THE World Bank has said that this year’s proposed national budget was bigger than the government’s implementation capacity. Although the budget had some positive aspects as the government included some commitments to eradicate poverty and increase growth, however, the size of the annual development program is too large taking the government’s implementation capacity into consideration. Especially, under the assumed situation like weaknesses in investment, problems in readymade garment sector and the constant threat of political instability, it is an ambitious target. The WB also identified inadequate infrastructure, shortage of land, electricity and other utilities as impediments to private investment as indigenous problems in the economy.
The WB also raised questions about the government projection of GDP growth for the current fiscal year at 6.12 per cent saying that there was no justification of such a projection of higher growth taking the overall economic and political situation in the year into consideration. WB held that the government would have to increase the investment ratio by 5 percentage points within a year to achieve the proposed GDP growth target which has never happened in the history of the country. WB officials also said that achieving the proposed gross domestic product growth target at the rate of 7.3pc would be challenging for the government under the existing investment condition. WB thinks that, it would be a great achievement for Bangladesh if its economy grows by 6.5 per cent in the next fiscal year.
It is well-known that the Finance Ministry revises ADP at the second half of the fiscal year so as to show bigger implementation. At the same time, ADP at the beginning is inflated to hyperbole and to fan the flame of political rhetoric. From an economic point to view this is not only nonsensical but also problematic for the overall calculation and thus development of the economy. We urge the Finance Ministry to revise the ADP according to the capacity at the very beginning of the FY.
Also, as opined by WB and other economists, the achievable ADP is only achievable if the country’s political situation has remained stable. So, if the government does really care for the development of the economy, it must ensure a business friendly stable situation.
Another key point emphasized by WB is that Bangladesh should increase the share of investment in the composition of GDP by reducing the high dependency on consumption based GDP. Otherwise, growth will not be sustainable for a long time and economic maturity will not be achieved where consumption contributes more than 80 per cent. In order to achieve these goals government should ensure economic governance along with political and policy stability for attracting private investors. And the government should ensure that private investment would not be hampered due to its excessive borrowing from the banking sector. At the same time government should take action against loan defaulters and dissolve the Board of Directors of BASIC Bank to prevent scam in the state-owned banks. The government should also ensure good governance in the state-owned banks and automate financial reporting in those banks.
