A budget is supposed to be a comprehensive economic policy statement of the government for one year. This is particularly so in the penultimate year of the present government. Keeping in view the next general election, the government is hoping to have another term in office after the election. A closer examination of the budget document reveals that a number of important issues have either been ignored or these have been discussed in a cursory manner.

The outlay of the next fiscal year has been increased by 19 per cent from the 2011-2012 revised budget to fix it at Tk 1.9 trillion (Tk 1,91,738 crores). The annual development programme (ADP) has been set at Tk 550 billion (Tk 55,000 crores). But nothing has been said about the implementation of the budget. The government will face formidable challenges in implementing the big budget. It would be extremely difficult to implement the budget if seen from the point of view of financing. If the government borrowed more from the banking system, it would have adverse impact on private sector borrowing, investment, growth and inflation.

There is uncertainty about the financing of Padma bridge project. The World Bankhich has suspended funding of the project due to corruption charges. The government is now looking for alternative sources of financing. It will take long time to firm up new funding proposals. That is why the Finance Minister made very low-key observations about this project in his budget speech.

The World Bank has finally broken the ice over the dispute regarding its financing of the Padma bridge project and proposed five new conditions for the government to ensure corruption-free implementation of the project. The conditions are:

l A high-powered investigation team has to be formed to probe the allegation of corruption.

l An independent firm has to be appointed to monitor implementation of the project.

l The persons against whom there are allegations of corruption would not be involved in the implementation of the project.

l Another condition is that the co-financiers will have to be actively involved in the procurement process.

l Besides, as a long-term step the government will have to take initiatives to increase the capacity of the Anti-Corruption Commission.

Two sides will soon discuss the conditions in detail.

The Finance Minister did not provide any statistical basis for his projection of employment creation and merely made some general remarks. We cannot measure poverty alleviation without figures on the employment situation. He spoke about overseas employment and job creation by the private sector. But the government has very little contribution in these areas. A vigorous employment policy was expected from the government.

The Finance Minister projected that within the next fiscal year, there will be a huge surplus power as a result of the implementation of dozens of power projects. Presently, the load shedding level swings between 400mw and 1200mw. We shall consider ourselves lucky if we can get rid of load shedding by the next year. It is said that the country will be able to import 250MW power from India by the next year. But this is hardly likely to happen. Discussion on this project is going on for two and half years. One year will not be enough for the implementation of this bilateral project. Similarly, the proposed import of electricity from Nepal, Bhutan and Myanmar at this stage seems to be more a pipe dream than a practical proposition.

No rationale was given in the budget document for whitening black money. In the post-budget press conference, the Finance Minister defended the provision for legalising undisclosed money saying it would bring investment and prevent cash going out of the country. In 2009, the Finance minister had admitted that whitening of black money was unethical. This time he supported it as a step that is going to inject investment.

Meanwhile, the World Bank in its appraisal report has mentioned about declining investment and shrinking savings in Bangladesh. If whitening of black money has not helped for last three years, how is it going to help now?

Spiralling prices of essentials is a big headache for the common people. Innumerable articles have been published in the daily newspapers on this subject. Debates took place on monitoring and syndicates. Even ruling party Members of Parliament are critical of price spiral of essential commodities. It is surprising that the national budget did not even touch this issue. It is very much an issue of public interest and the government did not care to address it.

The Centre for Policy Dialogue (CPD) has mentioned that the government has done injustice to tax-payers by increasing the minimum individual tax without raising the tax-free income threshold. They have also identified a shift in subsidies from agriculture and food security to power and energy, which may increase disparity between the rich and the poor. The government, CPD said, has failed to find out innovative ways to increase tax collection.

In the budget, there is no mention about attracting investment. No attention was given to falling investment. In the post-budget press conference, the Finance Minister said that Bangladesh was having growth with stagnant investment situation. But how far this will be sustainable is questionable. Growth is bound to decline without investment. The Finance Minister admitted that special reform interventions are needed to address instability in the capital market and to prevent unwarranted volatility. The capital market continues to be unstable and government action needs to be expedited.

Though the Finance Minister is hopeful about reducing inflation rate to 7.5 per cent, the mechanism for attaining this has not been spelled out. Contractionary monetary policy alone may not be sufficient in tackling inflation.

Bangladesh is a divided house. Political instability is responsible for this. The Finance minister has not addressed this issue. The government appears not to be in a hurry to deal with unstable political scenario.

The writer is an economist and columnist.

The Financial Express/Bangladesh/ 17th June 2012