Budget: Hopes and fears

The first yardstick to measure the performance of the economy is its growth rate. During the fourth quarter of every financial year, the government, research organisations and multi-national development agencies remain engaged in projecting the GDP (gross domestic product) growth rate of the economy. In the light of the three-month-long political unrest, all concerned have lowered their GDP growth forecasts. These include the Centre for Policy Dialogue (CPD), Bangladesh Bank, Asian Development Bank (ADB), World Bank (WB) and International Monetary Fund (IMF). The government is also set to downsize the current fiscal's GDP growth projection.
Very recently, the World Bank has projected GDP growth at 5.6 per cent for the current fiscal which was 6.1 per cent in the previous year. The ADB also scaled down Bangladesh's growth forecast last month to 6.1 per cent. Its earlier forecast was 6.4 per cent. The Bangladesh Bank, however, made a projection of about 6.5 per cent growth. At the beginning of the current fiscal, the government assumed GDP growth at 7.3 per cent. This expectation can not see success by any consideration. Meanwhile, the government has hinted about downsizing the total budget. According to the Finance Minister, the size of the budget for the current fiscal is going to be of Tk 2,380 billion. It may be mentioned that the country's budget for FY 2014-2015 was set at Tk. 2,505.60 billion. In the revised budget the government's total revenue earning target may be lowered from Tk 1,730 billion to Tk 1,620 billion.
The recent political unrest has affected all sectors of the economy. It has affected both domestic and international trade. Transport sector was seriously disrupted. Farmers suffered from not being able to market their products. However, imports were found rising. According to CDP, there was no investment at all in the country and a huge amount of money got smuggled out of the country.
While projecting lower growth, the World Bank says that the 3-month-long political turmoil costs Bangladesh US$2.2 billion. According to business and trade organisations, the loss is ten times higher than the WB estimate.
The Finance Minister has contradicted the WB and ADB's projections saying, these are not real estimates. He hopes that the growth rate will be more than 6.0 per cent. It is, however, possible to calculate GDP by inserting foreign remittance and showing robust growth in the service sector (tourism, hotels, restaurants etc) for the last quarter of the current fiscal that might end up with 6.2 per cent GDP growth.
The government is going to prepare the budget for FY 2015-16. It has already been told by the Finance Minister that the size of the budget may be to the tune of Tk 3000 billion. There will be many hopes and expectations reflected in the budget, as always. Expectation of the people is that the budget should not be void of essence. There must be specific objectives and modalities for achieving those objectives in the budget.
Some basic commitments are required in the budget. These include higher investment to the tune of 32 per cent of GDP, improving infrastructure facilities, ensuring business-friendly environment, improving law and order and most importantly, creating a healthy political atmosphere in the country. The Finance Minister can not ensure all these. He needs the support of the whole government.
Apart from inadequate infrastructure, the economy of Bangladesh has been plagued by unabated political unrest. When announcing the budget for fiscal 2015-16, the Finance Minister should take possible political unrest and its economic impact into cognisance. Political crisis has not died down. It may flare up any time. Recurrence of such crisis can be contained by practising a sustainable democratic culture that will ensure participation of the people and all political parties. The Finance Minister can take a bold step in allocating Tk 5-6 billion in the budget for holding an inclusive and participatory parliamentary election. That may work as an incentive and defuse political tension.
The writer is an economist
and columnist.
 chowdhuryjafar@ymail.com