FROM PAGE B4

The war and the dragging pandemic have sent the prices of commodities and everyday items to a new high as the global supply chain has received a renewed blow. As a result, inflation is rising to record levels in many countries.

“Inflation has had an impact in many countries. It is bound to have an impact on Bangladesh,” said Sen.

Inflation in Bangladesh rocketed to a 17-month high in March driven by higher food costs.

The economist thinks that the war can create a crisis related to the prices of oil, gas, metals, fertilizer, wheat and other foodgrains.

“So, there have to be some block allocations by taking this situation into account. There has to be additional allocation to tackle the fallout stemming from the war and any new wave of coronavirus. We have to put in place institutional preparedness to meet up those contingencies.”

Sen was also asked about the country’s perennial failure of implementing budgets in their entirety.

One way to encourage public spending, he advises, would be to decentralise public spending by increasing block allocations for the lower-tier governments such as union councils and municipalities.

“The upcoming budget should focus on raising the spending capacity of the local government to reduce the pressure on the central government. We will have to rely more on the local governments.”

To start with, 10 per cent of the budget should go to the local governments. “We have to create scopes for them to spend. This will help them use funds when they are needed. Otherwise, if we continue relying on ministries, the allocation will not be utilised.”

He called for increasing the spending capacity of the implementing agencies.

According to Sen, expenditure may shoot up to meet the contingency needs amid higher oil prices. And the budget deficit will widen too as revenue generation may face shortfall and export earnings may not be at the expected level.

“However, there is no need to panic since Bangladesh’s budget deficit has not gone out of control.”

As the possibility of another coronavirus wave can’t be ruled out, Sen suggests Bangladesh focus on the health sector particularly.

“We need to analyse the drawbacks in order to find out why we are not being able to use the allocation for the sector properly and where reforms are needed.”

Sen urged the government to pay special heed to bring in institutional reforms in some key areas such as health and social protection, instead of just raising allocations.

He warns that the number of people queueing for support from social safety net schemes such as the operation run by the Trading Corporation of Bangladesh, which sells some essential goods at subsidised rates, may go up.

“Some funds have to be allocated for these people. But what is even more important is to reform the social safety net sector so that the people who need the support get it.”