Economists expressed mixed reaction over the proposed budget as those who talked to the FE were critical of government measures meant to tame inflationary pressures on public life in particular.
Dr Debapriya Bhatta-charya, a Distinguished Fellow at the Centre for Policy Dialogue (CPD), points out that the inflation target for the next fiscal year is set at 5.6 per cent while the current rate is 6.3 per cent.
"So, the budget recognises inflation as a major challenge but it does not give a pathway for that," he says.
Dr Bhattacharya thinks the deployment of trade-policy tools like control of imports by imposing higher tariffs will have marginal impact on consumer price rises.
Because, he argues, the most important products which drive the inflation in the country are fuel, fertiliser, and food cereals. These are very necessary commodities and on the other hand those so-called luxury commodities are very marginal part in the import basket.
"So, the trade-policy tools will not work that much."
On the other hand, he says, the monetary policy tools have little scope because the fiscal expansion was not so much although one can make base interest rate higher and control the credit flow.
"We need to do that but it will also not have much impact on controlling inflation."
So, for inflation control, the most important part is to protect the purchasing power of disadvantaged groups and make more disposable income available to them through wage payment or direct fiscal transfer.
"So, in this case, although the corporate-sector taxes were reconsidered downward, the tax-free threshold of Tk 0.3 million was not enhanced and that is not very logical," Dr Bhattacharya notes.
The important part of government's fiscal policy has to be on the expenditure side, that is, by enhancing the subsidies for providing direct fiscal transfers, also underwriting the price of public services, providing agricultural inputs and others at subsidised prices, and also giving food support through regulated market mechanism.
"But a closer look at subsidy package will show it is dominated by power development board. Within the power development board, as we know by now, the independent power producers are getting money for their idle capacities, which is quite unjustified," he adds.
Dr Monzur Hossain, director at the state-owned Bangladesh Development Studies (BIDS), terms the budget formulation "more or less traditional" as the growth target and inflation target remained as usual.
He notes that the budget has considered the global uncertainties and supply-chain disruptions but the measures undertaken in the budget to tame the inflation are not adequate.
"The steps taken by the government to contain inflation are not adequate as it may increase further following uncertainty about the end of the Russia-Ukraine war."
About the Tk 3.7-trillion NBR revenue target, the BIDS economist says that it is too high and may not be achieved at the end of the fiscal year.
Dr Hossain feels that the allocation for social-safety net should have been increased further as this allocation is inadequate since the number of people below the poverty level is on the rise.
Dr Zahid Hussain, a former lead economist of the World Bank, told the FE the measures taken in the budget would not directly cool down the inflation.
He said some measures would help grow production.
He appeared critical of the marginal enhancement of the social safety-net programmes a merely 5.0-percent increase in next fiscal year compared to the present budget.
Mr Hussain says the government should have taken austerity measures as it will help save money by shrinking the budget gap.
Dr M Masrur Reaz, chairman of Policy Exchange of Bangladesh, told the FE the budget is welcoming as it has many measures to mitigate the present realities, including higher inflation.
He mentions that subsidy has surged to Tk 827.45 billion which is a measure to make inflation tolerable.
"It is a primary estimation of the government but the budget speech mentioned that there might be more 15-20-percent hike in the subsidy as the prices of key commodities, including fuels, in the global market remained up."
He feels that there are many projects which are not required under the present circumstances.
On deficit financing, he argues that long-term borrowing from external sources will be wise when it will be taken from the multilateral lenders, including the World Bank, as they are concessional ones.
Mr Reaz sees promoting green financing and ESG (environmental, social, and governance) as the right direction in absence of which businesses will not sustain in the long run.
