The Unnayan Onneshan (UO) states that lack of fiscal accountability due to limited role of the parliament in budget making process together with constitutional and systematic rigidities result in inefficiency, poor implementation of budget and misuse of public resources.
The independent multidisciplinary think-tank in its July 2017 issue of Bangladesh Economic Update called for immediate adoption of necessary reform measures that may include revision of budget-related constitutional provisions, expansion of scope of parliamentary surveillance over fiscal management, and strengthening of concerned parliamentary standing committee to deal with the problem.
FY 2017-18's budget speech seems to lack providing prudent and farsighted solutions to the current challenges except it earmarks an ambitious target of expenditure amidst inefficient distribution of resources and cost overrun, says the Unnayan Onneshan.
The think-tank notes that the political expediency along with lack of participation, accountability and transparency in fiscal management system has not only caused cost-overruns, scams, and capital flight, but the reign of uncertainty that kept the ratio of private investment to gross domestic product (GDP) stagnated over the years, slowed down growth in manufacturing resulting in underperformance in external sector.
Referring to imprudent budget making process induced inefficient channeling of resources to productive sectors and resultant lack of employment opportunities, the UO notes that the youth unemployment rate in Bangladesh is higher than the regional South Asian average, with a huge sizeable youth population languishing in as NEET (not in employment, education or training).
The causes of elapsing prospects are more of institutional. The gradual corrosion of institutions has constrained allocation of resources to be channeled efficiently into productive sectors in order for the economy to get higher returns in terms of expanded productive capacity, notes the UO.
Pointing to the underachievement of NBR tax revenue collection in recent years, the UO doubts that the target of collecting NBR tax revenue of Tk. 248190 crore may not be feasible in FY 2017-18, whereas a gap of Tk. 18152 crore has been found between the budget and revised NBR tax in FY 2016-17.
Observing institutional fragility in the banking sector due to monumental rise in writing off of loans, meteoric rise in the default loans and nose-dive in risk and capital adequacy ratio, the research organization comments that the public in general has to pump their tax money to rescue the stripped nationalized commercial banks through recapitalization due to loots in these banks.
Taking account of slow implementation against the planned duration of the infrastructure development projects, the UO comments that increase in allocation implies rising cost induced economic rent which has made the public investments inefficient. For instance, Bangladesh spends Tk. 59 crore (proposed) to build one kilometer of 4-lane highways whereas China and India spend Tk. 13 crore and Tk. 10 crore respectively.
Pointing to failure of economic growth to create employment, the research organization notes that unemployed population increased to 2.6 million which is highest since 2000. More than 70 percent of the total unemployed population is youth.
-AA Business Desk
Leave Your Comments