Centre for Policy Dialogue (CPD), a civil society think thank, on Sunday recommended reducing kerosene and diesel prices to provide some relief to investors and consumers, which will have a positive impact both on the economy and society, Agencies report.
“Rational downward adjustment of kerosene and diesel prices can provide some relief to investors and consumers by raising their disposal income, particularly those with lower level of income,” CPD research fellow Towfiqul Islam Khan said while placing a set of recommendations for the upcoming National Budget FY2017-18.
The CPD came up with the recommendations analysing the state of the Bangladesh Economy in 2016-17FY at a media briefing at the Brac Centre Inn in the city.
To overcome weaknesses in budget implementation, Towfiqul Islam put forward a five-point recommendation, including reduction in the prices of kerosene and diesel, depreciating BDT to provide exporters some relief, reduction in the interest rate of saving certificate, controlling rice prices and formation of an independent financial sector reform commission to remove weaknesses in the banking sector.
Towfiq said the cost of production in almost all sectors may experience upward trend due to implementation of the new VAT and SD act, possible depreciation in exchange rate, rise in rice price and another round of upward adjustment of electricity and gas tariffs.
Addressing the function, CPD distinguished fellow Dr Debapriya Bhattacharya said, “We fear that the cost of production will go up in the next fiscal year… we need to control it so that the private sector will have a competitive edge.”
About the budget size, Debapriya said the country’s macroeconomic base is friendly to give a bigger budget in 2017-18FY, but the quality of fiscal structure is declining gradually.
“Placing a big budget without any realistic review creates a fiscal elusion. It seems to be a big budget, but not big in true sense. There’s a big deficit between the big budget and its implementation,” he said.
“In the last three years, we noticed huge shortfall in the budgetary targets of revenue collection and expenditure, deficit and financing the deficit. The shortfall is going up gradually as the targets are not set on the basis of revised budget,” the CPD distinguished fellow said.
Placing the CPD recommendations, Towfiq said the total budget size has increased over time, but the actual implementation of the national budget as share of GDP did not improve over the last six years by any visible margin. For example, public expenditure remained stagnant at 13.5-14 percent of GDP. “So, it’s high time to turn this so-called ‘big budget’ myth into reality.”
He said the budget implementation capacity of a number of key government agencies will need to be enhanced — in both quantitative and qualitative terms.
Noting that the rise in production cost is expected to be accompanied by a decline in external earnings from exports and remittances, he said the CPD recommended depreciating BDT to provide exporters some relief and continuing to provide cash subsidies to exporters of non-traditional productions and for non-traditional markets in this situation.
The CPD recommended increasing budget for education and health sectors substantially to reach at least the national expenditure targets during the 7th five-year plan.
It said the budget for the education sector will have to be at least 2.7 percent of GDP in the 2017-18FY to achieve the target of increasing the allocation for education to 3 percent of GDP as set in the 7th five-year plan.
It also said budget for the health sector has to be equivalent to at least 1 percent of GDP in the next budget to achieve the target of reaching 1.2 percent of GDP as set in the 7th five-year plan.
CPD distinguished fellow Prof Mustafizur Rahman, its executive director Dr Fahmida Khatun and Research Director Dr Khondaker Golam Moazzem were present.