Thursday, 7 July, 2022

Budget: bold, pro-growth, pocket-friendly

Budget: bold, pro-growth, pocket-friendly

In the last fifty years, Bangladesh has risen from the trails of deaths, devastation and destruction of the Liberation War of 1971  just as the Phoenix rose from the ashes. At birth, the country was dismissed as an ‘economic basket case’, but today it is considered a rising economic star and role model for development. The country’s sustained GDP growth of over 7 per cent, especially in the last 12 years except the pandemic-hit fiscal of 2020-21, has generated much applause and recognition worldwide. Today a surprised world looks at Bangladesh as a symbol of resilience, hope and resurgence.

Driven by an industrial revolution, manpower export and robust agricultural growth, Bangladesh has become a middle-income country and aspires to become an upper-middle income country by 2031 and developed country by 2041 respectively. We are inching towards fulfilling the vision under the judicious and bold leadership of Prime Minister Sheikh Hasina. Termed as the architect of modern Bangladesh, Sheikh Hasina has literally ushered in a new era of economic development.

Before 2009, the size of Bangladesh’s annual budget used to be less than taka one lakh crore. After assuming power, the Hasina government started announcing and implementing a bigger national budget each year despite all the criticism of being too ambitious and having a large fiscal deficit. From less than taka one lakh crore, her government has gradually elevated the size of national budget to nearly seven lakh crore for the upcoming fiscal year. As a result of the increase in budgetary allocation in every sector and implementation of an umpteen number of development projects, the national economy flourished.

However, Covid-19 had dampened the country’s growth momentum to some extent in the last two years. Keeping an eye on achieving a strong post-pandemic recovery and cushioning the economy from the impact of volatile global economy and inflation, the finance minister placed a Tk 678,064 crore budget for the next fiscal year.

In terms of size, it is the biggest ever budget the country has ever witnessed and there is no reason to raise questions about the size of the budget considering the country’s increased economic growth and target of becoming upper-middle income country by 2031. Considering the impacts of external volatility on the economy, the minister set GDP growth target at 7.5 per cent, which we think is reasonable and achievable. Overall, the budget is pro-growth as it will cement post-pandemic economic recovery and at the same time pocket-friendly as it will seek to ease inflationary pressure.

However, this is our instant reaction. We will put forward further analysis on the budget in the next column.