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Issue 03

October 2018

Two articles in this issue of Policy Insights portray public expenditure management challenges arising from two separate developments. First, the cover article shows the rapid growth in government budget on pensions and gratuities for retiring employees in the public sector. The cost of the currently unfunded pension scheme could soon spiral out of control and is surely unsustainable. There are many countries – both developed and developing – are grappling with rising pension costs, causing severe pressures on their public finances. Defusing this ticking time bomb is challenging but passing it on to the next generation is no option. Then, the potential financial burden of fuel oil subsidies – the focus of the other article – is another fiscal sector challenge that must be dealt with now. Future demand for energy is going to grow rapidly as Bangladesh’s per capita energy consumption is amongst the lowest in the world and the growth momentum must continue. While there is no oil subsidy now, rising international prices and any exchange rate adjustments may unleash sudden pressures on public finances in the absence of reforms in the energy sector.

Boosting export response from non-apparel sectors has proven to be a huge challenge for Bangladesh. One article in this issue asks for ending all discrimination in policy support between apparel and other sectors in promoting export diversification.

As climate change-related financing is becoming increasingly prominent, there must be a proper governance structure to oversee the management and use of these funds. In this respect, an article in this issue stresses the role of finance professionals in some key specific areas. Other articles included considering if special economic zones can promote regional inclusivity; what Bangladesh can learn from East Asia’s decentralisation experience; how to deal with Dhaka traffic woes; and the potential of blockchain technologies in reshaping public services delivery.