The Centre for Policy Dialogue (CPD), one of the country’s leading think tanks, on Sunday projected a GDP growth rate of 2.5 percent - the lowest in almost 30 years - for the Bangladesh economy in the 2019-20 fiscal, as most of the sectors contributing to GDP were hit hard by the coronavirus pandemic.
The organisation disclosed the projection at a virtual briefing on “Challenges of Policymaking in Times of Pandemics: State of the Bangladesh Economy in FY2020”.
CPD also forecast that the country’s poverty rate may soar back up to 35 percent due to the impact of the lockdown imposed to fight COVID-19, meaning 35 percent of the population would be living below the poverty line in Bangladesh.
CPD Executive Director Fahmida Khatun said the government is going to announce a different budget in the context of the pandemic this year. “So, the government must come out of the traditional practice of a 5 percent budget deficit,” she said.
The economist added that the big challenge will be financing the budget as revenue generation would face a huge shortfall.
“We’ve to prioritise health, social protection, agriculture, and employment generation in the budget for 2020-21. The allocation for health sector should be 2 percent of GDP and the target should be increased to 5 percent in the 8th Five Year plan considering the existing situation,” Fahmida added.
Khondaker Golam Moazzem, Research Director of CPD, said lengthy health risks will prolong the problems of economic recovery in the country.
“The economic recovery will depend on appropriate policy and implementation of the policy. Opening economic activities without proper plans and preparations amid the situation will have an impact on the economy,” he added.
Moazzem suggested raising the tax-free income threshold levels from Tk2.5 lakh to Tk3.5 lakh in the budget for 2020-21 that will be placed on June 11 in parliament.
The economist also urged the government to look for additional funding from external sources for economic recovery.
The government announced the general holidays from March 26 up to May 30 in phases after confirmed coronavirus cases and deaths were reported in the country.