Research and Policy Integration for Development (RAPID), a private think tank, has identified a significant shortfall in policy direction in the proposed budget for the financial year 2024-25.

Despite the government’s intention to confront macroeconomic challenges, RAPID Chairman MA Razzaque pointed out the lack of explicit policy guidance in addressing these issues.

During a discussion hosted by RAPID at the National Press Club in Dhaka, Razzaque observed that while the budget speech acknowledges challenges such as the imperative to curb inflation and recognizes Bangladesh’s strong GDP growth, specific policy measures to achieve these objectives are conspicuously absent.

Razzaque highlighted that the proposed budget sets ambitious targets, aiming for a GDP growth rate of 6.75 per cent in FY25 while targeting inflation reduction to 6.5 per cent.

However, he expressed concerns that such growth targets could aggravate inflationary pressures, particularly given potential currency depreciation and stringent import controls.

Furthermore, RAPID’s analysis suggests that achieving Bangladesh’s goal of attaining upper middle-income status by 2031 hinges on maintaining a 6 per cent GDP growth rate, lowering inflation to 5.4 per cent, and stabilizing the currency.

Razzaque criticized the unrealistic private investment target of 27.3 per cent, citing the current high average bank lending rate of 14.5 per cent as a barrier to achieving this goal.

Addressing three critical challenges—sluggish export growth, a growing financial account deficit, and declining remittance inflows—Razzaque argued that the proposed 37 per cent growth in revenue earnings is overly optimistic given the current economic conditions.

During discussions on the proposed budget, Mashiur Rahman, economic affairs adviser to the prime minister suggested easing the duty burden on imports of unprocessed foodstuffs as a measure to combat inflation.

Additionally, Mashiur advocated for agricultural subsidies, citing increased productivity as a rationale for this support.

Addressing Bangladesh’s LDC graduation, he urged setting targets for signing trade agreements with major business partners and stressed the importance of enhancing tax officials’ efficiency to boost revenue collection.

He also highlighted the necessity of formulating policies that combine knowledge and experience to navigate evolving global scenarios.

Shams Mahmud, director of BGMEA, expressed reservations about the proposed budget’s potential impact.

Despite readymade garments and textiles being Bangladesh’s main exports, Mahmud noted that sector-specific issues were overlooked in the budget.

He highlighted the European Union as Bangladesh’s largest apparel market and underscored the absence of policy measures aligning with the EU green deal in the budget proposals.

Mahmud also discussed the challenges posed by Bangladesh’s graduation and the need for double-stage transformation for RMG to obtain GSP plus in the EU market, pointing out limitations due to a severe shortage of gas.

He urged the government to craft policies grounded in reality to stimulate investment interest in the country.

Binayak Sen, director general of the Bangladesh Institute of Development Studies, emphasized the importance of reducing public sector borrowing from banks to facilitate private sector investment crucial for Bangladesh’s aspiration to become a manufacturing nation.

He proposed providing subsidized food items to workers in industrial zones managed by the Trading Corporation of Bangladesh and advocated for withdrawing duties on essential commodities to curb food inflation.

Sen praised the proposed budget as industry-friendly.

Ashraf Ahmed, president of the Dhaka Chamber of Commerce and Industry, cautioned against overly stringent measures to control inflation, asserting that high growth would be unattainable without moderate inflation.

He warned that excessive tightening could precipitate an economic recession.

The event was moderated by RAPID executive director M Abu Eusuf, underscoring the importance of informed policy-making in navigating global economic shifts and local challenges.