The finance minister says it is not possible for the government to create jobs directly, so it is helping the private sector to expand businesses and create employment.
“We need to put the private sector in the driving seat so that they can take the [economy] forward. The government will have to help them to do so,” he said at a post-budget news conference on Friday.
To save jobs by offsetting the effects of the pandemic on the economy, the government in 2020 announced 23 stimulus packages worth Tk 1.28 trillion. Among those, 16 packages had a direct budget allocation of Tk 406.91 billion.
But high unemployment rate has remained a major concern, a factor that appears to be underestimated in several official statistics.
Last year, the Bangladesh Bureau of Statistics conducted a survey about unemployment before and after the start of the pandemic. It found that between April and July, the effects of the pandemic raised unemployment to over 22 percent, but the rate fell to about 3.75 percent by September.
But the South Asian Network on Economic Modelling or SANEM citing several bits of research claims the unemployment rate is still close to 10 percent.
A survey conducted by the organisation during January and February found that 10 percent of people were fully jobless, with the highest rate of unemployment prevalent among the youth. Normally youth unemployment stands at around 10 percent, but the survey found it had risen to 20 percent in the pandemic.
The deep corporate tax cuts, tax breaks to promote “Made in Bangladesh” brands, duty and policy facilities for local industries have earned praise, but analysts said he left key strategies obscure.
The minister said at the news conference, “The budget is quite open and totally business-friendly. I think the businesses will go into production by grabbing the opportunities. This will create jobs. How will they produce goods if they don't hire people?”
He hinted at more tax cuts to protect domestic industries in the future. “We'll tap the local products with potential. We'll be somewhat flexible and never raise VAT or taxes. They will decrease,” he said, adding that the tax cuts also aim to raise revenue.
Finance Secretary Abdur Rouf Talukder said the government set aside Tk 220 billion more for the Annual Development Plan in the budget than the target set in the five-year plan and it has been done to create jobs. “We think everyone will get a job within five months after the coronavirus situation comes under control."
Kamal also took questions on the plan to achieve the 7.2 percent GDP growth target set in the budget and the ability to implement the budget with a record deficit.
“We achieved the targets set earlier. Bangladesh’s macro-economy is advancing when the economic indices around the world are on a downward trajectory. So we will be able to implement the budget as we had done before,” the minister said.
In light of the pandemic, he said, economists are encouraging big spending plans even if it means leaving a huge deficit.
“Our loan-to-GDP ratio is below 40 percent. It's around 100 percent in China or India. So we'll be able to deal with it,” he said, referring to his plan to borrow heavily from the banking sector and foreign sources.