Home ›› 16 May 2023 ›› Front
The measures the government are planning to take in the national budget for FY2023-24, to meet the conditions set by the IMF for the $4.7 billion loan, will create “extra pressure” on the country’s poor people, says the Centre for Policy Dialogue (CPD).
CPD’s Distinguished Fellow Dr Debapriya Bhattacharya on Monday also urged the government to be more sensitive while implementing the International Monetary Fund’s (IMF) conditions.
The prominent economist made the remarks at a dialogue — titled “How to Reflect the Concerns of the Disadvantaged Groups in the Upcoming National Budget during the IMF Programme Period?” — on Monday.
The event was jointly organised by CPD and Citizen’s Platform for SDGs, Bangladesh in association with European Union at the Bangabandhu International Conference Centre in Dhaka.
“The government is trying to implement the IMF’s conditions seriously as the organisation has approved $4.7 billion in loans to Bangladesh. But, the conditions will create extra pressure on the country’s disadvantaged people,” he said.
Debapriya, also the convener of Citizen’s Platform for SDGs, Bangladesh, said, “We have noticed that when IMF conditions were enforced in certain countries, disparities and inequality increased in those nations as IMF sought to cement its authority.”
“We have observed that Bangladesh’s national budget has now become parentless and IMF has appeared as the foster father,” he pointed out.
The global lender’s conditions to Bangladesh for the massive loan include reducing subsidies in different sectors, revising the calculation method of the foreign exchange reserves as per international standards, reducing the budget deficit, increasing internal revenue collection, determining fuel prices as per international standards, reducing interest rates on savings bonds, leaving bank deposit and loan interest rates at market rates, and reducing non-performing loans in the banking sector.
Citing data from the Bangladesh Bureau of Statistics, Debapriya also said that inequality is widening in the country even though the poverty rate is decreasing.
“It is a matter of concern that income and consumption discrimination both are going up. The purchasing power of many has come down. Also, the government’s development expectation has declined as well as discussions on development projects. This means the government is under much pressure,” he added.
The economist continued that an imbalanced development can be noticed in the country. Good subsidies should continue and bad ones should be scrapped. “Bad subsidies like the capacity charge for power producers should be reduced and those funds should be transferred to agriculture. Any subsidy should not go against poor and local industrial expansion.”
Moreover, he asserted that the government did not go far enough to protect the underprivileged despite the rising inflation.
Recommendations
The government should implement IMF programme-stipulated reforms and policy steps by taking the inequality concerns into cognisance and in consultation with the disadvantaged population. They should also introduce participatory result-based management by involving the intended beneficiaries, Debapriya added.
“All development projects should be evaluated based on result or implementation so that people get proper benefits,” he said.
The e conomist also recommended ensuring disaggregated data (for the disadvantaged groups) to make the budget allocations and delivery visible for transparency and accountability.
Speaking at the event, CPD Distinguished Fellow Professor Mustafizur Rahman also said that Bangladesh’s budget size is small among South Asian countries considering the size of their GDPs.
The country’s national budget size should be around Tk 12 lakh crore. The government is unable to increase expenditure in the budget because lots of capable people do not pay taxes, he said.
“We hope that the government won’t give any facilities to the money launderers, loan defaulters and tax evaders in the FY24 budget. Good governance must be ensured,” he added.
The economist also suggested focusing on the universal pension scheme in the next budget, which will be presented in parliament next month.
CPD Executive Director Dr Fahmida Khatun said, “We want to see a balanced and inclusive budget in the next fiscal year. The government should ensure good governance, bring discipline in the financial sectors, reduce the number of loan defaulters and widen the tax net.”
Former caretaker government adviser Sultana Kamal said that disconnection between people and the government has increased the disparity in the country. “The government does not care about civil society’s opinion. People want economic liberty and the right to vote.”
Addressing the dialogue as the chief guest, Planning Minister MA Mannan said that IMF is not a factor in the budget. “We are not dependent on IMF. They have not given any conditions to give the loan. They just gave some requirements on the interest rate, time of repayment, etc.”
“…they are development partners. We borrow from them and pay them back with interest. The contribution of development partners to the budget is only 2 per cent.” he said.
“However, I personally believe that our poor have been deprived systemically year after year,” the minister added.
Former BNP MP Rumeen Farhana said the prices of different products, particularly daily essentials, are rising due to corruption. “Disparity has increased in the country due to the dependency on indirect taxes while corruption is happening in the name of subsidies,” she alleged.
