Coordination between fiscal and monetary policy required to ensure macroeconomic stability

Former Governor of Bangladesh Bank and Unnayan Shamannay Chair Dr. Atiur Rahman considers the proposed budget for FY 2023-24 to be a reformist and optimistic one. He argues that the BDT 5,000 billion revenue target and the intention of containing inflation within 6.5 percent- both are challenging. Yet, there was no alternative to taking this challenge- he opined. He further added, “Coordination between fiscal and monetary policy is of critical importance to ensure macroeconomic stability.” He said so today (Saturday, 03 June 2023) at Unnayan Shamannay’s post-budget media session held at the Khondoker Ibrahim Khaled Conference Room of the organization head office. Eminent sociologist and Unnayan Shamannay’s Emeritus Fellow Khondoker Shakhawat Ali chaired the session, while the organization’s Lead Economist- Robart Shuvro Guda, and Senior Research Associate- Shahnaz Hira were present as Panel Discussants.

While presenting the keynote Dr. Atiur pointed out that the budgetary initiative to raise the tax-free income ceiling from BDT 300 thousand to BDT 350 thousand may be expected to ease the burden of some citizens already under pressure due to inflation. However, certain other tax proposals such as- raising the property tax limit for the rich from BDT 30 million to BDT 40 million, increasing tax on foreign trips of workers and students- should be reconsidered. Dr. Atiur believes- the provision of mandatory BDT 2 thousand return for the non-taxable TIN-holders may contribute towards building a tax culture in Bangladesh. However, he warned that this must not be used as a tool to harass potential taxpayers. Robart Shuvro Guda pointed out that in the proposed budget- no allocations have been made for new social security programs and emphasized on the demand for initiating new programs in both rural and urban areas. He further pointed out that at present- of the total beneficiaries of the social security program only about 25 percent belong to the lowest income group. Shahnaz Hira said that not increasing health budget allocations citing lack of budget implementation efficiency as an excuse is increasing the out-of-pocket health expenditure. She suggested through increasing allocations for free-of-charge medicine supply and for employing health professionals at rural healthcare facilities, government can reduce the out-of-pocket health expenditure of rural primary healthcare-seekers from 68 percent to 50 percent.