GDP growth target cut again
The government has revised down the GDP growth projection to 6.1 per cent for 2020-21, the next revision this fiscal year, reflecting the devastating impacts of the second wave of the coronavirus pandemic on the battered economy.
The government had in the beginning geared to achieve an 8.2 % expansion in the gross domestic product (GDP) in today's fiscal year. Later, the mark was reset at 7.4 per cent.
The brand new growth target was fixed yesterday at a meeting of the fiscal coordination council chaired by Finance Minister AHM Mustafa Kamal.
Top officials of the finance ministry, the Bangladesh Bank and other ministries were also present at the meeting.
The GDP growth target for the next fiscal year could possibly be set at 7.2 %, according to a source who was simply present at the meeting.
In March, the World Bank projected that Bangladesh's GDP might grow as high as 5.6 per cent in today's fiscal.
Economist Binayak Sen told The Daily Star: "We can't expect a very high growth rate of 8 % as projected unrealistically in the 8th Five-Year Plan."
"But, if we are able to achieve a stable 5-6 % growth rate with broad-based healthcare for all, social protection for the poorest and the new poor, and robust agricultural growth within the next two to three years, which will be good for the economy and the citizens."
"That will be more regular with realistic expectations about government revenues in the medium term."
The director-general of the Bangladesh Institute of Development Studies said once the Covid-19-related uncertainties petered out nationally and internationally, Bangladesh could shoot for higher growth targets and address structural reforms in tax administration and implementation capacities.
The government is planning an expansionary cover 2021-22. The size could be Tk 602,484 crore, which is 17.3 % of the GDP.
Another budget could prioritise buying and generating coronavirus vaccines, stimulus packages and medical sector to handle the pandemic-induced monetary shock and protect the indegent from hunger.
In yesterday's meeting, medical secretary proposed a substantial budgetary allocation for vaccine import and production.
The government has reserve a block allocation of Tk 10,000 crore in today's fiscal year for the health sector.
Of the sum, around Tk 2,500 crore has been spent to acquire coronavirus jabs and other related equipment. Another Tk 1,000 crore would be spent to supply cash assistance among 35 lakh poor persons under a new stimulus package announced recently, the official of the finance ministry said.
The meeting assured other ministries of providing the required amount of funds, if needed, through the remaining amount of the fiscal year.
Sen said another budget should emphasise public health insurance and social protection, especially in cities, and agriculture as the very best safety net for the rural poor.
"Within the domain of public health, we should seriously think about the production of vaccines and motivate vaccine diversification."
"We should invest more for research and development in the area of health insurance and infectious disease because we are a high-risk, high-density country. We ought to expand the network of urban primary health infrastructure at the ward level since 60 % of Covid-19 infections are in Dhaka and another 20 % in Chattogram."
The federal government has unveiled a Tk 225,124-crore twelve-monthly development programme (ADP) for FY22.
The cover FY21 has been revised right down to Tk 540,286 crore, from Tk 568,000 crore initially.
The earnings generation target could possibly be set at Tk 389,079 crore for FY22. The National Board of Revenue (NBR) will be given a task to earn Tk 330,078 crore, almost like the current fiscal's target.
The federal government set a revenue collection target of Tk 378,000 crore in FY21. The NBR has been asked to improve Tk 330,000 crore.
The next budget would try to limit the inflation rate to 5.3 %, from 5.4 per cent in today's fiscal year.
The budget deficit, set at about 6 % of GDP in FY21, could be allowed to go up to 6.1 % in FY22 starting on July 1.
Binayak Sen said the cover the next fiscal year could adopt expansionary fiscal and monetary policies. Still, the absorption capacity of different ministries was a binding constraint as indicated by the reduced implementation capacity of medical ministry.
The health ministry were able to spend only 20 % of the ADP allocation in the first eight months of the fiscal year.
