The research institute proposes Bangladesh’s graduation from LDC status be delayed by three years
The South Asian Network on Economic Modeling (Sanem) has said that the FY2020-21 budget has not properly addressed the Covid-19 crisis and is conventional.
The research institute has proposed the government apply to the United Nations to delay Bangladesh's graduation from least developed country (LDC) status by three years – in order to provide long-term guidance, and facilitate business and manufacturing, to recover from the rampages of the novel coronavirus.
Sanem Executive Director Dr Selim Raihan proposed this at a post-budget videoconference on Saturday.
Without accurate data in the proposed budget, setting a growth target for the economy at 8.2 percent, exports at 15 percent and revenue at about 20 percent more than the revised target will send out a negative message to the world, the organisation said.
Presenting the keynote paper, Dr Selim said the novel coronavirus is an emergency, and some exceptional initiatives should have been taken, as though it was wartime.
"Our budget does not reflect this. The finance minister has announced a budget prepared in line with those in previous years. Although health and social safety have received increased allocations, the amount is less than the cost of the extent of the crisis."
However, a high-powered expert committee might be able to make proper utilisation of the increased allocation for the health sector, said Dr Selim.
"Meanwhile, the budget has not addressed mismanagement, corruption and institutional weaknesses of the health sector – availability and accessibility of Covid-19 vaccines have also been left out of the discussion," he further said.
Sanem finds the budget does not reflect that about three crore people have recently become poor.
Selim Raihan said that the prime minister's stimulus package aimed to benefit various sectors but the budget has said nothing about newly-poor people.
Additionally, there is no clear announcement regarding the recovery of the industrial sector which has suffered huge losses due to the pandemic, he added.
Selim suggested the government give more, specifically to affected sectors for their recovery, as well as think about the timing of graduation from LDC status.
Bangladesh will miss out on many benefits of the global market if it exits from the LDCs in 2024, he said, adding that foreign assistance will decrease while loan conditions will be tougher.
"The export market benefits will shrink, and Bangladesh will not be able to achieve the actual capacity to graduate from LDC status. As a result, another three years can be sought from the UN Committee for Development Policy."
Referring to the scope of whitening black money, Dr Selim said it was not effective in the past – it only discouraged compliant taxpayers.
"Also, whether such provisions are in line with the constitution is a question," he added.
He further explained that the budget focuses on the apparel sector too much but other export-oriented sectors have not been prioritised in the same manner.
Reflecting on the crises of the banking sector, Selim remarked it faces the pressure of partially financing both the stimulus packages and the budget.
Reemphasising the necessity of there being a recovery plan, he pointed out that political will has been reflected in the budget but whether it will be transformed into action is uncertain.
Discussing the shock to remittance inflows, the Sanem executive director said there is a possibility that as soon as international flights commence Bangladeshi migrant workers might be sent back home, in the same fashion as it was during the Gulf War of 1991.
Dr Sayema Haque Bidisha, professor at the Department of Economics of University of Dhaka, said the budget does not address the homeless urban poor and that the measures taken for youth and SMEs are insufficient. Bureaucratic complications often stand in the way of implementing these measures.
She also said, despite incentives and stimulus packages for the garment sector, workers have been laid off. The budget does not contain specific and definite measures for women, especially for those distressed by the current crisis.
Many other university professors and economists also spoke on the videoconference call.