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Dhaka, June 9 (bdnews24.com)— A leading economic researcher, Zaid Bakht, has said the government target for huge borrowings from the banking system will hurt investments and put pressure on the next budget. "One of the risks to the new budget is the huge loans to borrow from the banking sector to narrow the budget deficit," Bakht, research director of Bangladesh Institute of Development Studies, said Monday, hours after finance adviser AB Mirza Azizul Islam rolled out the proposed national budget.
The new budget proposes to borrow Tk 13,498 crore from the banking system for the next fiscal year, up from Tk 10,398 crore, the revised figure for the outgoing fiscal 2007-08.
If the loans are taken from government banks it will create pressure on the next budget, he said.
"On the other hand, borrowings from private banks will discourage investments."
Bakht also said the proposed annual development programme of Tk 25,600 crore in the budget for FY 2008-09 was unrealistic.
"Only Tk 12,000 crore has been spent in 10 months of this fiscal year," he said.
Bakht lauded the budget proposals regarding industrial raw materials, food and fuel, subsidies on agriculture and dearness allowances for government employees and pensioners saying that it would help drive the economy.
He however expressed concerns over the shortfalls in the budget to address economic growth, inflation and soaring prices of commodities, as there were some risks.
Dr Bakht said the size of the budget should have been Tk 400 crore-Tk 500 crore less than it was now, in a bid to reduce the risks.
Economists expressed doubt about the implementation of the proposed budget for FY 2008-09 against a backdrop of a budget deficit of more than Tk 30,000 crore.
In an interview with bdnews24.com, Bangladesh Economic Association president Qazi Kholiquzzaman Ahmed has doubted about the implementation of the proposed budget.
"The huge budget deficit will hinder implementation."
Kholiquzzaman said this year's budget has been announced in the context of "global chaos".
"Rising food and oil prices, credit crisis in the US have affected the world economy. In an era of globalisation, the global problems have adversely affected Bangladesh as well."
He thought it was one of the major challenges for preparing the budget.
"There are some internal challenges also. As there is a hike in the prices of commodities, more and more people are going under the poverty line," said Kholiquzzaman.
Speaking on initiatives to address the issue of soaring prices of essentials in the proposed budget, the economist said: "These measures were taken in the previous budget but it did not yield any benefit."
He stressed coordination of policies and ministries to solve the problems.
"There is no indication of that (coordination) in this budget."
Kholiquzzaman appreciated the budget's focus on agriculture, employment generation and social safety net.
"The proposed allowances in the social safety net were much-needed. But, the question is, when the process will start and how much time would be needed to reach the targeted people," he added.
Kholiquzzaman doubted the implementation of the budget, saying only 55 percent of the current fiscal year's budget has been implemented until now.
Budget implementation will slow further at the end of 2008 when the national elections are expected to take place, said the BEA president.
"This government will have only seven months to implement this budget and what the next government does with this remains to be seen."
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