Its execution will involve tremendous efforts
Thursday, 12 June 2008

Budget 2008-09

With only six months left for the present interim government to end its term handing over power to the elected government, the big size budget for the next fiscal is bound to overwhelm the nation. A budget looking for short term solution, it will be a Herculean task for the elected representatives indeed to execute it.  Notably, it is featured by 30,000 crore taka deficit out of total one 99,996 crore taka. The budget has been touted as an expansionary one that promises to lessen the miseries of millions of poor, minimize regional disparity, provide guaranteed jobs to rural people, and upscale food, fuel and fertilizer subsidies.  Finance Adviser Dr Mirza Azizul Islam set aside massive allocations for the less-privileged, buffeted by sky-high prices of essentials, two spells of floods and a devastating cyclone and external shocks. He however said his budgetary proposals are crafted in a way that could keep the macro-economy stable, foster higher growth and cut poverty. As Professor Wahiduddfin Mahmud quite rightly said, the budget represents the expected response of an interim government to a situation of widespread food insecurity and an environment of political and economic uncertainty. Moreover, many issues of budgetary policy remains unaddressed, or are only tentatively addressed, in the context of uncertainty regarding international fuel and food prices and domestic inflation and food supply situation. While such a budgetary stance seems to have been forced by compelling circumstances, the Finance Adviser must be well aware that none of these are sustainable solutions for the problems facing the economy. The prevailing rates of subsidies are already putting unbearable pressure on the budgetary balance. If the current rate of growth in the government’s domestic borrowing continues unabated, it will jeopardize macroeconomic stability. Curtailing the government’s development expenditure and public investment will negatively impact on economic growth and social development indicators, and will ultimately go against achieving the goals of expanded social safety net programmes that the budget is proposing. Given the uncertain environment surrounding the implementation of the proposed budget, there will be need for rethinking many aspects of the fiscal policy on the basis of evolving circumstances. This will not be like the routine year-end preparation of the revised budget. In particular, there will be need for monitoring the trends on several fronts with tremendous efforts.

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