Be prudent with new budget planning
The government is preparing to place its first proposal for the national budget of FY2024-25—the first budget after the 12th general election—at a time when the economy is going through a critical stage. Experts have pointed out three major challenges—namely slow economic growth, growing debt burden, and inflationary pressure—that need to be addressed in the new budget to turn things around. We agree that these three issues indeed demand the most attention, and to make improvement on these fronts, the government must be cautious in its budgetary planning.
Bangladesh has been suffering from a persistently high inflation for over one and a half years. As per the latest data of Bangladesh Bank, inflation stood at 9.81 percent in March 2024, with the monthly average over the past 12 months reaching 9.69 percent. This is in spite of the fact that inflation has come down globally. The inflationary pressure, along with shrinking income opportunities in a post-Covid economy, has pushed low- and fixed-income groups to a point where they have had to cut corners with their dietary requirements, education, and healthcare. On the other hand, reliance on loans to meet national spending as well as debt servicing is putting substantial pressure on our foreign exchange reserves. And then there is the slow pace of GDP growth; according to Bangladesh Bureau of Statistics (BBS), in the October-December quarter of 2023, our GDP growth stood at 3.78 percent.
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Against this backdrop, the upcoming budget is going to be crucial. The expectation is to rebound from the economic slump by successfully navigating through these challenges, and to this end, the government would do well to follow expert recommendations such as restoring macroeconomic stability, widening the tax net to increase revenue collection, making judicious use of resources, etc. More importantly, good governance in the public sector is crucial. This is something to which the government must renew its commitment.
Given the critical nature of our economic situation, the government should be prudent when designing the upcoming budget. Supporting the poor and vulnerable segment of the population must be a top priority so that they don't have to continue to make painful compromises on basic needs. Resource allocation must be planned judiciously to stop wastage. And, as many experts have been suggesting, some hard decisions must be made in order to enforce discipline and accountability across the board.
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