinks both local and foreign investments.
“When there is political uncertainty there is policy uncertainty, which adds a new dimension to corruption and the lack of transparency in various sectors, hampering the pace of development.”
According to Dr Salehuddin development targets often fail to materialised becuase of resources constraints and growing demands. “The government should focus more on implementing these; otherwise, it will lose its credibility,”
Stressing the need for strengthening the budget formulation system, he said although input from NGOs and economists are sought, they are not propertly considered when creating the budget. On the contrary, opinions from various vested quarters, such as chamber bodies and pressure groups get more attention.
“As a result, the budget lacks transparency and accountability. The national budget is not just about managing earnings and expenditures, but is meant to take the country forward by facilitating poverty alleviation and creating employment opportunities.”
The former central bank governor said equal attention should be paid to industries that cater to domestic demand and export-oriented ones, which is presently not the case.
He also noted that the country doesn't experience balanced development and inter-regional disparity is high; leaving people without access to resources out of the services loop.
Dr Salehuddin said the economy relies too heavily on the RMG sector for its export earnings and encouraged a diversification into promising industries like ship-building and leather processing.
When asked about the implications of having resources diverted from sectors to pay for the Padma Bridge project, he said it would be unfortunate if education, health and social security don't get priority over the massive infrastructural undertaking.
