Saturday, June 11, 2011

Bangladesh unveils budget with high on defense, low on farm spending

SALEEM SAMAD

Bangladesh, the world’s poorest Muslim majority country reveals a $22-billion deficit budget, which is high on defense expenditure and low in farm spending.

The overall agriculture budget decreased over 12 percent while that for defense increased almost 29 percent, which is incidentally the largest rise among all major sectors.
 Instead of investing in human development and infrastructure, the nation of 158 million, most of that money will likely go towards increasing Bangladesh's military firepower and salaries of defense personnel.

Finance minister Abul Maal Abdul Muhith calls for higher allocation in the energy and farming sectors to perk up economic growth.

The government targets revenue income at $16.01 billion in the coming fiscal year, from nearly $13 billion in the current fiscal year.

In a move to end a serious of power outage, the power production saw an increase of almost 20 percent as the finance minister outlined a plan to increase power generation by almost three times adding 7,800 megawatts to the national grid by 2013, write news portal bdnews24.

The minister set a 7.0 percent growth target for the gross domestic product (GDP) starting on July 1.

The budget holds down the rising inflation, principally blamed on price spirals and depreciation of the local currency, he explained.

Economic think-tank Unnayan Onneshan in a quick assessment on Thursday said the government might face extraordinary challenge to reach the growth target as quoted in the budget document of fiscal 20111-12 due to lack of supporting base in the overall economy of Bangladesh.

The budget was placed in the parliament on Thursday amidst boycott of the main opposition Bangladesh Nationalists Party.

The fiscal space squeeze and IMF condition for accessing one billion dollar loan to Bangladesh might also pave the way for increasing different type of inequality; such as geographical inequality, income inequality and social inequality in the country, the think-tank said.

Finance Minister almost echoed with the think-tank and said that the next fiscal year would be challenging for the economy. "Recovery from the recession and political instability pose a great risk for the economy and we're going to form a taskforce to deal with it," he told journalist on Friday.

He does not hesitate to blame that the economy has fallen into trouble after recovery from recession due to commodity crisis and in Bangladesh political stability rubs salt to the injuries.

The anti-tobacco lobby expressed mixed reaction, when the government increased tax to 42.5 percent to discourage smoking. The activists were expecting strict economic restrictions of the tobacco growers.

Bank stocks went up Wednesday and Thursday riding largely on report that corporate tax will go down to 40 per cent for commercial banks.

Saleem Samad, an Ashoka Fellow is an award winning investigative journalist based in Bangladesh. He specializes in Jihad, forced migration, good governance and politics. He has recently returned from exile after living in Canada for six years. He could be reached at saleemsamad@hotmail.com