Tk 1.2tr revenue shortfall feared
Economists suggest expansionary health, monetary policies
Economists fear a Tk1.2 trillion revenue shortfall in the current financial year following the outbreak of Coronavirus in the country.
However, they suggested an expansionary health and monetary policy for both public safety and protecting the economy from potential disaster.
At this moment it is important to allocate more money for health sector than the amount projected in the current budget and take other measures to save business, export and industries, they said.
After the global Coronavirus (COVID-19) pandemic situation there appeared to be risks on several economic components, said Professor Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD).
Mustarizur Rahman made the comments while talking to the Daily Observer on Thursday.
He said budgetary allocations should be increased in the areas infected with the COVID-19 virus to save people's lives.
They, in particular, stressed the production and distribution of medicine, improvement of health services and availability of medical instruments and support to health professionals.
He said in view of the COVID-19 emergency, it is important for Bangladesh to be appropriately ready for preparedness with higher emergency allocations and it is also important to tackle the future macroeconomic instability.
The economist said higher demand for cash incentives in the wake of COVID-19 may put additional pressure on the budget.
The revenue shortfall may be an amount of Tk1.2 trillion (6 per cent of the gross domestic product, GDP).
The government has already withdrawn duty on import of several health related and other commodities, lower corporate tax due to slowdown of the economy and other factors.
He said under this circumstance it is to be accepted to all.
Prime Minister Sheikh Hasina has already declared an amount of Tk50 billion package help for salaries of export-oriented sectors' workers and other additional measures have already been taken to face the challenges arisen out of Coronavirus outbreak.
Dr Mirza ABM Azizul Islam, a former caretaker government adviser, said the economy as a whole would be affected at micro and macro level.
He said the government along with tackling public heath should be cautious in managing the declining economic growth.
He, referring to Asian Development Bank's estimation, said the GDP would fall by 1.1 per cent and said along with foreign currency inward local manufacturing units would also be affected due to supply crunch of raw materials and declining domestic market.
The noted economist said social protection and safety net is an urgent issue at this moment. The government supports and helps should be provided to genuinely affected people and entrepreneurs.
The government initiatives to offer special packages and other facilities may increase banks' liquidity for a certain time but in the long run banks would face a challenge.
He said the upcoming budget must contain the existing slowdown and it should focus on health safety as its first priority with its available resources where revenue shortfall is becoming an important issue at this moment.