Budget didn’t reflect govt’s commitment: SANEM

The government’s priorities on social safety, education, health and employment generation set in the 8th Five-Year Plan are not reflected in the proposed budget for the 2022-23 finance year as it did not offer increased allocations for these sectors, says SANEM.

The South Asian Network on Economic Modeling (SANEM) has recommended raising per capita allocation of key social safety net programmes, excluding pension and interest, and an intensive road map for employment generation.

The research organisation’s officials made the budget observations during a press conference held at the BRAC Center Inn in Dhaka on Monday.

According to the 8th Five Year Plan (2021-2025), the government’s poverty reduction and human development strategies focus more on job creation, higher spending on social protection programmes for the urban and rural poor and vulnerable population, the planned introduction of universal health coverage, vastly lowering the exposure of the poor to a major economic shock, improve education and skills of the poor and vulnerable population.

The government will expand the budget allocation for social protection for the poor, excluding civil service pension which is not targeted at the poor, from 1.2 per cent of GDP in FY2019 to 2 per cent of GDP by FY2025.

“The government has terribly failed to prioritise the social safety net, education and health sectors and it is inconsistent with the government’s long-term and short-term commitments,” said SANEM Executive Director Dr Selim Raihan.

“If we do not invest in health and education on time, how can we expect better services or more benefit from them in future?” he questioned.

Selim pointed out, “The finance minister has addressed the current situation and major challenges in his budget speech but he did not discuss their threat level or how deep the vulnerabilities run.”

The minister also did not say anything about any new vulnerability that has been created as a result of the Covid-19 pandemic and the global economic crisis, he said.

“That, coupled with no mention of measures to lessen the difficulties and combat the challenges, will make addressing these issues hard,” he added.

He also stressed that a road map is needed to generate more employment and the government should rethink its strategies for private investment, subsidising in RMG and tax exemptions.

“The amnesty for money launderers should also be cancelled as there is no way to justify this unethicality. There is also a slim chance to get back the laundered money,” Selim said.

Addressing the media briefing, SANEM Research Director Dr Sayema Haque Bidisha said, “As employment generation has not increased in line with the GDP growth, the government should focus on those sectors and industrialisations where jobs are mostly created.”

She recommended a detailed and intensive action plan to contain inflation and strengthen the market monitor mechanism to strictly keep price manipulation and artificial crisis activities in check.

“Both monetary and fiscal policies need to be linked as well to maintain the inflation target and macro stability,” she added.

Sayema continued, “The old-age cash allowance has been kept at Tk 500 for many years while the OMS allocation has decreased to Tk 17.20 billion in the proposed budget for FY2022-23 from Tk 19.43 billion in FY2021-22. The per capita allocation for core social safety net programmes has to increase in line with the rising inflation.”

She urged the government to keep OMS rice price at Tk 10, instead of Tk 15 proposed in the budget, since the actual income and spending of marginalised people have gradually decreased due to the rising inflation.

She recommended keeping the exchange rate of the taka against the US dollar competitive while reducing the remittance incentive to 1 per cent, as the rates of the official and kerb markets are converging.

It is also important to check over and under-invoicing for imported goods and services, Sayema added.