Minister Kamal fights for an expansionist policy
JASIM UDDIN HARON |
June 05, 2021, 8:26 a.m.
AHM Finance Minister Mustafa Kamal said the government was pursuing an expansionary fiscal policy with the aim of stimulating economic growth.
“We are pursuing an expansionary fiscal policy and Bangladesh’s debt as a percentage of GDP (gross domestic product) has consistently remained around 40 percent.”
Mr Kamal said this during a virtual post-budget press briefing on Friday afternoon.
The spending is meant to generate income, he argued. “If there is no expenditure, it implies that there is no investment.”
Almost all countries are now widening their deficit to meet budget spending in the wake of the ongoing coronavirus pandemic, Kamal said.
He tabled in parliament on Thursday a budget of Tk 6.03 trillion for the 2021-22 fiscal year, maintaining a deficit of 6.2% which generally follows a rule of thumb of 5.0% of GDP.
Bangladesh has a large reserve of foreign exchange, he said, adding that the reserve was only $ 32.7 billion as of June 30, 2019. But it now exceeds $ 45.0 billion.
Mr Kamal said the tax rate remained somewhat “flexible” and that this was intended to generate more income.
Planning Minister MA Mannan, who also joined the event, said borrowing is not a problem for Bangladesh as everyone is reaching out for the country.
“We are not loan eaters [he probably meant loan defaulters] and we never spend the improperly borrowed money, ”he noted.
Regarding the vaccination campaign, Kamal said the government wanted to vaccinate everyone. “We will do this work and it is not possible by giving a deadline.”
On the other hand, Abdur Rouf Talukder, senior secretary of the finance division, said the budget allocation for the health ministry has widened.
“The allocation has been increased by 13.3% for the next fiscal year,” he said in response to a question from the media regarding the matter.
Mr Talukder said: “We have allocated 142 billion Tk to buy vaccines. We will give more, if necessary.”
“There is a lag,” he said, implying the problem of the purchase of goods and services by the Ministry of Health.
The secretary said the purchases are based on supply, but the plan is underway to create it based on demand.
There is another problem in the supply of the health department, he said, adding: “They lack experienced people to handle the purchases.”
They are looking at a fast-track program for the department.
Citing a press bite on Friday, Agriculture Minister Dr Abdur Razzaque said: “I scanned all the newspapers but frustrated because all the media cited the Ministry of Health budget being insufficient.”
“Resources are not a problem in Bangladesh because it has a variable economy,” he commented.
Dr Razzaque said the allocation for his own ministry was also adequate. He said Bangladesh wants to mechanize the agricultural sector and is also looking to start commercial farms.
Echoing Mr. Kamal’s expansionary policies, central bank governor Fazle Kabir said the Bangladesh Bank would also pursue a similar monetary policy to support growth, create jobs and increase demand.
Refuting claims that big companies have gobbled up a stimulus package, he said more than 96,000 small businesses were beneficiaries of the Tk 200 billion plan for CMSMEs.
“Of the Tk 400 billion package for large corporations,” Kabir said, “82 percent has already been disbursed.”
Regarding government borrowing, he said the banking system has adequate liquidity. The government wants Tk 764.5 billion from the banking system in fiscal year 2021-2022.
The governor said the banking system now has Tk2 trillion in liquidity, including investments from banks. “We now have over Tk400 billion in cash.”
The government has implemented 23 stimulus packages worth Tk 1.28 trillion in support of businesses and individuals affected by the virus.
The banking channel provided Tk 900 billion or 70 percent of the total amount and the rest is taken care of by the government.
“We are paying Tk 45.0 billion in interest on the budget,” Talukder said.
The senior finance division official said the package will continue until it is fully disbursed.
The Prime Minister’s Economic Adviser, Dr Mashiur Rahman, National Revenue Council Chairman Rahmatul Muneem, ERD Secretary Fatima Yasmin, and other senior government officials were also virtually in attendance.