Budget of self-preservation

It seems the universe keeps conspiring against Finance Minister AHM Mustafa Kamal.

When it is his moment to shine, some misfortune strikes. Last year, it was dengue, and this year, it is the raging coronavirus that has left him at the centre of what could possibly be Bangladesh’s most acute economic — and human — crisis yet.

With the rogue virus reigning supreme, there is likely to be a gingerly slog into the podium today for the 73-year-old, instead of a strut, to unveil a budget that can, hopefully, fend off an economic catastrophe.

Forget about growth and recovery, next fiscal year, which begins on July 1, would be all about self-preservation.

When Kamal took over the reins of the country’s purse strings from AMA Muhith on January 7 last year, exports and revenue were on the slow lane, defaulted loans were ballooning and the stock market was sinking.

Those ailments were still going strong when coronavirus arrived on these shores. They only magnified, and along came fresh problems of joblessness and destitution.

Compounding matters are the returning migrant workers, whose drudgery over the past decade had powered the economy back home.

Were the businesses and industries in shipshape, finding employment for them would not have been much of a difficulty. But the two-and-a-half-month-long general shutdown has left enterprises in a bad way, too.

They are now going for mass layoffs and pay cuts, and it is unlikely that they would be firing on all cylinders in the immediate future given the fast-expanding caseload and runaway death toll.

The economic sacrifices would have been understandable had the nation been able to flatten the curve on coronavirus in the past three months or so. But there does not seem to be any sign of the public health crisis bottoming out anytime soon.

All of this was avoidable, but it is now up to Kamal to mop up this monumental mess.

“We had no idea it would get this bad,” he told The Daily Star over the phone last night.

Sincere, spirited, emotionally intelligent and clued-in to the facts on the ground, he seems to have risen to the occasion, pushing through his understandable fear of coronavirus contagion and working round-the-clock since April from his home, all with the singular hope of gathering the vast resources needed to come out of this crisis alive.

He has been combing through project documents — which are sanitised painstakingly at both ends before they are placed in front of him — to cut off funds from those that have been dilly-dallying.

If it is not poring over documents, it is virtual meetings that he has been caught up with, sometimes with bureaucrats, sometimes with multilateral and bilateral lenders.

If the meetings must be in person, the visitors are sanitised before they enter his home and he holds court from as far as possible; and sometimes, he speaks while stood in the staircase of his sprawling mansion.

In short, he has become an indispensable deal-maker for Prime Minister Sheikh Hasina in trying to keep the crisis from throwing the economy into its deepest downturn yet.

And yet, he will most definitely come short in meeting the demands from the industries and the general public.

Given the stunning slowdown of the economy, domestic revenue mobilisation cannot be counted on much to fund the Tk 568,090 crore-budget.

The World Bank recently lowered the growth forecast for the economy this fiscal year to just 1.6 percent and 1 percent at best for the next fiscal year.

When there is no GDP growth to speak of, where would the money come from? And if you can’t make the resources available to tackle this crisis, where does it end?

It’s a mindboggling conundrum but one Kamal needs to have a crack at solving by way of the budget for fiscal 2020-21.

For starters, and in a complete departure from the past practice, he can choose to not lay a target on the National Board of Revenue’s head.

As is human psychology, when the task at hand seems impossible to achieve, one tends to just shut off and not put in any effort.

So a huge revenue target could turn out to be counterproductive, this time. Rather, let the tax officials do the best they can.

Bangladesh’s tax-GDP ratio is amongst the lowest in the world despite becoming a wealthier country by the day until coronavirus hit, and one of the main reasons for that is tax evasion and leakages.

Perhaps he could crack down earnestly on this ill practice.

One way could be through automation. Given the fact that the ongoing pandemic has turbocharged digitalisation, perhaps fiscal 2020-21 could be the year that the tax automation drive finally takes off in full.

At the same time, all-out effort must be given to keep the wheels of the economy moving, and for that Kamal needs to give tax cuts too to industries and corporates.

Both direct and indirect tax collection would take a massive hit, meaning Kamal has to turn to banks and foreign loans and grants to fund a big portion of the budget. The lesser the government deploys the latter two, the better.

This also means, austerity must be enforced. A penny saved is a penny earned — should be his mantra.

Expenditure must be prioritised.

And there is absolutely no doubt that health should get the top billing this time to douse the burning pathogen, followed by social safety programmes to keep the pandemic from undoing decades of progress in poverty alleviation and then the agriculture sector to keep the nation fed.

Everything else can take a backseat for now.

And it seems Kamal, who must feel the weight of the world on his shoulders, is thinking along these lines.

“Saving people from COVID-19, staving off hunger, finding jobs for the jobless and the marginalised will be the focus,” he said on the eve of the budget.

The agro-economy will be encouraged and so too would be the domestic industries.

“We are going back to our roots — we are looking inwards. And I see the dawn breaking in this way.”