impacts of Covid: SANEM
New budget underestimated
impacts of Covid: SANEM
Staff Correspondent: The South Asian Network for Economic Modeling (SANEM) has said the proposed national budget has failed to make a proper assessment of the impact of COVID-19 pandemic.
“Issues of poverty, job market, SME sector and vaccination against COVID-19 have been underestimated in the budget, which would lead to limitations in formulating policies,” said Dr. Selim Raihan, Executive Director of SANEM at a virtual press conference.
Research Director of SANEM Dr Sayema Haque Bidisha also spoke at the event to present the think-tank’s reaction to the fiscal 2021-22 budget placed in Parliament on Thursday by Finance Minister AHM Mustafa Kamal. Dr Selim , professor of Dhaka University economics department, said “If the policymakers remain in their comfort zone during such a crisis, then they will not feel the need to create and implement appropriate policies.”
He said “Emphasis must not only be placed on financial recovery, but also on social recovery.”
He mentioned that recovery of education, health, social security, poverty and inequality needs to be addressed. “In brief, the solutions presented seem to be on an ad hoc basis, rather than overall planning in regards to the COVID-19 crisis.”
Dr Raihan further states that budget implementation is a major issue. Although the budget has three stages, there is always little discussion about the revised and actual budgets later in the year.
From SANEM’s research it has been found that for the past 10-12 years, the proportion of the proposed budget that is actual spending is around 75-78%. Public health expenditure, education and social protection are currently very small portions of GDP, which does not align with international SDG norms.
Ideally, these expenditures should be doubled to achieve SDGs, however it would be impossible if the budget is only around 17.5% of GDP.
He said that the revenue GDP ratio (11.3%) seems to be unrealistic and historically high for the upcoming fiscal year, as per our current situation, and needs to be toned down. “Most notably, there is no mention of the ‘New Poor’ and inaccuracies in the lists of ‘Old Poor’ and ‘Non Poor’ – which would lead to issues in providing support to these groups.”
He thanked the finance minister for prioritising the vital sectors But the “roadmap” on how the budget will be implemented in these priority sectors is missing, he said. Dr Sayema, also a teacher at Dhaka University Economics Department, welcomed the increased allocations in social security and health sectors as positive. “The budget is, overall, business friendly which is positive and there is visible effort in reviving the economy.”
However, she said it is not clear how much the general public, the low-income people and the middle class will benefit from the efforts made to boost businesses.
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