There should be a balance between economic reality and political necessity in the upcoming budget, the Centre for Policy Dialogue’s (CPD) distinguished fellow Debapriya Bhattacharya said yesterday.
The public policy analyst made the observation at a media briefing on the 2013-14 budget at the CPD office in the capital.
Emphasising caution and balance, he said that fiscal and external matters, plus governance are the three major challenges to implementing the next budget.
“All the three risks will be underpinned through unfolding political hostilities,” he said, adding, “If such animosities persist, they are going to seriously jeopardise the successful implementation of the upcoming budget.”
The economist said the gap between the targets of the 6th five-year plan indicators and the present index is huge and the country does not have enough resources to fill the vacuum.
“The economic reality is we don’t have enough resources to achieve the targets envisioned in the five-year plan,” added the CPD expert.
He observed that domestic demand is declining.
Banking Sector
Focusing on the banking sector, Debapriya said the financial sector is in a deep crisis.
Bad debts increased from 6% to 10%, while high interest rates and spread, and subsequent excessive liquidity within banks were putting pressure on the financial system, he maintained.
In addition, “corrupt loans” that Hallmark and Bismillah Group obtained made the scenario worse, he continued.
The private sector was also not taking loans from banks, as there is no quantitative change to the investment climate, he pointed out.
“High growth will not be possible without necessary investment,” he observed.
Padma Bridge
Viewing domestic funding for the Padma Bridge, Debapriya said such financing would have a negative impact on allocation for important social sectors like education and health.
In the current fiscal year, expenses in the annual development programme (ADP) increased to Tk90bn while it is announced that ADP expenses would be set at Tk100bn in the next budget, he said.
In budget discussions, the government decided to allocate Tk60bn for the troubled bridge project leaving only Tk40bn for allocation to all other sectors in the upcoming fiscal year, he added.
The government allocated Tk90bn for the current ADP while it had Tk40bn for allocation to all sectors, he pointed out.
CPD Executive Director Mostafizur Rahman conducted the programme while its Research Director Fahmida Khatun made a comprehensive presentation.
