Staff Reporter :
The government needs to focus on lowering the interest rate of national saving tools, and adjustment of fuel price and exchange rate to sustain the economic growth for the fiscal year 2016-17.
The Center for Policy Dialogue (CPD), a civil society think-tank, came up with the recommendations at a press conference in the city on Saturday.
The briefing was organised to release its report titled “The State of the Bangladesh Economy in FY 2016-17 (First Reading). CPD also stressed the need for reform in banking sector, local government and public investment towards economic sustainability.
Presenting the report, CPD research Fellow Towfiqul Islam Khan said that they had analysed the strength and weakness of the country’s macro economy and handed observations on mitigating various forthcoming challenges.
He said, the robust GDP growth and rebounded investment in FY2015-16, low inflationary pressure, rising foreign exchange reserve, manageable fiscal deficit, and positive outcome in the capital market are now comfortable spaces for Bangladesh economy in FY 2016..
He, however, said the financing mix of the budget deficit based on sales of saving tools, rising non-performing loans, weak governance amid new scams in banking sector, inadequate capital adequacy ratio, and lower remittance inflow are the major areas of concerns for this fiscal year.
Towfiqul Islam identified the robust GDP growth and rebounded investment in FY2015-16, low inflationary pressure, rising foreign exchange reserve, manageable fiscal deficit, and positive outcome in capital market as the comfortable spaces for Bangladesh economy in FY2106-17.
On the other hand, the financing mix of the budget deficit based on National Savings Bond sale, rising non-performing loans (NPL), weak governance amid new scams in banking sector, inadequate capital adequacy ratio (CAR) and lower remittance inflow are the major concerning areas of this fiscal year.
“The government will go for a big revision of its fiscal framework for the current fiscal year due to revenue shortfall and unsatisfactory performance in ADP implementation,” said CPD distinguished fellow Dr Debapriya Bhattcharya.
He said every year a highly ambitious fiscal framework is proposed which is later revised but the actual realised figures are nowhere near the original targets.
“We will see no exception of this trend in this year also due to resource scarcity and unattained revenue targets,” he said.
CPD in its report projected a revenue shortfall of Tk 40,000 crore for the current fiscal year.
Dr Debapriya Bhattcharya also suggested the government to cut interest rate on savings tools and fuel prices, and keep a market-based exchange rate to maintain the fiscal discipline.
CPD Executive Director Mustafizur Rahman and Additional Research Director Khondaker Golam Moazzem also spoke on the occasion.
