Country's leading economists on Sunday suggested the government pursue an expansionary fiscal policy and increase its spending to help money flow into the people's hands.
They also recommended widening the coverage of social safety net, accelerating the private sector credit growth, enhancing revenue collection and preparing the budget for fiscal year (FY) 2021-22 considering the context of the pandemic.
They came up with the suggestions at a virtual pre-budget meeting with finance minister AHM Mustafa Kamal.
Prof Rehman Sobhan, Dr Wahiduddin Mahmud, Dr Qazi Kholiquzzaman Ahmad, Dr Salehuddin Ahmed, Dr Atiur Rahman, Dr Zaidi Sattar, Dr Ahsan H Mansur, Prof Mustafizur Rahman, Dr M MAkash and Dr Nazneen Ahmed took part in the discussion, among others.
Briefing newsmen after the meeting, the finance minister said the economists advised him to go for an expansionary fiscal policy in the next FY so that everyone in need of assistance can be provided with the necessary support.
"Money has to be made available to the people so that they can meet their cost of living," he said.
The minister said that the need for expanding the health services delivery has also been highlighted in the meeting. "We will definitely enhance (health) allocation in the next budget and also try to ensure quality health services for the people."
Replying to a query, he said the economists also suggested bringing the people and the sectors that have been excluded this year, under the coverage of incentive packages next year.
"They also wanted to know if the allocations reached the designated businesses or people. They also suggested for expansion of the coverage and extension of tenure of the stimulus packages," said the minister.
Mr Kamal said the economists have also suggested formulating the next FY's budget keeping in mind the ongoing pandemic.
Regarding the tax-GDP (Gross Domestic Product) ratio, he said the proportion is very low in Bangladesh which needs to be improved. "The ratio would have gone up had the eligible people paid tax accordingly," he added.
Mr Kamal explained that the government does not realise tax from many areas and gives waiver taking into consideration various factors. The mega projects and other government projects are out of the purview of taxes, he added.
He said that efforts will be there in next FY to expedite the tax collection. However, he cautioned that if the taxes are imposed properly on every sector, the cost of projects will go up and people will also suffer.
Regarding the legalisation of undisclosed money through budgetary measures, the economists suggested the government examine whether the people who pay taxes properly feel discouraged or not due to this action.
Mr Kamal said tax evasion is a crime. "If someone evades taxes, we can prosecute them legally."
"If people take advantages within the purview of legal structure that is also an offence. But no punishment can be given in that type of tax avoidance," he added.
The minister said some systems do help create undisclosed money. "We have to cut the sources that help generate undisclosed money. That will take time but we have to do it as soon as possible."
Contacted, executive director of Policy Research Institute of Bangladesh, Dr Ahsan H Mansur, who attended the meeting, told the FE that the budget for next FY has to be context-specific.
"We are going through a pandemic. So, we should not formulate a normal budget by avoiding the pandemic," he said as suggested at the event.
"The economy will face stresses, revenue collection will be sluggish, and we have to spend more on helping the coronavirus-affected people," he added.
Dr Mansur said there should have a provision/allocation for support mechanism for any upcoming lockdown period either that happens next week or next year. "A preparation should be there for arranging food for a certain number of people after announcing lockdown."
For the general safety net programmes, the allocation should be increased, he said, adding that the cash support mechanism has to be more pragmatic.
He also said that this year's fiscal policy was not supportive. The spending of stimulus packages was very meagre which should not happen next FY. "Stimulus should be spent out. An expansionary fiscal policy is needed. We have to spend more."
He suggested that the tenure of stimulus packages should be extended by three to five years. "The borrowers would not be able to repay it now. We need to keep them alive."
