The Centre For Policy Dialogue (CPD), in its budget reaction on Friday, said the proposed budget for the fiscal year 2020-21 (FY21) has largely ignored the impacts of the Covid-19 pandemic.
“We see that the government didn’t set its priorities considering the Covid-19 pandemic: sectors like health, social safety net, agriculture and employment generation couldn’t make it to the top list of the priorities in the proposed budget,” CPD Executive Director Dr Fahmida Khatun said.
“The proposed budget is as usual, and innovation and creativity aren’t evident,” she further said while making reactions in an online briefing to the proposed budget for the FY21.
CPD said the Covid-19 induced health, economic, humanitarian and social crises are unprecedented and the budget for the FY21 needed to be more innovative in addressing the multidimensional crisis.
“The government appears to have prepared the budget under the assumption that the fallout from Covid-19 will be managed within a very short period and the economy will bounce back in 2021,” it said.
However, CPD said the Covid-19 situation is an evolving one; there are significant uncertainties regarding its duration and extent of impact.
The think tank said during a crisis like the Covid-19 pandemic the main objective should be supporting the poor and affected people, instead of being too much concerned with the GDP (Gross Domestic Product) growth.
“Several countries have been facing a negative growth, which is natural during a pandemic,” it said adding that the focus should be on coping, adjustment and mitigation with a view to subsequently getting on the recovery track.
The GDP target has been set at 8.2 per cent for FY21 in the proposed budget while the GDP growth in the revised budget for the outgoing FY20 reset at 5.2 per cent.
Earlier, CPD estimated that the GDP growth rate would be not more than 2.5 per cent in FY20.
Private investment has been estimated to be 25.3 per cent of GDP in FY2021, which, according to CPD, is a whopping 12.6 percentage point increase from the government’s previous estimation for FY20.
“A staggering Tk 4.46 trillion will be additionally required for private investment, which is a 125 per cent increase in nominal terms based on the estimation of the ministry of finance for the 2020 fiscal year,” the think tank said.
It said the growth of credit to the private sector has been set at 16.7 per cent for FY 2021 while private sector credit growth was only 8.8 per cent- the lowest since July 2011.
“It is envisaged that a 125 per cent increase in private investment will be attained in FY21 via a private sector credit growth of 16.7 per cent,” CPD wondered.
CPD said the dynamic of the remittance-inflow rise during the pandemic might soon change due to job losses in the host countries.
It fears there will be lower remittance from GCC (Gulf Cooperation Council) countries due to Covid-19, oil price slump, various restrictive measures and stringent health-related conditions in host countries.
