In an exclusive interview, State Minister of Planning Dr Shamsul Alam spoke to Dhaka Tribune’sTanveer Mohiuddin about the challenges and goals of the government ahead of the national budget.
What are some of the main challenges you think need to be addressed in the upcoming budget? How do you plan to tackle the issue of rising inflation?
Inflation is an international problem now, and not just in Bangladesh. It has been mostly inflicted by the Russia-Ukraine war, as the war has hampered supplies of many goods. The rise in prices of commodities did not take place due to any deficiency in economic management nor due to production deficiency in any of the seven economic sectors. In fact, we have had very positive outputs in agriculture over the last couple of years.
Undoubtedly, one of our major challenges in the budget will be to lower the inflation rate, and we do take this crisis very seriously.
The government currently gives a 2.5% incentive on remittances. Since the price of the dollar is so high, do you think it is still necessary?
It is difficult to say. Demand for the dollar has been increasing a lot and there is still some gap between the bank rate and the kerb market. So this incentive will help to channel remittances through banks or formal channels.
As an economist, I personally think that, as we have been taking devaluation steps over the last couple of weeks, further provision of any incentives may not be needed. Devaluation not only works as an incentive for remitters, but also for exporters.
Which sectors do you think need to be subsidized more?
Certainly, the agriculture sector as it provides basic necessities and employment is the highest in this sector– around 40% of our labour force. We need to provide incentives in terms of subsidies for mechanization as well as for fertilizers; and fuel prices have increased enormously. To help keep the cost of production low, we must continue to support the sector as much as possible.
As forecast by FAO and other international organizations, there is a probability of a global food shortage, and so at this time we need to make sure our agriculture sector continues to gain more momentum and we must help increase productivity.
There have been reports that the tax collection target for the next FY is going to be higher even though the government missed out on the target this year with a huge gap. Is this true?
Even though there is a gap between the target and the amount collected, we can see that revenue collection has grown by 17% in comparison to the previous year, which is very positive news. The revenue department needs to work steadily, collecting as much income tax as possible to support government activities.
We need to bring in reforms wherever necessary in order to increase our tax revenue, as well as tariff and VAT collection. Yes, we need to rationalize tariffs without a doubt, but we need to emphasize personal income tax revenue more rather than VAT, tariffs, and customs duties.
Our imports have increased by 45% and exports rose by 35% in this FY till May in terms of money volume, trade has increased to $100 billion for the first time. It means more revenue will be collected from exports and imports.
With the unfavourable exchange rates, is the government likely to initiate more big projects?
All the mega-projects taken are game-changers, and they need to be implemented to change the economic situation for the better. Projects like the Padma Bridge, Karnaphuli tunnel and MRT metro rail will be in operation within the next fiscal year and other projects will also need to be completed as well as new mega projects will have to be taken up to influence the economic structure and improve the market situation, besides creating more jobs.
But of course, these new mega projects will be undertaken with caution and by assessing the benefits to be derived from them.
Are you confident that the Padma Bridge will yield the expected benefits right away?
Yes, from the very first day the bridge will start contributing to the economy by enabling the movement of people and commodities of 21 districts from the south and will add 1.2% to the national GDP.
And the southwestern districts will enjoy GDP growth of 2.3% more. The much-awaited Padma Bridge will prove itself to be a visible game-changer within the next one to three years.
