Bangladesh could face over-indebtedness from 2032 (Economic Association)
Repayment of foreign loans taken out for mega-projects could weigh on the country from 2032, the Bangladesh Economic Association said, while suggesting the government focus on its revenue base.
“Bangladesh could move from the current green category to the red category when the country starts debt servicing for a total of 4-5 megaprojects in 2027-28. This means that the debt situation could get tricky,” he said. on Sunday the president of the association, Abul Barkat. , adding that the situation could get worse in 2032.
The Bangladesh Economic Association has also proposed an alternative budget of Tk 20.50 lakh crore on this day for the financial year 2022-23. In the budget proposal, the association recommended the formation of two separate ministries – public transport and research, and innovation and development.
According to the association, the alternative budget is 3.4 times larger than the government budget, as it noted 338 recommendations to gradually eliminate inequalities in income, wealth, health and education.
Abul Barkat said that Bangladesh has become a country where income inequality is dangerous. The main objective of the next budget should be to reduce inequalities and create decent jobs.
Barkat, who was the chairman of Janata Bank, said inequalities in health and education were also increasing, in addition to growing inequalities in income and wealth. Meanwhile, the pandemic has doubled the number of poor.
“Reducing inequality should be the main objective of the next five budgets,” he added. The president of the Economic Association said that fundamental structural changes must be made to revenues and expenditures for this purpose.
“Second, the tax burden should not be imposed on marginal, poor, lower middle and middle income people in the budget. Emphasis should also be placed on social security and human resource development.”
On rising commodity prices, he said inflation should be kept between 5% and 6%.
“We must create new jobs and ensure fair prices for producers, while food inflation must in no way get out of control.”
In the alternative budget, the association has proposed a number of solutions based on the development of political policies for several economic challenges such as increasing revenue collection, managing the budget deficit, stopping the money laundering and expanding the social safety net.
The alternative budget includes a revenue collection of Tk 18.70 lakh crore, which amounts to 92% of the budget.
“In the proposed budget, direct tax amounts to 77% of domestic source revenue, while the rest will come from indirect taxes. The budget deficit is 7%, which is much lower than the current government budget deficit. There is no need for foreign loans or loans from local banks,” Barkat said, calling the challenges of increasing income an economic problem with political solutions.
Abul Barkat said, “We have recommended the government to focus on direct taxes while indirect taxes fuel inequality. We also proposed to keep the marginalized out of the tax net over the next few years.
The economist also called for controlling black money and money laundering to minimize the budget deficit.
“Another problem is that everything in our country is centralized in Dhaka or oriented towards Dhaka, which is not conducive to development. Therefore, we have proposed to move ministries to divisional seats,” the president said. from the Association.
Barkat said the highest priority in their budget is social security, as the allowance stands at 21% of the budget. The second priority sector is the education and technology sector, while the third is agriculture.
Members and representatives of the association as well as various professionals were virtually connected to the alternative budget press conference.
In the national budget for the financial year 2021-22, the government has set total expenditure at around Tk6 lakh crore, or almost 17.5% of gross domestic product.