Medium-term strategy needed for Covid fallout recovery: CPD

The Centre for Policy Dialogue on Saturday emphasised on a medium-term strategy for economic recovery from the Covid fallout as there is no indication of it in the proposed budget for 2021-22 fiscal year.

“Given the magnitude of negative impact on various sectors due to Covid-19, we underscored the need for medium term strategy for economic recovery,” CPD Executive Director Fahmida Khatun said in a webinar on “CPD’s Virtual Budget Dialogue 2021”.

She said that although there was a section on reforms in the budget document, it only referred to what had been done so far. It did not spell out what concrete reforms would be undertaken to improve the efficiency in the economy.

“The unfinished reform agenda in many areas such as tax, customs duty, banking sector, health sector and social sector has constrained the achievement of budgetary targets and its ability to cope with adverse impacts of the pandemic,” she said.

“Along with reducing tax for enterprises, CPD suggests introducing a payroll tax cut — such as raising the tax-free limit of income tax for employees — to create more jobs in the time of crisis to stimulate consumption,” the economist added.

Moderating the session, CPD’s distinguished fellow Mustafizur Rahman said that the proposed budget was not so big to address the overall impact posed by the pandemic.

“The income of huge number of households came down due to the pandemic. But there is information scarcity to address the problems. More money is needed to address issues like public health, social protection, implementation of universal scheme,” he said.

As Bangladesh is going out of the least developed country bloc, there is need for more reforms and the tax-GDP ratio has to go up, he said. “Besides, we have to think about our children as well,” he added.

Planning Minister MA Mannan said that they were trying to strengthen the Bangladesh Bureau of Statistics for more data. “More financing is needed here for accurate data collection,” he said.

“Business communities have welcomed the budget. We are continuing discussion to work together. Many have called for reducing tax rate and it will be considered,” the minister said.

He found Bangladesh a “strange country” where buyers pay VAT but businesses do not collect it.

CPD Chairman Rehman Sobhan, Inter-Parliamentary Union President and Parliamentary Standing Committee on Ministry of Environment, Forest and Climate Change Chairman Saber Hossain Chowdhury, former minister for commerce Amir Khosru Mahmud Chowdhury, Policy Research Institute of Bangladesh Executive Director Dr Ahsan Habib Mansur, former Bangladesh Bank governor Salehuddin Ahmed, Federation of Bangladesh Chambers of Commerce & Industries President Md Jashim Uddin, Metropolitan Chamber of Commerce and Industry President Nihad Kabir, and National Association of Small and Cottage Industries of Bangladesh central executive committee President Mirza Nurul Ghani Shovon also spoke in the webinar.