Say experts at a dialogue organised by CPD
The global coronavirus pandemic is nothing like the world has seen before, which is why the government’s eighth five-year plan must be out-of-the-box and have policy and institutional reforms to overcome the economic fallout from the public health crisis, said experts on Tuesday.
Their comments came at a virtual dialogue titled “The Eighth Five Year Plan: Addressing Covid-19 Challenges and Sustainable LDC Graduation”, organised by the Centre for Policy Dialogue.
Effectiveness of a plan depends highly on the implementation and design of the mechanism, said Rehman Sobhan, founding chairman of CPD.
“The problems discussed today are the same as what we did in the seventh Five-Year Plan. What the lesson we learned from the previous plan and what corrective action plan was taken.”
The problems are in designs and implementations, he said.
“It should have been presented in the parliament what we achieved in the seventh five-year plan. Why the identified problems were not resolved,” he added.
The eighth five-year plan is comprehensive and there is no doubt about it but there is a question of what is new in there, said Ahsan H Mansur, executive director of the Policy Research Institute.
The challenges that were identified before remain.
For instance, the financial sector is hobbling and its ills are longstanding, while the lack of reforms in tax policies is hurting the government’s revenue collection.
With the present trend of revenue collection, the tax to GDP gap will fall further at a time when the government needs huge amounts of funds to meet the demands of expenditure to recover from the pandemic and also for the implementation of Sustainable Development Goals (SDGs).
“Efficiency of administration did not enhance. Lack of policy intervention and reforms created a credibility gap.”
In the given situation, the government has to shun the usual thinking and take bold decisions for reforms in all aspects, said Mansur, also a former economist of the International Monetary Fund.
“The financial sector has been criminalised and there is no accountability,” said Amir Khasru Mahmud Chowdhury, a standing committee member of Bangladesh Nationalist Party.
The Bangladesh Bank cannot exercise its autonomy and decisions are being made under political pressure, he said.
Besides, major reforms in the sector are not being taken due to political reasons, said Chowdhury, also a former commerce minister.
The previous problems persist, and the institutional capacity did not improve, said Nihad Kabir, president of the Metropolitan Chamber of Commerce and Industry (MCCI).
“If it is not increased, we will lag. We have to change our mindset and focus on implementation, monitoring and evaluation.”
The impact of covid-19 is yet to be measured and it will take two to three years to return to pre-covid level.
“So coordinated and sustained steps are needed.”
To reach its growth target, Bangladesh has to reduce the cost of doing business, remove obstacles and improve the business climate.
On the other hand, education institutions should focus on creating employable and skilled manpower.
Kabir also called for separating the National Board of Revenue’s policy department and regulatory affairs.
Meanwhile, the CPD said domestic resource mobilisation could become a binding constraint for implementing eighth five-year plan.
Reforms and institutional strengthening are needed to enable the economy to create greater fiscal space through higher domestic resource mobilisation, raise allocative efficiency and efficacy of resource allocation concerning public expenditure, raise labour productivity and enhance the competitive strength of the economy, said Fahmida Khatun, executive director of CPD.
Meanwhile, the experts also called for taking measures for availing the duty-free market access following graduation from the least-developed country (LDC) bracket.
The LDC graduation in 2024 will need adequate preparation such that the growth momentum is sustained, the think-tank said.
This will mean that eight five-year plan should be able to foresee the needed steps in anticipation of significant preference erosion and demands on raising the competitive strength of the Bangladesh economy, it said.
The eighth five-year plan period covers the mid-way journey towards attaining the goals and targets of the SDGs by 2030. The issues of inclusiveness and equity and leaving no one behind must be prioritised in the plan document.
The CPD also urged for forming a multi-stakeholder task force for monitoring the delivery of the Covid-19 liquidity support packages and evaluating their effectiveness.
For inclusive growth and to address the Covid-19 pandemic related vulnerabilities, economists also put emphasis on the social safety net and government investment.
Due to the public health crisis, poverty and vulnerability have increased among those who used to work in the services sector and informal sector in urban areas, said Zahid Hussain, a former lead economist of the World Bank’s Dhaka office.
The government should focus on the health sector so that it can provide vaccines to 70 to 80 per cent of the population and pharmaceutical intervention is very important here.
“For economic recovery from the pandemic fallout, everyone has to be included in the process. It is not possible to face the crisis with only monetary support and that is why the focus should be given on the fiscal policy.”
Hussain also urged the government to increase investment in the social safety net programmes.
Increasing revenue to GDP ratio, employment generation and attracting investment from home and abroad will be a big challenge for the government, the speakers said.
Planning Minister MA Mannan was the chief guest at the event.