Currently tariffs make up 30-35% of our tax revenues. As part of LDC graduation, we would need to reduce tariffs across the board. I don't like taxes as much as the next guy but we're currently amongst the lowest taxed countries in the world. What taxes should we increase to finance the government after 2026-27? My preference would be property/land taxes and fiscal decentralisation.
> Genuine banking and capital market reform would allow for a deeper pool of financing source for the budget deficit as well options for households to channel their savings into productive investment. However, this does not appear to be on the cards.
Can you do into detail what some of the necessary banking and capital requirements involve? The first thing that comes to mind are the BSEC and ICB's interference in stock prices.
The subsidies expenditure should be short lived in my estimation. Subsidies normally come down during the middle of the term and expand around election season.
To push down debt to gdp ratio and reduce domestic interest rates, a wave of privatisations would be super helpful. Sugar and jute mills remain the low hanging fruit. Then comes Telecom, power plants and oil refinaries. After that airlines and ports.
The rise in subsidies is driven by PDB. This is a structural problem, not likely related to the political cycle. Agree that privatisation would help, not just to keep debt-GDP ratio down but also with long-term growth. But the underlying politics means I just don't see it happening any time soon.
I'm pretty hopeful at least for the energy front. I think electricity privatisation would end up being a bottom decision instead of a top down policy. Mostly because of the falling cost of solar + electrochemical/thermal batteries.
The only way the government would have prevented the rise of solar was by subsidising existing power generation systems. But due to the IMF programs most of the subsidies should go away by 2026-7. The lowering of subsidies will motivate businesses to lobby government for power sector reforms like direct PPAs like in the case of Vietnam. (https://www.pv-magazine.com/2024/07/05/vietnam-opens-energy-market-to-bilateral-ppas/).
Unfortunately it will take a while before electric heating outcompete natural gas heating. At least 5-8 years depending on the jurisdiction.
Currently tariffs make up 30-35% of our tax revenues. As part of LDC graduation, we would need to reduce tariffs across the board. I don't like taxes as much as the next guy but we're currently amongst the lowest taxed countries in the world. What taxes should we increase to finance the government after 2026-27? My preference would be property/land taxes and fiscal decentralisation.
> Genuine banking and capital market reform would allow for a deeper pool of financing source for the budget deficit as well options for households to channel their savings into productive investment. However, this does not appear to be on the cards.
Can you do into detail what some of the necessary banking and capital requirements involve? The first thing that comes to mind are the BSEC and ICB's interference in stock prices.
The subsidies expenditure should be short lived in my estimation. Subsidies normally come down during the middle of the term and expand around election season.
To push down debt to gdp ratio and reduce domestic interest rates, a wave of privatisations would be super helpful. Sugar and jute mills remain the low hanging fruit. Then comes Telecom, power plants and oil refinaries. After that airlines and ports.
The rise in subsidies is driven by PDB. This is a structural problem, not likely related to the political cycle. Agree that privatisation would help, not just to keep debt-GDP ratio down but also with long-term growth. But the underlying politics means I just don't see it happening any time soon.
I'm pretty hopeful at least for the energy front. I think electricity privatisation would end up being a bottom decision instead of a top down policy. Mostly because of the falling cost of solar + electrochemical/thermal batteries.
The only way the government would have prevented the rise of solar was by subsidising existing power generation systems. But due to the IMF programs most of the subsidies should go away by 2026-7. The lowering of subsidies will motivate businesses to lobby government for power sector reforms like direct PPAs like in the case of Vietnam. (https://www.pv-magazine.com/2024/07/05/vietnam-opens-energy-market-to-bilateral-ppas/).
Unfortunately it will take a while before electric heating outcompete natural gas heating. At least 5-8 years depending on the jurisdiction.