Prof Rehman Sobhan said the banks are facing many problems in disbursing the credit component of the loan program
Experts and economists have raised questions about ambitious GDP (gross domestic product) growth and high revenue collection target in the proposed budget amid Covid-19 pandemic, when the country's business activities are stagnant.
On Friday night, they expressed their views while addressing a webinar on the budget for 2020-21 fiscal year in which the government set a target of 8.2% GDP growth with a total revenue target of Tk378,000 crore.
Dhaka Tribune arranged the webinar titled Tribune Talks, which was broadcast live on Dhaka Tribune's Facebook page. Tanim Ahmed, special correspondent of the daily, moderated the session.
Centre for Policy Dialogue (CPD) Executive Director Dr Fahmida Khatun said that the total revenue collection target is very high. Of the target, Tk330,000 crore will be collected through the NBR, which is 9.82% higher than the previous fiscal year.
"This year, we don't need to think about GDP growth while all the countries of the world are facing either negative or very low GDP growth rates. But why did we project at 8.2% growth rate?"
She said that the revenue mobilization without reform of the revenue collection system is very challenging.
On the issue of financing the budget deficit, the government is dependent on the banking system and has increased its bank borrowing target almost to double figures, while the banking sectors are facing a challenging period, she said.
The CPD executive director said the banking sector is struggling though the central bank has taken several monetary measures to boost liquidity in the market.
At the webinar, CPD Chairman Prof Rehman Sobhan said the banks are facing many problems in disbursing the credit component of the loan program.
The second big problem, he mentioned, is the problem of the logistics of any type of reactivation of the economy.
The prominent economist said the big social protection program in the budget is going to be exclusively a governance problem.
He, however, lamented the public health sector is neglected largely.
Prof Sobhan said that Vietnam, which is the competitor of Bangladesh in the international market, has become the global role model in handling the pandemic and is leading to a significant economic recovery.
Senior economist of Policy Research Institute Dr Ashikur Rahman said the high dependency of borrowing from the banking sector impacted the private sector credit growth.
"High dependency on bank borrowing is not good amid pandemic, when the banks are facing pressure to implement a stimulus package," he said.
"Our tax to GDP ratio is the lowest in the world, which is the issue that should be addressed seriously," he added.
Metropolitan Chamber of Commerce and Industry (MCCI) President Barrister Nihad Kabir said: "The country's businesses are passing a critical time and we cannot work from home in our manufacturing industry.
"Our corporate tax rates are much higher than neighbouring countries. However, the tax rate for non-listed companies has been reduced, which will be a relief," she said.
"We hope that, in the next few years, the rate will be reduced further."