Budget for the coming FY2021-22 has been presented at the National Parliament on 03 June 2021. Since then, it is being widely discussed both within the House and outside. All these reviews and analyses clearly indicate that the proposed budget has been quite cautious in reflecting the ground realities.
What is more pertinent is that the policymakers have tried to present a roadmap for the future in this document. On the one hand, social security, corona treatment and vaccination have been prioritized to cope with the pandemic and safeguard those living at the margins. And on the other hand, industry and business-friendly tax proposals have been made to provide an investment environment to create adequate employment so that people have money in their hands to bolster domestic demand.In this sense a balanced budget has been presented to attain GDP growth rate of 7.2 per cent while ensuring safety of lives and livelihoods. Provided the economic recovery takes place as expected, this target seems quite achievable. However, at this point, we should not be too concerned with growth rate. Now is the time to ensure survival. If we can achieve growth as targeted- then fine. If not- we need not be so worried given the turbulent world situation.
Instead, we should rather focus on putting this two-pronged strategy into action and safeguard both lives and livelihoods. This strategy is simple, and more importantly it suits the demand of the time. No doubt, implementation of the budget proposals will be challenging. Hence, we must be vigilant about the results-based implementation of the budget to attain this growth target. Given the strong macro-economic stability Bangladesh is now enjoying, experts think that this targeted growth rate is very much achievable.
I am also equally confident about our macroeconomic strength. And hence I believe instead of getting bogged down with issues such as growth and deficit financing, we should rather strategize to make sure that 60 to 70 per cent of our citizens get Corona vaccines within the next fiscal year. People will feel relieved once vaccinated. And this will boost the business confidence as well. We all know by now that this will make economic and social recovery much easier.
We have also learnt that the government is ready to collect the vaccines from any source at any cost. We now, need to pursue ‘smart diplomacy’ to secure further support from international development partners like the World Bank, ADB and IMF. For vaccine-support we can certainly further rely on COVAX via WHO. WHO is trying hard to collect surplus vaccines from the developed countries to distribute to the vulnerable countries. And we must keep an eye on this process and ask for our share of the same. It was reassuring to hear that the government will be ready to allocate additional resources for procuring vaccines in the post-budget press conference by the Finance Minister.
Some estimates show that we will need a few billion dollars to vaccinate the desired number of people. Couple of billion US dollars have already been committed by ADB and World Bank. If we need more, the Government can easily borrow it from domestic and international sources. Central Bank can also extend forex credit to the government for this. As has been the case in financing the Padma bridge, it can certainly intermediate the purchase of foreign exchange for procuring vaccines. It will not create any significant pressure on the macroeconomy. Hence, it is not the money, but the supply of vaccines remains to be a problem.
Many experts and other stakeholders are suggesting that the government could have been a bit bolder and more liberal about allocations to the health sector in the proposed budget. I tend to agree with them as well. Total allocation for health in the proposed budget has increased by 4 per cent (compared to the revised allocation for health in the budget for the ongoing fiscal year). The total amount allocated for health stands to be BDT 330 billion. It should have been more. It constitutes 5.4 per cent of the total national budget. Everyone is talking about raising this ratio. It was noted that over the last 10-12 fiscal years, the share of health in the total national budget had been hovering around 5 per cent. Our per capita income has increased. In fact, we have now the highest per capita income in South Asia whereas we are the last in terms of per capita health expenditure. A South Asian country on an average has per capita health expenditure (in PPP terms) of 110 USD. But for Bangladesh it is only 110 USD (in PPP terms). Hence, with the pandemic in mind, everyone expected that in the budget proposal for the coming fiscal year, health will be receiving at least 7 per cent of the total allocations. I believe the policymakers chose to be bit more cautious than expected because of the trend of significant health allocations remaining unspent and the prevalence of widespread leakages from the public spending in this sector. During recent fiscal years on an average around 24 per cent of the development allocations for health sector remained unspent. Considering these concerns, I can fully understand the reason behind this cautious stance of the budget makers. But since allocations have been very cautiously made, there is no scope at all to be lagging in implementation in the coming fiscal year.We, therefore, need to further strengthen our monitoring system of the spending to stop further leakages in this sector. The policymakers may consider using digital technology to monitor budget implementation all levels including the field levels. In Bangladesh Bank, we initiated a ‘digital dashboard’ to monitor import-export LCs which strengthened the central bank’s monitoring capacity. Similar initiative can as well be taken for the Ministry of Health and Family Welfare. The ICT ministry can provide the necessary support to the Ministry of Finance and IMED of the Ministry of Planning to design such a digital dashboard. The CAG can also prioritize its digital accounting initiative for the health ministry and its directorates.
Reviewing the development project allocations for the health ministry in the Annual Development Programme (ADP) for the coming fiscal year, it seems that a commendable continuity has been maintained. However, development allocations could have been better. Around BDT 173 crore has been allocated for 65 development projects in health sector. However, there is only one new project in this budget. Of course, we must continue the projects that were already started. But to re-structure the health service delivery system, there should have been more new projects. For example, there should have been new infrastructure projects to enhance access to health services all over the country to reduce pressure on the large hospitals in major cities. Establishing oxygen plants, ICU facilities, ventilation systems, recruiting more expert human resources and connecting smaller district level hospitals with the larger public ones via telemedicine require huge investments. This is not there in this budget document. Surely, we could have undertaken new projects related to Research and Development related to health services. Mere allocation of one hundred crore Taka every year without taking note of why this was not well spent is not good enough. There is no alternative to setting up a separate research foundation for this. This foundation should be managed by independent experts exercising enough autonomy to accomplish farsighted research on health sector. While the national budget is prepared for a single fiscal year, it also works as a roadmap for the future. Hence, the time to invest in research and development to build a knowledge-based society is now. Since we are aspiring to be a developed country by 2041, it is now the time to lay the foundation for such a country by investing in human resources who will generate ideas and innovations for making a transition to a developed economy. Indeed, that must be a knowledge-based economy.
Another issue which is being widely discussed by all stakeholders including the health experts includes restructuring of the pattern of health allocation and spending. Certainly, increased allocation alone will not suffice in facing the health challenges. For example: primary healthcare has been historically receiving 25 per cent of the health budget. But the largest share of our health-service seekers needs primary healthcare. Hence share of this sub-sector in the total health sector budget is pivotal. The more we enhance the quality of primary healthcare, the more we can reduce expenses for the secondary and tertiary healthcare. Disaggregation of the health budget reveals that only around one-fifth of the health budget goes for ‘medical and surgical supply’. Low-cost and free-of-cost medicine provided to the people from government-run healthcare facilities falls under this head of expenditure. Hence, if we could increase the share of the budget going to this head, it would significantly reduce the ‘out-of-pocket health expenditure’ of the masses.
For the health sector, the most welcome proposals in the budget for FY 2021-22 are the tax breaks proposed for the private investors to be engaged in healthcare infrastructure development. Most people in Bangladesh rely heavily on the private sector for healthcare. About 83 per cent of the outpatients and 43 per cent of the inpatients seek healthcare from private healthcare facilities. Hence, providing tax-holidays for ten years for the health sector related private investors indicates that our policymakers are aware of the existing realities. Provision of tax holiday for establishing hospitals outside Dhaka, relaxing taxes and VAT on importing Corona treatment equipment are welcome initiatives indeed. Policymakers can also think about providing corporate tax incentives to financial institutions that are interested to invest in such projects. I would like to put forward another proposal considering our overwhelming dependence on the private sector for healthcare. The poor and even a significant share of the middleclass households are finding it extremely difficult to foot the bills for the corona treatment in private hospitals. Government could think about running at least a pilot of a health voucher scheme to provide some subsidy to these households. Some pilot programs of universal healthcare have already been implemented. Based on those experiences we should also take up larger programs. The universal healthcare can only be made possible if we can develop a model of health insurance for all. And what could be a better opportune moment than now in attempting innovative pilots when the country is going through unprecedented health crisis. These proposals should be further discussed by the honourable Members of the Parliament during the budget session and by the civil society leaders outside the parliament.
I would like to conclude by pointing out that along with ensuring maximum efficiency in budget implementation, we should also be ready to make necessary changes in the health system to make it capable enough to face the challenges posed by the pandemic. For example, many commentators on the health budget are advising to come up with a special block allocation to confront the rising Corona infection rates in the border areas. At the same time, it is high time to start thinking about inter-border disease control regulations. WHO have already developed necessary health protocol on this. We just need to customize these regulations to suit our needs. We ought to come up with a framework for regional and sub-regional cooperation for this purpose. The bottom line is- we must come up with a long-term vision for the health sector. This vision could help the policymakers in allocating resources for health sector development in the coming years keeping in mind that we are no more LDC. Times of peril are most suited for innovation. Hence, we now have an opportunity to restructure our health system considering the national and international experiences of coping with the pandemic. Vaccination alone will not be enough. We need to focus more on masking of the entire population, maintaining social distance and washing hands as prescribed by the health protocols. This presupposes the ‘all of the society’ approach. The social activism is a must in this war against the pandemic. Government alone cannot do much. The central government, local governments, NGOs, civil society self-help groups and the private sector must come forward to provide free masks to those who cannot afford the same. Professor Mushfiq Mobarak of Yale University has been conducting action research on this and important lessons have been learned on social activism around this masking issue. Let us all work together to help people wear mask extensively to tide over these waves of corona virus. Let us convert this challenge into an opportunity. This is doable.
The author is Bangabandhu Chair Professor, Dhaka University and former Governor, Bangladesh Bank. He can be reached at: [email protected]