Asian Development Bank (ADB) country director in Bangladesh Manmohan Parkash said the 2021-22 fiscal budget should give special focus on the bottom 30-per cent population affected adversely by Covid-19.
"It should be a 'caring' budget, provisioning enough for the worst-affected people. It gives an opportunity for a 'reset' of financing priorities," he told the FE in an interview recently.
"Balanced development between urban and rural areas is imperative for inclusive growth. Employment creation is vital to recover from the pandemic."
"Policy incentives and cheaper financing schemes in the budget could help kick-start cottage, micro, small and medium enterprises (CMSME), boosting the job market," Mr Parkash said.
"Developing rural areas and the less-connected areas where the pandemic's economic impact is severe, helping the urban poor and informal workers, and giving easy access to finance for the marginal farmers are all steps that can be considered."
Incentives for entrepreneurship, start-up funding and bond market development could help improve access to finance, the Indian-origin Parkash told the FE.
About economic challenges amid Covid-19, Mr Parkash said as almost all the global economies are mostly affected, Bangladesh should try to establish its own economy creating a big consumer base.
"Creating local economies of scale is fundamental to survival during such challenging times. With over 165-million people, huge domestic demand can be created and a self-sustaining economy be developed."
"Focusing on developing local economies should be a key priority. More equitable development of countryside will help develop local economies, which will drive the country's growth and avoid people rushing to cities."
"Unplanned urbanisation is a key challenge of developing countries and the country needs to learn from the German model of developing local centres of excellence, creating local jobs and opportunities so that people don't desire to move to urban areas."
Replying to Bangladesh's uneven growth, Mr Parkash said the pandemic has shown several fault lines in its development model.
"The first and foremost is the mismatch between economic growth, and social and human capital development. More emphasis should be on investing in health and social sectors. Countries that have invested more in public health have been able to manage the crisis well."
Then there is a need for investing in education and skills development in a bid to create jobs and educate people good hygiene practices, he cited.
When asked about the costly development projects, Mr Parkash, who has extensive experience in project implementation and administration, said: "The initial cost of a product is less important, what will I get from the product in its life is more important."
"There has to be emphasis on quality contractors and consultants. Performance-based contracting system is the norm now. This method should be used more and more in Bangladesh if it wants quality infrastructure without cost overruns and delays." Quality of supervision, responsible land acquisition, proper environmental management and close monitoring of projects are other areas which need to be emphasised for delivering quality projects in time within competitive costs, the ADB country chief said.
Replying to the ADB-government's GDP growth projection mismatch for FY21, he said: "The situation under the pandemic is volatile and projections are dependent on the timing and underlying assumptions, many of which change frequently due to several factors. Hence the difference is possible."
The growth projection considers the current state of improvement in pandemic situation in Europe and the US, where normalcy is returning after vaccination.
"We're hopeful that Bangladesh's economy will continue to recover, supported by a strong manufacturing base, the strengthening of growth in export destinations and increased remittance," said Mr Parkash, a post-graduate in the Management of Public Enterprises from Indian Punjab University.
He praised the opening-up of economy in May 2020, saying: "The cautious reopening of the economy in end-May 2020 after the pandemic-induced lockdown imposed to control the spread of Covid-19 was a key political decision and seems to have paid good dividends."
The economy has shown early signs of recovery with record remittance and increased export.
Mr Parkash, however, said these need to be sustained and monetary and fiscal measures need to be continued.
"The health system needs further improvement for efficient vaccine delivery and ensuring effective health services to the people. Further reforms should be undertaken in the areas of resource mobilisation, export diversification, employment generation, skills development as well as social protection."
"The future planning process needs to include disaster and emergency management issues adequately. Programmes need to be mobilised to support and expand micro-, small- and medium-sized enterprises," Mr Parkash said.
"Managing non-performing loans, prioritising key development projects in annual development plans, improving business climate, increasing private-sector capital mobilisation, attracting industries relocated from other countries, business process reengineering to facilitate foreign investment, improving business logistics and trading facilities across borders, building institutions, and improving skills and education are of critical importance."
Cutting needless expenditure, Mr Parkash says, further improvement in the access to digital technology and internet, and product specialisation will also help.
On the ADB's support to Bangladesh in tackling the virus, he said it would continue to be a reliable development partner for the country. The ADB will supply financial support to necessary development projects and programmes, and this will be accompanied by knowledge, in partnership with other development partners and the private sector.
"A social and economic recovery from the Covid-19 pandemic will be a priority for the ADB's operations in the coming years," Mr Parkash concluded.
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