Kazi Zahidul Hasan :
The next budget should give focus on increasing private investment and employment generation to maintain an inclusive and sustainable economic growth, opine economists.
The government is going to present the budget for 2019-20 fiscal in the Parliament on June 13 amid several challenges facing the economy, such as sluggish private investment and high unemployment rate with alarming rise in income inequality.
Economists said that the economy has to create more jobs to absorb the flow of new entrants – roughly 2.0 million or so. And that also requires higher investment.
“Pragmatic budgetary measures are needed to boost private sector investment that remains sluggish over the last one decade causing a concern for economy,” former Finance Adviser to the Caretaker Government Dr AB Mirza Azizul Islam told The New Nation yesterday.
He said stimulating private investment is necessary to create necessary job opportunities for a large number of unemployed workforces.
“The next budget should focus on necessary reforms and set expenditure priorities in productive sectors to revive the current investment cycle and job creation. Besides, adequate allocation should eye improvement in infrastructure, human capital development and export diversification to spur economic growth,” he added.
Dr AB Mirza Azizul Islam also cited that the government must fix the spending priorities on the basis of prevailing economic condition.
He however said that boosting private investment would be a key challenge for the next budget.
“Private sector investment will have to increase to increase employment,” Fahmida Khatun, Executive Director of the Centre for Policy Dialogue told The New Nation.
For the last one decade, private investment to GDP ratio remained stuck at 21 to 23 percent. For instance, in fiscal 2017-18 it was 23.26 percent of GDP, according to the Bangladesh Bureau of Statistics.
“Although average unemployment rate is reported to be 5.0-6.0 per cent, Youth unemployment rate is about 11 per cent, which is alarming,” she said adding that the budget should focus on ensuring revival of private investment to support economic growth and job creation,” said Fahmida Khatun
She also said that slowdown in private investment poses a big challenge for the economy. The challenge can be addressed through short, medium and long term measures.
“Bangladesh urgently needed to unlock the private investment to sustain economic growth. It should take necessary policy reform to increase easy access to finance for private enterprises and improve the governance of public sector and infrastructure to deal with the stagnant private investment,” Dr Ahsan H Mansur, Executive Director of Policy Research Institute (PRI), told The New Nation.
He pointed out that undeveloped infrastructure, poor governance and high cost of doing business associated with high rates on bank loans, are holding back private investment. Sizable non-performing loans in banks continue to be another constraint in accelerating investment growth.
“We need immediate policy actions to overcome these bottlenecks for attracting more investment.”
Highlighting the country’s bleak job situation, Dr Ahsan H Mansur said that millions of young people are entering the workforce each year, but the economy has a little capacity to absorb them. “This is a defining moment for economy. Bolstering of the private sector investment is necessary to meet this challenge.”
He suggested that the next budget should offer sops for labour intensive industries to create more jobs.
