REACTION

Economists

Eminent economists of the country have expressed deep concern over the rising revenue expenditure and subsequent meeting of such spending through costlier domestic borrowing.

They also said the weak external balance poses a serious threat, which has to be tackled effectively.

Muzaffar Ahmed

Member, Trustee Board, Transparency International Bangladesh (TIB) chapter and renowned economist Muzafar Ahmed has termed the national budget for the fiscal 2001-02 as a dishonest budget. The TIB member said that the finance minister projected a over-ambitious revenue income. He projected that the revenue income would increase by Tk 3.0 billion in the 2001-02 fiscal. But during the current fiscal revenue income missed the target.

Muzaffar Ahmed said that it was projected that income from dividend and profit would be Tk 8.4 billion but in fact in the current fiscal income from this sector would miss the target. In the revised budget income from this sector was shown as Tk 7,74 billion.

In the same manner, an increased income of Tk 8.00 billion from VAT (value added tax) was projected. But during the current fiscal income from this sector would increase by only Tk 2.00 billion. In this way, the finance minister projected an unrealistic revenue income, Ahmed observed. He said that the finance minister played with the numbers game. he had shown that the per capita income during the BNP regime increased by Tk 27 and during the Awami League regime it increased by Tk 48. But if the devaluation is taken into account, the per capita income during the BNP regime increased by 70 cents and it was only 80 cents during the Awami League regime, he pointed out. "This is a dishonest exercise and a man of finance minister's stature should not have done it", Muzaffar Ahmed said. He also projected that if the Awami League emerged victorious in the next general election, new taxes would be imposed through SRO (statutory regulatory order) to augment the revenue income.

President, Chittagong Chamber of Commerce and Industry (CCCI), Farid Ahmed in his initial reaction said that reduction of tax and duties were presented prominently in the budget documents but increase of tax and duties were presented in the annexture. For this reason it is not possible to give a full-fledged reaction to the budget, he remarked.

He said as per the guidelines of the WTO it was proposed to reduce customs duty but considering its adverse impact, it was proposed to impose supplementary duty.

Bangladesh Chamber of Industries (BCI) President Khandaker Mosharraf Hossain, Bgmea President Kutubuddin Ahmed and the Women Entrepreneurs Association President Nasreen Awal Mintoo hailed the proposed budget and termed it as realistic.

Bangladesh Money Chambers association (BMCA) President Kefayetullah Masud in his reaction said that keeping the foreign exchange reserve at a critical or fragile stage a country like Bangladesh cannot expect dynamism in the national economy.

He said during 1994-95, the foreign exchange reserve was 3.47 billion US dollars, it was 2.04 billion dollars in 1996 and at present it was only 1.8 billion dollars.

He said due to a weak approach and unrealistic steps of the central bank, foreign remittance worth 8.00 billion dollars could not be deposited to the central bank's account.

He proposed introduction of auction system to fix the exchange rates of the remittance. UNB adds: Economists see the proposed new budget as a "flat" one, intending to disturb none of the consumers and producers and avoid strong reforms like accelerating privatisation.

Professor of Economics of Dhaka University Abu Ahmed said the budget avoided contentious issues. "There is nothing about privatisation, or reforms in other areas," he said in a quick reaction over the proposed budget.

He appreciated the budgetary projection of a lower borrowing, but apprehended whether it would be maintained as the borrowing had already exceeded the target in the current budget.

Nothing is stated about why 10.5 per cent depreciation of local currency against the dollar was needed when inflation remained so low, what impact the adjustment really brought to exports and reserves, how much debt-servicing went up due to the adjustment, Prof Ahmed pointed out.

"The budget speech also lacked any explanation about why the reserve dropped to such a critical level," he noted.

No additional incentive was offered for capital market. Corporate tax was required to be lowered to invite new corporate house, both local and foreign, to spur the moribund capital market, he felt.

In a quick reaction to budget proposals, development economist Dr Quazi Kholiquzzaman Ahmed appreciated that the contribution of agriculture and farmers to the economy was recognised.

He also appreciated the special focus given on environment protection, but said the issue of adaptation with the environmental changes had been left out.

Social sectors like education and health have been given reasonably enhanced allocations, but mechanism to ensure smooth implementation is absent. He also felt the need for a strong mechanism to reduce corruption from the overall system.

"In order to get the proposals implemented and achieve the results intended, you need proper mechanism to reduce waste and corruption and ensure efficient use of resources," said Dr QK Ahmed, the chief executive of Bangladesh Unnayan Parisahd (BUP), a local think tank

Dr Wahiduddin Mahmud

Dr Wahiduddin Mahmud of Dhaka University and Dr Debapriya Bhattacharya, Executive Director of the Centre for Policy Dialogue (CPD), were giving their reaction yesterday on the proposed budget for fiscal 2001-2002.

"This year's budget essentially represents an exercise in maintaining continuity," Dr Wahiduddin Mahmud said. "For understandable reasons, there are no major new initiatives because the government that will have the responsibility of implementing the proposed budget is not in place yet." However, even preparing merely a budget for continuity involves some problems. Budgetary projections and framing of the underlying policies have to be based on an evaluation of prevailing macroeconomic trends, he said.

The renowned economist noted the problem is that the 'economic indicators have undergone ups and downs' during the last one year. The first half of the current fiscal year saw the highest growth in industrial production and export since 1994-95 but there have been some adverse developments since then. Export earnings, in particular, have taken a dip putting pressure on the external reserves and resulting in the recent devaluation of Taka. The 'full-year macroeconomic scenario that emerges is still very respectable compared to the previous years,' but projections based on this scenario may be misleading. A lot will depend on how far the recent adverse developments can be overcome.

"At this moment, I would take more seriously the issue of external deficits rather than that of budgetary deficits. The higher growth in industrial production had led to an upswing in import demand, which is one factor behind the balance of payments problem. Large-scale manufacturing in Bangladesh is highly import-intensive because of the absence of local industries producing machinery and intermediate goods. The proposed budget has sought to provide incentives to domestic industries by recasting some import duties and through other support measures. But if investments and industrial production, besides that for export, really pick up again, as it did in the early part of this fiscal, the consequent balance of payments problem will have to be effectively tackled."

Dr Mahmud observed that in the present circumstances, maintaining the existing financial support to certain export items has been a wise decision. The question is whether the existing set of incentives will be enough. It seems reasonable to extend the facility to other promising export items that cannot take advantage of the duty drawback scheme. It is true that the burden on the budget on this count is already substantial. In future, it will be necessary to lower some of the existing rates of subsidy, particularly the 20 per cent subsidy on cloth export, to more reasonable levels. Besides, providing some income tax benefits on export earnings may also be considered at least as a temporary measure.

He pointed out that inspite of the decline in foreign aid disbursements, development spending as a proportion of GDP has rather increased. For two successive years now, development spending has exceeded the target, which is a reversal of the previous experience. During the last five years, the proportion of domestic financing of the development budget has increased to nearly 60 per cent from about 40 per cent. However, while the country has become more self-reliant, the same cannot be said about the budget itself.

The main source of domestic financing has been the government's domestic borrowing, rather than the surplus of the revenue budget, he said. Compared to the previous fiscal year, the government's borrowing from the banking system in the current fiscal year is estimated to be only slightly lower at Tk 3,700 crore. The proposed budget shows such borrowing to exceed Tk 2000 crore in the coming year. Besides, net receipts from the sale of savings certificates have sharply increased to exceed Tk 2000 crore.

"The government's borrowing from the banking sector may not appear to be that risky given the prevailing low rate of domestic inflation. But continuous large-scale borrowing leads to large debt repayment liabilities, thus creating a vicious cycle of public debt. According to the proposed budget, next year's payments of interest on domestic bank borrowing, estimated at about Tk 3,630 crore, will far exceed that year's fresh borrowing. Besides, if development spending is financed by domestic borrowing, ultimately it affects the external defiicts as well."

In the face of the decline in foreign aid, Dr Mahmud said, there has been an increased reliance on foreign suppliers' credit for financing development projects. Commercial rates of interest are charged on this kind of credit and the repayment schedule starts almost immediately. This may thus put additional burden on the balance of payments in the coming years. In view of its growing importance, suppliers' credit should be shown separately from external financing so that cautious policies can be pursued in this respect.

He said that for the first time in recent years, revenue earnings have reached the target and have probably increased, and not declined, as a proportion of GDP. For the coming year, revenue earnings are projected to rise at an equally respectable 13 per cent rate. But the success in this respect will greatly depend on what happens to the trends in industrial production and external trade. On the other hand, he said, revenue expenditure as a proportion of GDP was increasing, even if slowly, throughout the 1990s. Revenue expenditure increased by 12 per cent, instead of the projected six per cent, in the current fiscal year. The projected increase from the next year again by about six per cent may not therefore appear very credible. Salary hikes, the continuing process of transfer of manpower from development projects and placing them under the revenue budget and the increased interest payments on domestic borrowing have all combined to make it difficult to restrain the growth of revenue expenditure.

The leading economist mentioned that various steps have been taken in the recent years to boost the government's revenue earnings. Considerable success has been achieved in increasing revenue from income tax and domestic VAT. In the current fiscal year, income tax collection is estimated to have increased by more than 20 per cent. Even then, the incidence of tax evasion is extremely high in Bangladesh and the tax-GDP ratio is one of the lowest among developing countries, he said. During the last four years, he pointed out, holders of black money were been given the opportunity of making their income legal by paying taxes at a minimum rate but the response was rather poor. This puts into question the credibility of tax policies.

Dr mahmud observed, "It will be necessary to take politically difficult and bold measures to overcome the structural weaknesses of the budget." By floating the idea of forming two commissions for reviewing public expenditure and for stepping up the revenue earning efforts, the finance minister has, in effect, left such reforms as part of a future agenda, he said.

Dr Debapriya Bhattacharya

Dr Debapriya Bhattacharya said a major task of the government in the next fiscal year would be to cut down budget deficit, utilise more foreign funds and borrow money from cheaper domestic sources. "There is nothing one can do on income side but one thing the government should do is prudent expenditure management aiming at fiscal consolidation and backstopping of balance of payment (BOP)," Dr Bhattacharya said analysing the proposed for fiscal 2001-02.

About the finance minister's commitment to form Public Expenditure Review Commission, he said the task of that commission should be to frame 'Fiscal Responsibility and Budgetary Management Act' aiming at limiting budget deficit, public debt and issuing of bonds.

Dr Bhattacharya said the budget framers deserve some credit for making it in a fragile fiscal situation. They were not unaware of the situation and that is why they tried to keep revenue expenditure far below the revenue income.

He mentioned that the estimated revenue expenditure for the next fiscal year is 5.6 per cent of GDP as against a revenue income of 12.7 per cent. But, he cautioned, if revenue expenditure cannot be kept within the budgeted target as happened in this fiscal year (2000-01), some serious problems could arise.

This year, actual revenue expenditure was 11.2 per cent of GDP against the budgeted target of 6.3 per cent.

But the most worrying thing, according to Dr Bhattacharya, is the increasing public expenditure that grew by 10 per cent in real terms this year and overshot the budgeted target. Public expenditure this year stands at 12 per cent of GDP as against the target of 6.4 per cent. "The growth rate of public expenditure has almost doubled and the most dangerous thing is that it has happened on borrowed money," Bhattacharya said.

Analysing the public expenditure pattern this year, he said public administration topped the list with 20.7 per cent followed by domestic interest payment (19.4 per cent) and power and energy (14.3 per cent).

Almost the same thing is going to happen in the coming fiscal year as 19.7 per cent of total public expenditure will go for administration and 9.8 per cent for domestic interest payment.

Giving an analysis of the revenue expenditure in this fiscal year, the noted economist said faster growth was in salary and allowances, which is 28.8 per cent of the total revenue expenditure, followed by subsidies and transfers (27 per cent) and interest payment (20 per cent). "These three account for more than 75 per cent of the total revenue expenditure."

Dr Bhattacharya mentioned that the government borrowing from non-bank sources in the form of saving certificate has increased more than the target this year and it is really worrying as the interest on this sort of borrowing is more than that of the bank sources.

"It is better to borrow from banks, if necessary, as banks have excess liquidity and the government will have to pay lower interest."

Talking on savings, the economist said it grew by 0.88 per cent, one of the lowest in South Asia, to 18.76 per cent of GDP in fiscal 2000-01 and national savings grew by 0.68 per cent.

The most disturbing thing is that the rate of investment growth was less than that of savings growth. Investment growth was 0.61 per cent and it reached 23.63 per cent from 23.02 per cent of GDP.

Turning to investment, Dr Bhattacharya said 82 per cent of the investment came from public sector, while only 18 per cent from private sector. He termed the situation 'a hesitant participation of the private sector in investment'. If there is no improvement in savings-investment balance, the country could fall into mid-term crisis, he thought.

At the same time, he said, increase in sale of saving certificates might have a negative impact on private investment.

Reviewing the revenue growth and tax structure this year, the renowned economist observed that the most praiseworthy thing is that 15 per cent of the revenue earnings came from direct tax. However revenue is still very much dependent on import duty as 46 per cent of it comes from this source. In this context, he pointed out that if import falls, revenue income also falls dramatically but the rise in import creates balance of payment problem. on.

He mentioned that the revenue-GDP ratio, which is nine per cent this year, is far below what it should be. If the targeted revenue could be earned next year, the tax-GDP ratio, which would be 9.6 per cent, would still fall below the rates in other least developed countries. He suggested raising it to over 10 per cent.

He criticised the revenue target set for the next year with only 12.7 per cent growth. The NBR portion of revenue registered a growth of 14.7 per cent this year whereas the targeted growth next year has been set at 13.2 per cent. "On all heads, the target for the next fiscal year is lower than that this year. If any one thinks this year's growth was extra ordinary, then there is nothing to comment."

Dr Bhattacharya, however, noted that for the first time in last 10 years, GDP growth rate crossed six per cent this year.

A sizable portion (44.6 per cent) of the growth came from the 'real economy' agriculture and industryand this is a good sign, he said. But an issue of concern is that per capita income grew by only 1.6 per cent in terms of dollar and stood at 369 dollars, one of the lowest even in South Asia.

Dr Bhattacharya said the most praiseworthy thing is that the growth was achieved in a situation of low inflation and there was safety net programmes for the leftouts in the growth process. Business community

Various trade and business organisations, including chamber bodies, expressed mixed reactions to the new budget placed in parliament Thursday last.

Most of the organisations identified the budget as a pro-election one sans any new vision but hailed it for reducing duties on import of raw materials, raising taxes on finished products and increasing sectoral allocations.

A good number of organisations, however, expressed their concern over the worsening of fiscal balance with significant rise in public borrowings and criticised the government for not taking any measures for development of the capital market and improving the foreign exchange reserve.

They identified the budget as devoid of measures to reduce public expenditure, improve capital market, foreign exchange reserve situation and support development of backward linkage industries.

Making the highest allocations for poverty alleviation, education, health, infrastructure and liberal approach to income tax and special support for agriculture was, however, highly appreciated by the organisations.

No policy initiative to revive capital market: FBCCI

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), expressed mixed reactions Friday to the newly announced national budget for the 2001-2002 fiscal.

Addressing a press conference, the FBCCI leaders expressed their dissatisfaction over the advance income tax system for investors and said they expected that the government officials would be brought under the tax-net.

"Dual policy cannot be run in one country," commented the president of the FBCCI, Yussuf A Harun.

Referring to India's allocation of 250 billion rupees for the textile sector, he said there was no separate allocation and guideline in the budget for flourishing backward linkage industries in the country.

He also observed that there was no policy initiative in the budget to revive the capital market.

The business leader said their proposal to withdraw supplementary duty on raw materials was not reflected in the budget.

Pointing to relatively less tax for non-government organisations (NGOs), FBCCI leaders said they are facing unequal competition in different businesses with NGOs as they had to pay only 40 per cent tax which was reduced to 25 per cent in Thursday's budget.

They said they would reiterate their demand to the government for broadening the definition of the cottage industries.

The business leaders, however, hailed the government for taking pragmatic steps in different sectors including agriculture, education and health sectors.

They also expressed the view that there would be a positive impact on the agro-based industries and other local industries due to the proposed budget.

The FBCCI leaders, however, mentioned that they would urge the finance minister and the National Board of Revenue (NBR) to reconsider their demands during a meeting scheduled to be held Tuesday.

It doesn't have any major new vision : MCCI

The Metropolitan Chamber of Commerce and Industry (MCCI) has stated that the proposed budget for fiscal 2001-02 "skirts" the issue of increasingly deteriorating fiscal and external imbalances that may have long-term ramifications on the economy on many fronts.

In its reaction expressed through a press release to the proposed budget, the MCCI stressed the need for balancing between fiscal prudence and stimulus for the economy while noting that the task will be a challenging one for subsequent years even though the growth trend remains otherwise positive.

The MCCI statement was issued by its Acting Chairman Tapan Chowdhury.

The chamber in its reaction said: "The 2001-2002 Budget placed by the finance minister on June 7, 2001 is basically a 'holding', election year budget as expected, and does not have any major new vision or approach. There are some positive features such as continued support for agriculture and agro-processing, jute and textile industries, reduction of taxes on pre-fabricated building materials, reduction and rationalisation of VAT and Customs duties for industries."

While pointing out that no new taxes have been imposed under the proposed budget that "is designed to appeal to all sections of society," the MCCI observed, "the successive fiscal stimuli applied to the economy has had the desired expansionary and growth effects, particularly in agriculture, but the question now is one of sustainability."

It stated: "The budget skirts the issue of the increasingly deteriorating fiscal and external imbalances which will have long-term ramifications on the economy on many fronts. The recurring expenditure of the government during the current fiscal has exceeded the budgeted amount by over Tk 10 billion (1,000 crore), financed mainly through increased non-bank borrowing. The increasing national debt and increasingly expensive foreign aid do not bode well for the future in terms of crowding out capital for private investment, raising interest rates, and increasing the burden of external debt servicing.

"There is no alternative to administrative reforms and containment of the recurring expenditure of the government but this has not been addressed at all. The ADP increase projected in the budget is a mere 4.4 per cent in terms of taka, i.e., just about covering inflation. There is a need for a new vision in ADP planning, where the Public Sector Corporations like PDB and BTTB finance their own investments (or not expand it at all), instead of relying on an increasingly tight GOB (government of Bangladesh) budget, which should concentrate more and more on social sectors and poverty alleviation," according to the MCCI.

"Furthermore", the MCCI observed, "the burden of the SOE losses continue to increase and be out of the budget hidden through directed credit from NCBs. But these unpaid 'bills' will eventually have to be picked-up by the GOB through the budget. Privatisation is, therefore, reaching emergency status, but this is again not reflected in the current budget.

"The foreign currency reserves and external balance have meanwhile reached a crisis proportion and this is also not addressed in the budget, particularly in view of current recessionary conditions in major export markets and increasing imports fuelled by fiscal stimulus," the MCCI said.

"Therefore, while growth trends," the MCCI said "are positive, balancing between fiscal prudence and stimulus for the economy will be the challenge in subsequent budget exercises."

DCCI regrets ignoring of its recommendations

Reducing wasteful public expenditure, improvement of capital market and foreign-exchange reserve and fund supports for backward-linkage industry are among the missing points of the proposed new budget.

The premier chamber in its budget-evaluation meeting, however, appreciated Friday the reduction of duties on some raw materials, continuation of export supports and higher allocations for education and poverty alleviation.

But, it said, "industrialisation and creation of employment have not received proper attention in the budget... Privatisation has been fully neglected."

The meeting, chaired by the chamber's acting president, Mahbub-Uz-Zaman, noted with concern that the government planned to borrow from domestic sources to make up part of the Tk 175.26 billion (17526-crore) budget deficit. Borrowing from banks would reduce the availability of funds for private-sector investment, it observed.

Major recommendations put forward by the DCCI remained ignored, making the exercise of pre-budget discussions, virtually useless, the chamber noted with regret.

It put forward a 26-point recommendation, including allocation for effective steps for good governance and controlling smuggling and terrorism, to be reflected in the budget before being passed by the House.

The chamber strongly pleaded that the government employees should be brought on to tax net in order to reduce the pressure on the private sector to pay more in taxes.

Besides, the budget should have directions to salvage capital market, the chamber felt, seeking duty reduction on more raw materials and capital machinery.

BKMEA

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) at a meeting Thursday hailed the budget for its support to develop the knitwear industry. BKMEA president Manzurul Haque appreciated the budget for a special subsidy of taka two billion for using domestic raw materials in RMG industry, reducing duties on import of covered van and fabricated building materials. The BKMEA executives also thanked the finance minister for waiving duties on import of spare parts used in export-oriented industries.

Political Parties

Different political parties and organisations brought out processions and held rallies in the city yesterday hailing and denouncing the proposed budget for 2001-2002 fiscal.

The Dhaka city unit of Awami League brought out a procession from its central office at Bangabandhu Avenue at 6:15pm welcoming the budget. Jatiya Sramik League also brought out a separate procession and held a rally hailing the proposed budget.

City AL joint-secretary Akhterul Alam led the procession. Later, a rally was held in front of the Jatiya Press Club. Akhter said the government of Prime Minister Sheikh Hasina presented a people-oriented budget.

He said the country under the dynamic leadership of Sheikh Hasina achieved tremendous development in last five years and the proposed bud get is the reflection of the development. Other AL leaders congratulated the prime minister, Finance Minister SAMS Kibria and other members of the cabinet for presenting a pro-people budget.

Meanwhile, denouncing the budget BNP and its different front organisations brought out a procession from its central office at Naya Paltan at 6:30pm and paraded different city streets. Later, they held a rally also in front of the Jatiya Press Club.

BNP Secretary General Abdul Mannan Bhuiyan, and city BNP President Sadeque Hossain Khoka MP and General Secretary Abdus Salam addressed the rally.

Mannan Bhuiyan said the AL, which is totally isolated from the people, failed to resolve their problems. The public expressed their no-confidence in the government years ago and went ahead with a movement to press for its immediate resignation.

Rejecting the proposed budget, he said it has been tailored to serve the ruling party's purposes and to hoax the people. He said the overall economy of the country is sluggish due to misdeed, corruption and wrongdoing of the government.

The BNP secretary general said the foreign currency reserves have come down to the lowest level and all the economic indicators have shown negative trend.

Prior to the proposed budget, he said, the government approved a large number of phony projects and allocated several hundred crores of taka among the AL leaders.

He called upon the people to topple the government from power through voting in the upcoming general election and establish a people's government under the leadership of Khaleda Zia. Sadeque Hossain Khoka termed the proposed budget 'anti-people' and 'anti-development'. He said the budget was presented ahead of the election purely to hoax the people. It does in no way reflect the country's real economic situation.

Like the previous Awami League budgets, he said this one, too, will not be able to achieve its revenue income target. Rather, it will increase revenue expenditure and hamper development targets. Jatiya Party (Matin-Naziur) in its instant reaction said the proposed budget is a document of the present government's forgery and looting and is nothing but an attempt to legitimise the looting by the Awami League men.

In a statement, its acting chairman Prof. MA Matin said the budget speech is full of falsehood and tall talks and aimed to influence the upcoming election.

Bangladesh Chamber of Industries (BCCI) President Khandaker Mosharraf Hossain and its vice-president AK Azad hailed the proposed budget, saying that it has given top priority on education, health, agriculture and infrastructure sectors. They hoped that it would expedite the ongoing development of the country.

President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Kutubuddin Ahmed also hailed the budget for giving increased allocation for the education, agriculture and transport sectors.

He however demanded special allocation for the garment sector, especially for the backward linkage, for industrial development of the country.

Bangladesh Money Changers Association in a statement said though there has been some positive indicators in the economy, there has been no development in the foreign currency reserves. It said the highest reserves of 347 crore US dollars were in 1994-95 fiscal, which have now come down to 11 crore US dollars. The overall economy of the country cannot be dynamic if the foreign currency reserves are in a miserable condition.

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) will formally give its responses to the budget proposals today, while other major chamber bodies will come up with specific observations in a day or two.

The Consumer Association of Bangladesh (CAB) criticised the proposed budget, saying that it does not show any direction towards national development.

In an instant reaction yesterday, it termed the proposed the annual balance sheet a 'face-saving' one. It said like the previous years, it preserves the interest of businessmen instead of that of the consumers.

The Samajtantrik Chhatra Front led by its President Nurul Islam brought out a procession in the city and chanted slogans against the budget. Its leaders said the budget is against the students in particular and education in general.

The Dhaka Inter-district Bus, Microbus and Minibus Sarak Paribahan Sramik Union brought out a procession from Fulbaria bus terminal, congratulating the new budget.

President and general-secretary of the union, Nurul Amin Nuru and Kamrul Islam respectively, thanked Prime Minister Sheikh Hasina and Finance Minister Shah AMS Kibria for presenting to the nation a people-oriented budget, which also is balanced, and timely.

Saifur predicts a bankrupt economy

Former finance minister and BNP lawmaker M Saifur Rahman said the proposed budget would lead the country towards a weak and bankrupt economy.

He said that the next caretaker government would face serious difficulties in running the country with the foreign currency reserve declining below one billion dollars.

Saifur said the revenue collection decreased but the expenditure of the government increased. While giving an instant reaction to BBC Bangla Service last night, the former minister observed that the rate of inflation declined because of stagnant economy.

He said domestic interest of the government rose so high that it surpassed the defence expenditure of the country.

Saifur termed the fiscal management of the government 'very poor'. Expansionary fiscal measure and reckless bank borrowing created an unsustainable situation in the economy, he added.

Meanwhile, former planning minister and BNP leader Dr. A Moyeen Khan said the proposed budget is "not acceptable in principle" and that it simply reflected an imaginary picture to "deceive the people".

In his reaction, Dr. Moyeen said this government cannot place budgetary proposals for the sixth time in its tenure since it was elected for a five-year term.

The announcement of the proposed budget towards the end of its term demonstrated the ruling party's intention to stay in power beyond its tenure, he added.

Menon terms Kibria's budget speech a meaningless talk

In a reaction to the proposed budget for fiscal 2001-2002, Workers' Party president Rashed Khan Menon has said the Finance Minister's budget speech was a meaningless talk with a lot of wrong explanations, reports UNB.

"On the eve of a general election, it was his last showdown to draw the people's attention but the people would not be convinced with such a speech", said the leftist leader in a discussion meeting on budget here today.

Rejecting Kibria's claim on the country's development following the policies of the government, he said the finance minister did not acknowledge the credit of farmers in harvesting bumper crops.

"He did not even admit that the farmers are incurring losses due to low price of their produces," Menon said adding "the subsidy in agriculture sector was not given for the farmers, it was for fertilizer production and businessmen."

The discussion meeting organised by party's city committee was chaired by Mozammel Haq Tara.
 

Sources: UNB, The Daily Star, The Financial Express