Budgetary target should be realistic, says Mirza Azizul Islam

Former Finance Adviser to the caretaker government Dr AB Mirza Azizul Islam is of the view that without enhancing the administrative capacity, it will not be possible to buck the poor trend of budget implementation.

“The budget is gradually getting delinked from reality. It’s not enough to only allot funds. It needs to be ensured that funds are properly utilized and projects are timely completed,” he said.   

“The rate of ADP implementation this year is the poorest in the past five years,” he said, citing facts and figures, “What is the point of setting lofty targets, if they cannot be implemented?”

In an exclusive interview with bdnews24.com on the national budget for 2016-17, Mirza Azizul Islam gave these suggestions for revenue augmentation on Tuesday.

On June 2, Finance Minister Abul Maal Abdul Muhith will create a record by presenting the budget for eight consecutive times. It will be the 10th budget to be presented by him.

Muhith has already announced that the size of the next budget will be more than Tk 3.40 trillion.

A week ahead of the budget Mirza Azizul Islam, who presented two budgets during the tenure of the caretaker government, gave his views on the size of the budget for the 2016-17 fiscal, investment scenarios, challenges of revenue mobilisations and how to deal with those challenges.

He also dwelt on the current economic scenario in the country.

bdnews24.com: The finance minister has announced that the size of the next national budget will be more than Tk 3.40 trillion. What is your take on this?

Mirza Azizul Islam: I think at the outset, the budgetary target should be rationalised. Only setting lofty targets will not help. Implementation has to be ensured. A realistic budget should be presented.  I have calculated that the size of the next budget will be 29 percent bigger than the current fiscal year’s revised budget. In my opinion, it is an unrealistic expansion.

This is why I am saying, the budget is gradually getting delinked from reality. It’s not enough to only allot funds. It needs to be ensured that funds are properly utilized and projects are timely completed.

[The size of the current financial year’s budget was originally fixed at Tk 2.95 trillion. Later it was revised to Tk 2.63 trillion.]

Annual Development Programmes worth Tk 1.10 trillion have already been approved in the new budget. If the allocation of development funds for the autonomous organisations is taken into consideration, the size of the ADP will be Tk 1.23 trillion. What is your view on this?

Every year a huge allocation is initially earmarked for the ADP. But after seven-eight months, after some adjustments, its size is invariably reduced. These programmes are hurriedly implemented in the last two-three months of the financial year. This way, though money is spent, the quality of the work is not up to the mark.   

We need to get rid of this situation. We need to make preparations for budget implementations. Administrative efficiency needs to be enhanced. Projects should be completed on time.

As per the figures available with me, in the first ten months (July to April) of the 2015-16 fiscal, only 51.34 percent of the revised ADP was implemented. This is the lowest in the past five years. The implementation rate during the previous fiscal was 56 percent.  Now only two months are left in the current fiscal. So the pressure of last minute expenditure to fulfill the ADP target will remain. In the given scenario, is it not natural for anyone to question the quality of the work?

Fuel and food prices in the global market are low now. What impact is it making on Bangladesh’s economy?

It is true that the lower fuel and food prices have brought some relief to our economy. That’s why the finance minister is also in a position to present the budget in a ‘relaxed’ manner. Inflation is within the bearable limit. However, there is a concern. Remittances sent by the expatriates are showing negative trends. In the first ten months (July to April) of the current fiscal 2.4 percent less remittance has been received as compared to the same period in the previous fiscal. I think this negative trend will continue in the remaining two months.

Remittance is the life-line of our economy. It’s said that expatriates keep the wheels of our economy moving. Because of this, the finance minister may face some difficulties in preparing the budget.

There is also a positive aspect. Export earnings have increased. Ten months’ figure shows an increase of 10 percent in this sector. That is a matter of some relief for the finance minister.

Despite several measures private investment has not increased. What is your view on this?

No doubt, private investment has remained stagnant, but one has to admit that the government is taking measures to improve the scenario. Roads and flyovers are being constructed.  Initiatives are being taken to solve power and gas crises. Businessmen and entrepreneurs are regaining confidence. I think if the current political stability continues, this private-investment drought will be overcome.

However, in this regard, I want to reiterate that road construction, ADP implementation… everything will have to be completed on time. Only then will we get the benefit.

In the present context, which aspect of the budget, according to you, will pose a major challenge?

I always consider implementation as the biggest challenge. Now, too, I am sticking to that.

The finance minister has talked about making separate allocations in the new budget for mega projects. What is your opinion on this?

I welcome the government’s decision. The government has taken a courageous decision of implementing the Padma Bridge project with its own fund. For GDP growth, more such mega projects need to be implemented.

In the new budget, the government is giving priority to the implementation of mega projects like Padma bridge, Rampal Power plant, LNG terminal, Matarbarhi Power Plant, metro rails.

I also welcome the finance minister’s announcement of making a separate budget for these projects.

Political stability has prevailed in the country for some time. It seems it will prevail in future as well. Against this backdrop, how helpful will the new budget be for Bangladesh’s economy?

Undoubtedly, political stability is positively impacting Bangladesh’s economy. Bangladesh’s GDP growth in the last few years had been 6.5 percent. Even during the global recession, Bangladesh maintained that growth rate. At present it is crossing the 7 percent mark. The economy will get further momentum if the present trend of political stability continues.  This will help increase investment and create jobs. The people will get the benefit.

[The GDP growth rate had been fixed at seven percent during the 2015-16 financial year. The Bangladesh Bureau of Statistics has indicated after analysing the data for the first nine months (July-March) that a growth of 7.05 percent is likely to be achieved. The new budget is understood to have set a growth target of 7.5 percent.]

bdnews24.com: Thank you, sir.

Mirza Azizul Islam: Thank you.