Staff Reporter :
Experts on Tuesday suggested the government for formulating a subsidy policy based on economic reality of the country.
They said such a policy will not only help reduce burden the government but also make the economy sustainable.
“The government’s subsidy spending should be policy based and time bound. An efficient use of subsidy is a must to ensure economic benefit,” Dr Ahsan Monsoor, a noted economist of the country told The New Nation yesterday.
He said, Bangladesh cannot afford huge subsidy bill in the long run as it has resource constrains. So, subsidy bill should be reduced in every year budget considering the economic reality.
“The government’s subsidy spending remains high touching it to 3.5 per cent of the gross domestic product (GDP). It should be brought down to 2.0 per cent of the GDP to make fund available in development projects,” he added.
Referring to an official figure, Dr Monsoor said, the overall subsidy spending by the government was 0.7 per cent of the GDP in 2007. It later goes up to over 3.0 per cent in 2012-13 due to higher allocation for the power sector.
He said, fuel subsidies on the head of Bangladesh Petroleum Corporation would go nil in the next budget thanks to a halving of international oil prices. “It will help the government to save thousands of crore taka which should be diverted to the infrastructure, health and education sectors.”
Officials familiar to budget preparation said that the government’s total subsidy bill could come down to around Tk24,000 crore in the next fiscal (2015-16) from that of the current fiscal’s budgetary spending target of Tk32,854 crore.
“As my knowledge, the highest subsidy would go to the head of Bangladesh Power Development
Board (BPDB) to address probable increase in power purchase from the costly private sector plants.
The government should come out from the costly power purchase from quick rentals by introducing based-load power plants. Once such power plants come into generation, the subsidy for power sector may be reduced,” Dr Monsoor said.
He further said that subsidy for agro sector should remain in the budget for the welfare of the farmers.
Echoing the same view, former Bangladesh Bank governor Dr Salehuddin Ahmed said, “The government should adopt a balanced subsidy policy for the betterment of the economy.”
He added: The government’s subsidy spending should be rational and effective, and it should not exit year after year.
He further said that a reduction of subsidy bill will give the government more funds for budget spending. It would be diverted to the implementation of the mega development project,” he noted.
When asked, he said, the government should not cut the subsidy bill from the pressure of donor agencies. It should do so only to bring reforms in fiscal policy as it is always facing difficulty in managing subsidy bill due to the limited resource of the country.
Experts on Tuesday suggested the government for formulating a subsidy policy based on economic reality of the country.
They said such a policy will not only help reduce burden the government but also make the economy sustainable.
“The government’s subsidy spending should be policy based and time bound. An efficient use of subsidy is a must to ensure economic benefit,” Dr Ahsan Monsoor, a noted economist of the country told The New Nation yesterday.
He said, Bangladesh cannot afford huge subsidy bill in the long run as it has resource constrains. So, subsidy bill should be reduced in every year budget considering the economic reality.
“The government’s subsidy spending remains high touching it to 3.5 per cent of the gross domestic product (GDP). It should be brought down to 2.0 per cent of the GDP to make fund available in development projects,” he added.
Referring to an official figure, Dr Monsoor said, the overall subsidy spending by the government was 0.7 per cent of the GDP in 2007. It later goes up to over 3.0 per cent in 2012-13 due to higher allocation for the power sector.
He said, fuel subsidies on the head of Bangladesh Petroleum Corporation would go nil in the next budget thanks to a halving of international oil prices. “It will help the government to save thousands of crore taka which should be diverted to the infrastructure, health and education sectors.”
Officials familiar to budget preparation said that the government’s total subsidy bill could come down to around Tk24,000 crore in the next fiscal (2015-16) from that of the current fiscal’s budgetary spending target of Tk32,854 crore.
“As my knowledge, the highest subsidy would go to the head of Bangladesh Power Development
Board (BPDB) to address probable increase in power purchase from the costly private sector plants.
The government should come out from the costly power purchase from quick rentals by introducing based-load power plants. Once such power plants come into generation, the subsidy for power sector may be reduced,” Dr Monsoor said.
He further said that subsidy for agro sector should remain in the budget for the welfare of the farmers.
Echoing the same view, former Bangladesh Bank governor Dr Salehuddin Ahmed said, “The government should adopt a balanced subsidy policy for the betterment of the economy.”
He added: The government’s subsidy spending should be rational and effective, and it should not exit year after year.
He further said that a reduction of subsidy bill will give the government more funds for budget spending. It would be diverted to the implementation of the mega development project,” he noted.
When asked, he said, the government should not cut the subsidy bill from the pressure of donor agencies. It should do so only to bring reforms in fiscal policy as it is always facing difficulty in managing subsidy bill due to the limited resource of the country.
