The government should not hesitate to increase budget deficit if it is required for essential expenditure, infusing funds into the economy, and raising aggregate domestic demand, says Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka.
"It must be appreciated that the previous several years of prudential macro-economic management, including keeping budget deficit at or close to 5% has created the headroom which may now be used to expand the deficit in this emergent situation, if needed," MCCI says.
At the same time, tightening financial management will also yield a significant amount of savings if unnecessary over-spending, wastage, and other leakage of funds can be stopped, it said in a press release issued on Friday.
"In order to ensure this, the necessary resources should be allocated to the government agencies tasked with monitoring and evaluating public expenditure and project delivery."
MCCI thanked the government prioritising five essential sectors in the budget for protecting lives and livelihoods. They are health, continuation of the implementation of stimulus packages to address the financial and economic impact of the pandemic, agriculture, overall development of human resources, including education and skills enhancement, and rural development and job creation.
The chamber believes the upcoming fiscal year may be one of the most challenging ones from the perspective of fiscal management due to the present economic slowdown caused by Covid-19 not just in Bangladesh but also globally.
It appreciated the plan for reduction of corporate tax rates, saying it is a step in the right direction to meet the long-held demand of the business community for setting the corporate tax rates in line with regional competitor countries.
It said the budget had not indicated any specific reform and restructuring of the tax policy and tax administration to enhance capacity and deliver the right kind of public services. It also said it always advocates for meaningful structural changes in tax administration.
The chamber said there should be an interim evaluation of the budget after three months, and every three months for the next year so that it can be restructured and revised accordingly, if required.
"As there are still so many 'unknown unknowns' to be dealt with in regard to the pandemic and its ongoing effect on society and economy, the need of the hour is flexibility to deal with situations and requirements swiftly as they arise," it added.