The Centre for Policy Dialogue (CPD) said on Saturday that the Padma bridge project may eat up a big chunk of additional allocation in next fiscal’s budget, reducing allocation in three key sectors—education, health and social safety—alarmingly.
“All other priority projects will be hindered as the Padma bridge will be implemented with own financing… so the government should go for cutting unnecessary spending,” the think tank’s distinguished fellow Debapriya Bhattacharya said while presenting a set of recommendations for the 2013-14 FY budget.
Presenting a report on the current and next budgets, CPD Research Director Dr Fahmida Khatun said, alongside financing the Padma bridge project, the ongoing violent political agitations are adversely affecting the budget implementation and investment.
“It has been historically observed that when the national elections approach, development administration enters into a state of paralysis as officials opt for fence sitting,” the report said.
Debapriya Bhattacharya said in this context the government should present an austere, conservative, compromising and careful budget for the next FY.
On compromise, Debapriya said, “A clash has been created between political necessity and economic reality… what creative steps the finance ministry take in this regard is to be seen.”
According to the government plan to implement the Padma bridge project with own financing, Tk 6,852 crore will be allocated in the next fiscal year’s ADP for the bridge.
The CPD said the ADP of the next FY may at best be Tk 10,000 crore more than that of the current FY, of which around 69 percent will be absorbed by the Padma bridge project as incremental allocation.
The CPD said not only in the next FY, the enhanced domestic resource allocation for the project will have significant implications for the allocation priorities under the next three to four ADPs.
“One will need to assess the fuller macro-economic implications as the government converses the domestic currency or takes loans from the foreign currency reserve,” the CPD said.
The thin tank also recommended that the domestic resource mobilisation be enhanced and the government explores possibilities of concessional or low cost foreign financing.
Debapriya said implementation of the ambitious targets in different sectors set by the current government slowed down after 2011.
He urged the government not to fix any ambitious target including for GDP growth, budgetary earning and expenditure plans in the election year.
He said though a number of positive indexes are visible in the economy at present, it is facing two major risks — fall in private invest and deterioration in banks’ performance.
Source: The Daily Star