Repayment of foreign loans taken for mega-projects may weigh down on the country from 2032, said the Bangladesh Economic Association, while suggesting the government to focus on its revenue base.
"Bangladesh may slip to the red category from its current green when the country would start debt servicing for 4-5 mega-projects altogether in 2027-28. This means the debt situation may turn tricky," said the association President Abul Barkat on Sunday, adding the situation might worsen in 2032.
The Bangladesh Economic Association also proposed an alternative budget of Tk20.50 lakh crore on that day for the 2022-23 fiscal year. In the proposal of the budget, the association recommended forming two separate ministries – public transport and research, and innovation and development.
According to the association, the alternative budget is 3.4 times bigger than the government budget, as it noted 338 recommendations to phase out inequalities in income, wealth, health and education.
Abul Barkat said Bangladesh has now become a country of dangerous income inequality. The main goal of the upcoming budget should be minimising inequality and creating decent jobs.
Barkat, who was the chairman of Janata Bank, said health and education inequalities are also rising apart from burgeoning inequalities in income and wealth. Meanwhile, the pandemic has doubled the number of the poor.
"Reducing inequality should be the main goal for the next five budgets," he added. The Economic Association president said fundamental structural changes have to be carried out to income and expenditure to this end.
"Secondly, tax burden must not be imposed on the marginal, poor, lower-middle and middle-income people in the budget. There should be focus on social safety and human resource development too."
On rising commodity prices, he said inflation should be kept between 5% to 6%.
"We must create new jobs and ensure fair prices to the producers, while food inflation must not be allowed to get out of hand in any circumstance."
In the alternative budget, the association proposed a number of solutions leaning to political policymaking for several economic challenges such as boosting revenue collection, managing budget deficit, stopping money laundering and widening the social safety net.
The alternative budget incorporates a Tk18.70 lakh crore revenue collection, which amounts to 92% of the budget.
"In the proposed budget, direct tax amounts to 77% of the internal source income, while the remaining will come from indirect taxes. The budget deficit is 7%, which is much less than the current budget deficit of the government. There is no need for foreign loans or loans from local banks," Barkat said, terming revenue boosting challenges an economic problem with political solutions.
Abul Barkat said, "We have recommended the government to emphasise direct tax as indirect taxes fuel inequalities. We have also proposed to keep the marginalised out of the tax net in the next few years."
The economist also called for checking black money and money laundering to minimise the budget deficit.
"Another issue is that everything in our country is centralised in Dhaka or Dhaka-oriented, which is not conducive to development. Therefore, we proposed shifting the ministries to divisional headquarters," said the association president.
Barkat said the highest priority in their budget has been on social safety, as the allocation amounts to 21% of the budget. The second priority sector is education and technology sector, while the third is agriculture.
Members and representatives of the association and various professionals were connected virtually to the alternative budget press conference.
In the national budget for the 2021-22 fiscal year, the government set the total expenditure at around Tk6 lakh crore, which is nearly 17.5% of the gross domestic product.