It is difficult to put a finger on the Bangladeshi budget. There are aspects that are exhilarating – almost Utopian. 13.4% commitment to education. Over 6% to medical health. About the same amount to Health and Nutrition. And yet…

It is difficult to be excited when almost half your budget is based on loans and aid. When the supposed success of one program so ties the nation’s economic policies that it becomes claustrophobic. This is especially true in Bangladesh where almost every program for focusing on the economic dimension of empowerment is tied to micro-credit.

With an estimated revenue for ’04-’05 of $7 Billion and an expected expenditure of $10 Billion, the budget deficit is 4.2% - acceptable levels for ‘developing countries’. The expected revenue is 16.7% higher than last year. There has been 5.52% growth in GDP over the last year compared to 5.2% the year before. Exports have grown to 14.7% and imports to 15.4% (compared to 6.2% and 7.4% respective in 2002-03). Foreign reserves are at $2.6 Billion, up from $1 Billion in October ’01. Foreign investment has increased by 32% in the last year. Remittances from expatriates increased by 11.4% taking that account to about $350 Million. This government aims to achieve 7% growth in GDP by 2007-’08, while maintaining budget deficit at 4.2% and annual inflation at 4.5%. The government believes that through such a plan, massive employment generation will be achieved that can reduce poverty (currently at 49.8%) by half, eradicate extreme poverty, provide quality primary education to all, maintain gender equality in primary and secondary education and reduce infant and maternal mortality rates and malnutrition.

The budget presentation focuses clearly on social development programs – on education, health and poverty. 40% of this budget is earmarked for the Annual Development Program. This along with a long term vision of poverty alleviation does present political willingness to tackle the problems and an intent to develop a road map for the same. A nation that boasts of 97% primary education – among the best in the ‘developing world’ – is on that path. While one could quibble about quality of education and the education programs, very few budgets could boast of such commitment to education with $1.3 Billion earmarked for education. Most of this is to be spent on teachers, books, classrooms and scholarships in primary and secondary education. $0.75 Billion is to be earmarked for medical health with new professional trained and new medical colleges and health institutes being planned. Implementation of a three year Health, Nutrition, Population Sector Program started with an outlay of $1.8 Billion will also aim to provide health service to the country and lower mortality rates by 75%.

In addition, numerous agricultural loan programs have been reduced or waived. In addition, the agriculture development budget is estimated at $0.35 Billion for research, training, conservation of seeds, irrigation and other development programs. Agricultural subsidies are raised from $20 Million to $60 Million with an expectation to double it in the next financial year. $0.2 Billion has been earmarked for irrigation projects, water management, and crop protection in areas prone to floods. Numerous programs are proposed to help fisheries, livestock, provide for rural infrastructure building (which will also provide for rural employment), and improved welfare programs for the old, destitute, and those affected by natural calamities as well as for increased pensions, low cost housing and food for work programs. Through these development plans, focus has been explicitly given to women’s issues. Money totaling about $1 Billion has been earmarked for building of roads, railways and bridges.

Credit needs to be given to the Bangladeshi government for focusing a significant part of its budget on its mainstay – the agricultural community. However, unanswered question remain. While the budget seems strongly focused on reducing poverty, and providing the people of Bangladesh with support for economic empowerment, it is not clear how these programs will be funded and hwy the current process of funding will not actually increase poverty. For one, most programs of employment generation are driven via the micro-credit model. Even if we stay oblivious to the problems of micro-credit programs (and there are many), it is not clear how a nation that currently bases 45% of the finances for its development program on foreign funding can envision poverty abatement – unless of course it is dependent on the goodwill of funding agencies and economic institutions. There are few programs in revenue generation and they are based on the textile and the cottage industries. While the government recognizes that with the phase out of the Multi Fiber Agreement and the beginning of WTO, the textile industry will also suffer, it presents few alternatives.

An economic plan based on optimism regarding the goodwill of economic institutions is unfounded. With increasing shift in balance of trade and external debt, it is difficult to see how these institutions will not attempt to influence internal policies regarding opening up of social sectors, end of subsidies to farmers and the diary industry as well as in the health care sector to ensure increase profits for themselves. Unlike the budgets of other developing countries in the region, neither the policies, nor statements from the government seem to recognize this looming trap. How the government is able to balance policies that are strongly pro-people with pressures from these institutions will define the future economic state of Bangladesh.

Another aspect of Bangladeshi development programs that stand out in the analysis of this budget is the dependence on the Non Government Organizations in this process of development. For one, the NGO sector also provides for a significant amount of employment in Bangladesh. However, it is a sector – unlike the government, which is elected – that is not accountable to the people of Bangladesh. The politics within this sector, the dynamics of its interactions and the focus of their work (as with any NGO sector) are driven by their own financial and personal needs. There are questions, then, regarding the efficacy of administration through NGOs, especially in a democracy – questions that the Bangladeshi government has largely ignored. This is another aspect that will certainly affect the future of Bangladesh – how it does is still not clear.