Economists on Thursday criticised the proposed national budget for FY25, arguing it does not have adequate focus on restoring macroeconomic stability.
Speaking at a post-budget discussion hosted by the Economic Reporters' Forum (ERF), they said the budget flagged major challenges such as rising inflation, revenue generation, foreign-currency reserves, growth and job creation. But the proposed measures were incomplete and insufficient to tackle these issues effectively.
In a keynote presentation, Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), said persistent high inflation remains a major concern for the economy, which continues hurting the livelihoods of common people.
While the central bank adopts contractionary measures to control inflation, she said, the proposed fiscal policy is expansionary -- which is "contradictory".
"Under such circumstances, bringing down inflation will be difficult," she noted.
Dr Fahmida Khatun questioned the projected GDP growth of 6.75 per cent for FY25, considering the current macroeconomic context. Achieving this ambitious target in a private sector-driven economy would require increased investment.
However, she said that the private investment-to-GDP ratio has remained stagnant at around 23-24 per cent for several years.
"It is unclear how the government plans to raise it to 27.34 per cent in the next fiscal year," the CPD executive director said during the discussion chaired by ERF President Refayet Ullah Mirdha.
The economist also talked about the consistently high revenue targets set for the National Board of Revenue (NBR) despite their history of falling short.
She said the bank borrowing target has been proposed at Tk 1.37 trillion, which is 2.50 per cent of the GDP. The gradual high dependency of the government on the bank borrowing would create a crowding-out effect that would hurt the private sector.
Former Bangladesh Bank (BB) governor Dr Salehuddin Ahmed said the budget has almost nothing that would bring smiles to the lower-income groups and businesses as the debt burden keeps rising, while the scope of employment continues squeezing. He criticised the apparent contradiction between the budget's "Smart Bangladesh" slogan and the proposed increase in mobile and internet taxes. "Such slogans should not mislead the public."
He argued that the budget should have prioritised three key issues: inflation, foreign currency reserves and energy. But the budget lacked concrete measures to address these pressing challenges. Dr Monzur Hossain, research director at the Bangladesh Institute of Development Studies (BIDS), advocated for a stronger focus on restoring macroeconomic stability, even if it meant compromising somewhat on projected growth figures.
"If the macroeconomic problems are not addressed properly, achieving the desired long-term growth trajectory will be difficult," he said.
He questioned the government's approach of reducing subsidies by simply raising energy prices. "Is this the most effective way to manage subsidies? Shouldn't alternative options, such as improving institutional capacity, be explored?"
Dr AK Enamul Haque, professor of Economics Department at East-West University (EWU), macroeconomic stability needs to be ensured through policy stability.
Discussing the appropriate use of public funds, Dr Haque said the expenses for the power and gas sector continue to rise, which placed a huge strain on government revenue. "Perhaps it is time for an independent assessment to justify these rising costs," he added.
The economics professor stressed on enhancing institutional capacity through regulatory reforms. He aired concerns about individuals borrowing from the banking system and subsequently becoming bank stakeholders, which is a conflict of interest.
President of Bangladesh Textile Mills Association (BTMA) Mohammad Ali Khokon also spoke at the discussion.
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