BRAC University hosts discussion on role of fiscal policy
BRAC University recently hosted a panel discussion on the “Economic Resilience of Bangladesh: Role of Fiscal Policy” organized by the Department of Economics and Social Sciences (ESS) on the Merul Badda campus in Dhaka.
Fiscal policy is the use of government spending and taxation to influence the economy. Governments typically use fiscal policy to promote strong and sustainable growth and reduce poverty.
The discussants at the program were Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue, Mohammad Nurul Amin, Chairman of Global Islami Bank PLC, and Tahera Ahsan, Executive Director of the Japan-Bangladesh Chamber of Commerce and Industry.
About 18% percent of Bangladeshis still live below the poverty line and many fell victim to inflation which totaled 30 percent over the past three years, said Mustafizur Rahman.
Yet public expenditure stands at just 13% of the GDP, whereas it is around 20% in South Asia, he said.
The latest national budget efficiently consolidated 140 social safety net programs into 99, yet 45% of the social safety net budget has been allocated in the form of agriculture subsidy and pensions, which should be excluded, he said.
While old age allowance has been increased from Tk 800 to Tk 850, it is still not justified if inflation is taken into account, he said.
The social safety net beneficiary list should be reviewed to reach only the deserving and the country should move from social safety net to social security, said Rahman.
Around Tk 7 lakh crore or 40% of loans have turned sour against deposits of Tk 19 lakh crore, said Mohammad Nurul Amin.
The troubled banks will either be merged or be put up for acquisitions or transfers, he said.
When the government collects funds from the economy through financial instruments such as bonds, it reduces the availability of private sector credit, said Tahera Ahsan.
Though the latest national budget lacks stimulus for private sector growth, it prioritizes austerity as the focus now is on reaching a balance in the economy and not growth, she added.
Professor Wasiqur Rahman Khan, Chairperson of the ESS department, also spoke at the event.
