Budgetary constraints

Now that it’s June, it’s time to discuss the economy in Bangladesh. For the rest of the year, our topic is politics. No wonder we are an economically backward but politically volatile nation.

So what about the budget? The whole point of having a budget is to give structure to our expenditure and earning. And in a poor country, it’s always a difficult task. Too many things to do and too little to spend. So what does one do?

The easy task is to follow routine. But the catch is it will not fulfill needs. And today or tomorrow, people will express their annoyance about it.

So what can be done to fulfill the needs? Obviously, the first task would be to bolster the means. So how does one do it? One option could be to increase revenue and another is to start borrowing.

Borrowing, obviously, is the painless choice, but the only catch is, as every cash-strapped person knows, it’s not that easy. Or it’s easy up to a point.

Beyond that it’s difficult. And also it comes with its bag of problems, which includes repayment, high prices and interest and service charges that usually apply, the greater the borrowing.

This year’s budget has nothing new. As usual the figures have been updated. And the effect of fiscal policy was blunted by a five-year financial policy! Ever heard of one? Not to my knowledge. In that case, much of the efficacy of future fiscal policy is lost.

So, who has authorized the finance minister to draw up a five-year fiscal policy? He might as well have formulated a five year budget. Why didn’t he do it?

The reason why people don’t draw up such budgets is because one doesn’t even know what the annual expense or expenditure is. It usually misses the target. And next year, they will try to adjust to it. But our finance minister is confident in his outlook.

So why five-year? Why not ten or twenty? The answer is simple, planners have worked on the time horizon and found that the shorter it is, the better for monitoring and adjustments, as necessary. That’s why the quarterly report and the annual outline. For strategic purposes twenty is the time line, as data beyond it gets statistically insignificant.

Five years were introduced by Stalin in the ’30s to industrialize Russia, which it did. But unfortunately our political paradigm is different and we cannot “enforce” anything.

We’ve to allow the “market forces” to do the “dirty work.” The job of a state or government is pretty limited but crucial “to allow the market equilibrium to operate in perfect market conditions”.

Have we done that? Has the budget ensured it? I don’t think so. Why? It will still need a new entrepreneur seven days to get a trade license. Why? Why can’t he get it online? When you can get passports and visas online, you have to wait a week for a trade license. It’s funny.

Also there’s no mention of regulatory bodies. Yet market cartels and oligopolies have turned even the food market into an abattoir. Doesn’t the government have a role to play? Evidently, the finance minister and his government doesn’t think so.

As for the allocation of resources, most of it goes to government officials, leaving very little for the common man.

This is indecent. No country does it. At least 50 pc must go to development and overhead or establishment cost cannot exceed 20 pc of total budget. That’s a basic principle of any project.

But the national project is upside down. This must stop if there is to be development.

If the government officers can’t collect money, they should not spend it. It can’t be the other way round.
As far as the gross misery index is considered, Bangladesh is only behind Botswana and Nigeria.

The misery index is measured by a country’s tax to service ratio. We pay almost 50 pc of our income, almost as high as Denmark, and get little service. But the Danish pay the same amount and have housing, health, education and almost everything you can think of, for free. We pay the same amount of money but get very poor service.

Part of the reason is that Denmark has a highly efficient civil service and strong local government, while we are devoid of all that. Only in the United States is part of the social services private but that, too, is covered by insurance and land mortgage banks.

Unfortunately, we’ve the worst of all worlds and there’s no vision for growth. The only economic realty for us is going abroad, if you’re an employee or money laundering, if you’re an employer. Where is the country and it’s budget? Nowhere!

The political leadership of the country must understand that the people have lost confidence in the nation. Given half a chance they would like to migrate. People are voting with their feet. This is a dangerous situation. And why shouldn’t it be so. Bangladesh has the highest rate of unemployment at the post-graduate level. In a way our education system is making them unfit for the job market.

This situation needs to be reviewed. Only culture or heritage cannot feed hungry tummies. Past debates about education have revolved around language, not skills. This is strange. This indicates the “collective consciousness” of the nation. We focus on the immaterial and not the material.

This must change, if Bangladesh is to change its lot. In most countries of the world, including the heartland of capitalism, the United States, education is largely nationalized. But our education remains largely privatized. Higher education remains imprisoned in the interest of the faculty.

Countries, including China, allow foreign university campuses but not Bangladesh. The faculty here feels that they are so competent that no foreign faculty or university is allowed.

Neighbouring India, too, had the problem teachers-as- self-serving group but they, too, have liberalized laws allowing foreign universities to set up full-fledged facilities in their country.

And it’s not teachers alone all professionals want the country to be their captive market, whether it is engineers, doctors or lawyers. Where else do you find such autarky? But the finance minister has no guts to challenge them.

That’s not the only problem. Overpricing by donors has become a key problem. Why? We don’t even know the rate-of-return (RRI) on the mega projects, so how and why do we undertake them? Financing of any viable project is not a problem. Anybody can get the money.

But when the project is not viable, we’ve all sorts of problems. Ultimately leading to a Sri Lanka type of situation. Are we heading for it?

(The writer is a journalist having hands on experience in policy-making)