THE World Bank on Thursday suggested that Bangladesh needs quick reforms to sustain the growth momentum which has landed it among the five fastest growing economies in the world. The WB tipped the Bangladesh economy to grow at 7.3 per cent this fiscal year, which, however, is lower than the prediction of the government (8.13 per cent) and the Asian Development Bank (8 per cent). Bangladesh faces several short and long-term development challenges: banking sector vulnerabilities, revenue shortfall and pressure on foreign exchange reserves. The banking sector is now struggling with non-performing loans, and private sector credit growth has slowed down.
At the end of last year, the banking sector’s total NPLs stood at Tk 93,911 crore, up 26.38 per cent year-on-year. Last year, the central bank approved loan rescheduling of Tk 20,000 crore. Despite these wholesale approvals of loan rescheduling, default loans are increasing. The domestic revenue mobilization of the country is well behind the target so far this year. In the first six months of fiscal 2018-19, the revenue growth was only 6.4 per cent higher than the corresponding period of the previous year — the smallest in recent memory. It is seemingly impossible to do development expenditure without increasing revenue.
Bangladesh’s growth outlook remains stable and strong, thanks to the stable macroeconomic front and export-oriented industry-led growth. Sound macroeconomic policies — such as keeping the budget deficit below 5 per cent of the GDP — and resilient domestic demand have led to growth in manufacturing and construction industries on the supply side. After a modest performance last year, export earnings and remittances have bounced back, helping the rural economy to grow faster. To sustain growth, the banking sector should undergo reforms and good governance practice. True autonomy of Bangladesh Bank should be vested thus it can regulate the financial sector and the State-owned Banks. Also, reforms in governance and bureaucracy are needed to sustain growth. The growing disparity between extremely poor and rich should also be addressed immediately.
It doesn’t need to say by the WB; we also know that-most of the big loan defaulters are not sincere enough to repay their loans despite getting several facilities from the government. They must leave such bad attitude.
At the end of last year, the banking sector’s total NPLs stood at Tk 93,911 crore, up 26.38 per cent year-on-year. Last year, the central bank approved loan rescheduling of Tk 20,000 crore. Despite these wholesale approvals of loan rescheduling, default loans are increasing. The domestic revenue mobilization of the country is well behind the target so far this year. In the first six months of fiscal 2018-19, the revenue growth was only 6.4 per cent higher than the corresponding period of the previous year — the smallest in recent memory. It is seemingly impossible to do development expenditure without increasing revenue.
Bangladesh’s growth outlook remains stable and strong, thanks to the stable macroeconomic front and export-oriented industry-led growth. Sound macroeconomic policies — such as keeping the budget deficit below 5 per cent of the GDP — and resilient domestic demand have led to growth in manufacturing and construction industries on the supply side. After a modest performance last year, export earnings and remittances have bounced back, helping the rural economy to grow faster. To sustain growth, the banking sector should undergo reforms and good governance practice. True autonomy of Bangladesh Bank should be vested thus it can regulate the financial sector and the State-owned Banks. Also, reforms in governance and bureaucracy are needed to sustain growth. The growing disparity between extremely poor and rich should also be addressed immediately.
It doesn’t need to say by the WB; we also know that-most of the big loan defaulters are not sincere enough to repay their loans despite getting several facilities from the government. They must leave such bad attitude.
