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Press reports on State of the Bangladesh Economy in FY2015 and the Closure of Sixth Five Year Plan

held at CIRDAP Auditorium, Dhaka on Monday, 1 June 2015, the media briefing to release the report “State of the Bangladesh Economy in FY2015 and the Closure of Sixth Five Year Plan,” was prepared as part of CPD’s Independent Review of Bangladesh’s Development (IRBD) programme.

View more news reports on the event

 

Published in The Financial Express

CPD vents scepticism about quality of national data
Suggests formation of National Statistical Commission

FE Report

The Centre for Policy Dialogue (CPD) said Bangladesh’s data production on important indicators, including GDP calculation, is now widely criticised out of scepticism about its authenticity.

GDP (gross domestic product) growth does not reflect the reality and data of resource mobilisation by the National Board of Revenue (NBR) do not match with that of the finance division, it categorically noted.

The policy think tank’s observations came at a media briefing arranged Monday to release a report styled ‘State of the Bangladesh Economy in FY2015 and the Closure of Sixth Five Year Plan’.

Executive Director of the CPD Prof Mustafizur Rahman conducted the briefing at the CIRDAP auditorium in the city.

The organisation listed five key areas where reform ought to be undertaken.

It said Bangladesh now needs to set up an independent commission to ensure quality of data, which are used nationally and internationally to assess the ground situation in the country.

Similar commissions for local government financing, public expenditure, financial sector and agriculture prices should also be instituted for maintaining transparency, accountability and good governance.

“An independent statistical commission is to validate the macroeconomic correlates,” it said about the vital corrective measure.

CPD additional director Khondaker Golam Moazzem said data-production system should be transparent as the GDP growth rate for the outgoing fiscal year does not match with the forecasts made by local and international organisations.

He said Bangladesh’s economy had not expanded so hugely during the first half of the current fiscal that it could compensate for the losses incurred in the third quarter (January to March) that witnessed one of the worst political troubles.

The think tank called upon the government to formulate separate law to deal with black money and benami (bought in other’s name) property, within and outside the country.

The CPD made the proposal after it found out that fiscal measures on ad-hoc basis for the whitening of black money had failed to bring undisclosed money and benami property back into the mainstream economy.

“It is now important to formulate a predictable legal framework where tax rate should be above the marginal rate,” Dr Debapriya Bhattacharya, distinguished fellow of the CPD, said at the programme.

“This kind of law is not rare in the world,” the economist added to underpin his point.

Neighbouring India enacted a Benami Transactions (Prohibition) Act in 1988, which has been amended this year, to put an end to such transactions, and to empower the government to recover such property.

Towfiqul Islam Khan, a senior research fellow at the policy outfit, presented the keynote on the topic.

The CPD distinguished fellow, Dr Debapriya Bhattacharya, underscored that the question is whether Bangladesh economy can reach its potential growth targets through enabling policies and congenial political environment in the years to come before 2021.

Observing the trends of public expenditure in recent budgets, he cautioned that the quality of fiscal planning had deteriorated over the last four years with the fiscal gap ever increasing.

In his keynote presentation, Mr Towfiqul Islam Khan introduced the IRBD report that mainly looked at macroeconomic management in FY2015 and outlook for FY2016, recent dynamics of rice price in Bangladesh, assessment of progress of fast-track projects and analysis of implementation of the sixth five-year plan (SFYP).

He mentioned that the Bangladesh economy was experiencing a number of macroeconomic advantages like lower inflation, declining interest rates, stable exchange rates, manageable fiscal deficit, positive balance-of-payments situation, augmented foreign- exchange reserves and low level of global commodity prices including that of oil.

Acceleration in private investment remained an illusive goal while NBR’s tax-revenue-collection growth was below target despite having import duty and supplementary duty collections on track.

The fiscal planning for FY2016 will require significant midterm corrections to achieve a realistic revenue target, noted Mr Khan.

 

Published in The Financial Express

Demand-supply mismatch of rice confusing policymakers: CPD

FE Report

The local think-tank, Centre for Policy Dialogue (CPD), in its latest observation said there is a mismatch between the data of demand and supply of rice which is misleading the policymakers to take timely initiatives.

The CPD at a press conference in the city said on Monday inefficiency from lack of competitiveness in the marketing of rice in Bangladesh is encouraging imports.

The private research organisation also suggested some policy measures which could address the concerns of the rice sector.

The observations came at a media briefing on releasing the report styled “State of the Bangladesh Economy in FY 2015 and the Closure of Sixth Five-Year Plan,” prepared as a part of CPD’s Independent Review of Bangladesh’s Development (IRBD) programme.

CPD Research Fellow Towfiqul Islam Khan presented the IRBD report that mainly looked at macroeconomic management in FY 2015 and outlook for FY 2016, recent dynamics of rice price in Bangladesh, assessment of progress of fast track projects and analysis of implementation of the sixth five-year plan (SFYP).

The report said the accurate measurement of demand-supply gap of foodgrains has remained elusive for policymakers in Bangladesh since available estimates based on BBS (Bangladesh Bureau of Statistics) data do not conform to the reality on the ground.

There has been sustained increase in rice production for the last two decades and Bangladesh achieved near self-sufficiency in rice production, it said.

However, the country was never in a position to export regular variety of rice, it said adding that she imports rice occasionally and wheat regularly to meet domestic demand.

“Several factors contributed to the inaccuracy in the estimates of ‘food gap’ (defined as total requirements not met by domestic production),” the CPD report said.

“These include, among others, ad hoc and inaccurate estimate of per capita consumption, persistent biases in the acreage (and hence production) estimates of foodgrains by seasons and lack of accurate population estimates by poor and non-poor categories and by place of residence (rural and urban areas) etc,” the report said.

Thus an unresolved paradox exists in the food economy of Bangladesh, it added.

The country has a surplus in terms of the availability of foodgrain if the current estimates of domestic production along with provisions of seed, feed and wastage are considered and estimated consumption based on the country’s population are taken into account.

Yet Bangladesh imports a significant quantity of foodgrains each year, indicating that the current estimate of food gap is probably erroneous.

 

Published in The Daily Star

Think-tank CPD finds ad hoc steps failed to bring black money into Bangladesh’s economy
CPD for law to curb black money

Staff Correspondent

The Centre for Policy Dialogue yesterday urged the government to formulate a law to bring into the mainstream economy black money and benami properties bought in and outside the country.

The think-tank made the proposal saying it found that ad hoc fiscal measures to whiten black money had failed to do so.

“It is now important to formulate a predictable legal framework where tax rate should be above the marginal rate,” Dr Debapriya Bhattacharya, distinguished fellow of the CPD, said at a media briefing at the Cirdap in the capital.

Debapriya said this in response to reporters’ queries on black money, capital flight and benami properties (bought in the name of someone else, not the one who financed it).

The CPD yesterday shared its independent review on Bangladesh economy for the outgoing fiscal year. CPD Executive Director Prof Mustafizur Rahman was also present there.

Debapriya said if enacted, the law would make the entire process transparent, and there wouldn’t be any need to ponder over the issue of money whitening every year.

In its 2014 report, Washington-based Global Financial Integrity cited that $13.16 billion (Tk 102,648 crore) was illegally moved out of Bangladesh between 2003 and 2012.

Explaining why such a law is needed for Bangladesh, Debapriya said anti-money laundering measures were not giving solutions to the issues of capital flight and overseas investments by Bangladeshis. Besides, the National Board of Revenue doesn’t have any mechanism to find out about the properties of Bangladeshis outside the country.

The law must ensure that the life of an honest taxpayer gets easier, and those who want to disclose untaxed money and benami properties can do so without any hassle, he said.

The economist said if one didn’t disclose black money, super tax rate (two or three times the usual rate) should be imposed on them.

Referring to benami properties, he said if the real owner didn’t disclose it, the person against whose name it had been bought should be made co-owner of the property.

This type of law is not rare in the world. Neighbouring India enacted Benami Transactions (Prohibition) Act in 1988, which was amended this year to put an end to such transactions, and empower the government to recover such property, he said.

 

Published in New Age

Enact new law to streamline undisclosed money: CPD

Staff Correspondent

Centre for Policy Dialogue on Monday suggested for enactment of a law aiming at ensuring declaration of undisclosed money and hidden assets shown by tax dodgers in other names.

It is an urgent need, said CPD distinguished fellow Debapriya Bhattacharya while focusing on existing facility on legalising undisclosed money and growing capital flights from the country.

CPD, a non-government local think-tank, was releasing a review report on the country’s economy in the city’s CIRDAP auditorium, days before the announcement of the national budget by finance minister AMA Muhith in parliament on Thursday

CPD also suggested for appointment of commissions on the banking sector, national accounting and agriculture alleging that there were lots of confusion with data on growth in gross domestic products, default loans and collection of tax by the government agencies.

They, however, welcomed a belated move by the Bangladesh Bank to examine bill of entries of some identified items whose imports made a sharp rise in recent times despite sluggish private investment.

CPD has been suspicious over the imports growth saying that capital flight might be taking place through over-invoicing.

Moderated by CPD executive director Mustafizur Rahman, the economists said still there was a lack of confidence among the businessmen although there was political stability and better outlook of the macro-economy.

They said the country’s economy had scopes to grow further with the improvement in service delivery by the government agencies. The public private partnership initiative was almost off track, they observed.

They said reform in many areas had been stalled after 2012 which eventually pushed up losses of the state-owned enterprises.

CDP suggested for price hike of gas and electricity and keeping the price of petroleum fuel oils unchanged.

Focusing on existing facility for undisclosed money and growing capital flight, Debapriya said there should be at least medium-term plan to check proliferation of such money. He said enactment of a law would help bring in undisclosed money and hidden assets in the mainstream economy.

Such move will also help mobilise higher revenue, he said, adding that the government should slap tax on assets inherited by persons from their predecessors.

He underscored the need for strong political will to enact the law saying powerful quarters in the ruling party and outside the party might resist the move.

CPD said 6.5 per cent growth in gross domestic product in the outgoing fiscal year assessed by the government was questionable.

Kandakar Golam Moazzem, additional research director of the think-tank, said they assessed economic losses at 0.4 percentage point due to three-month long political unrest.

The World Bank assessed the losses at around one percentage point.

Moazzem said they had no data about extraordinary growth in the first nine months of the fiscal year which could offset the losses.

 

Published in The Financial Express

CPD for offloading shares of SoEs in capital market
FE Report

Centre for Policy Dialogue (CPD) has suggested that the government should consider, among others, offloading shares of state-owned enterprises (SoEs), in the capital market to help achieve its revenue earnings target.

The leading private think-tank in its ‘State of the Bangladesh Economy in FY2015 and the Closure of Sixth Five Year Plan’ released Monday made the suggestion.

“To achieve a realistic revenue target, different measures, including the offloading of the SoEs’ shares, need to be undertaken,” said the CPD.

Meanwhile, the government has initiated a fresh move to offload shares of state-run more power entities in the capital market to raise funds for financing various development projects under the Power Division.

The decision was taken a meeting held on May 21 last at the power division under the ministry of the power, energy and mineral resources.

At the meeting, a committee was formed headed by Monowar Islam, Secretary of Power Division.

Representatives of securities regulator, stock exchanges, state-run investment corporation were also included in committee.

According to meeting sources, the committee will make a comprehensive work plan, including recommendations and submitted its report within 30 working days, meeting sources said.

 

Published in BSS

CPD for financial reforms to boost growth

BSS

Centre for Policy Dialogue (CPD) today said despite the hartals and countrywide blockade, Bangladesh is closing its financial year 2014-15 (FY15) with a number of microeconomic advantages.

The civil society think-tank in its quarterly report on “Bangladesh Economy: FY15” released today at a press conference at CIRDAP auditorium opined the country may bring some massive reforms in the upcoming fiscal taking the advantages of lower inflation, declining interest rate, stable exchange rate, manageable fiscal deficit, positive balance of payment, foreign exchange reserve and low level of global commodity prices.

“If the government carry-out substantial reforms in policy levels in the upcoming fiscal utilizing the stability of the economy, Bangladesh can easily move out from the average 6 per cent plus GDP growth,” said Dr Debapriya Bhattacharya, Distinguished Fellow of CPD.

He also stressed for political harmony for the sustainable economic growth of the country.

The CPD made the report under its Independent Review of Bangladesh’s Development (IRBD) Programme.

The think tank body recommended for forming five independent commissions for statistical, agriculture price, local government financing, public expenditure review and financial sector reform towards better macroeconomic management.

It also advocated for expediting the reform agendas such as public services act, PPP act, privatization, financial reporting act and others, which are being remained stalled.

Commenting on tax reform, Debapriya Bhattacharya said: “Boosting of tax revenue collection without institutional reform is not possible, rather the exercise of traditional style would impose more burdens on tax payer.”

He also opted for imposing of “inheritor tax” saying a person who doesn’t do any work should not be successor of any property without any tax.

The CPD distinguished fellow also urged the government to formulate a law regarding black money. “If there is any law about it, there will be a continuation of whitening the black money and regular scope of mainstreaming the undisclosed earning,” he added.

About the “fast tracked projects”, the CPD said out of six projects, four is on track and would be successful while the status of another two is conditional.

Replying to a query, Professor Mustafizur Rahman, Executive Director of CPD, put emphasis on increasing investment and productivity to attain the goal of “Vision-2021” envisaged by the government, as the country is still far behind of attaining the desired GDP growth.

He also suggested the government to ensure the maximum utilization of resources for highest outcome.

 

Published in bdnews24

CPD suggests law to tax black money

Staff Correspondent

The Centre for Policy Dialogue has suggested a law to bring undisclosed or black money under the tax net to increase revenue.

The private think-tank’s Distinguished Fellow Debapriya Bhattacharya made the suggestion at a function titled “Bangladesh Economy in 2014-15: Third Interim Review” held at the CIRDAP auditorium in Dhaka on Monday.

He said untaxed money needed to be brought under the mainstream tax net for an increase in revenue.

“That’s why a dependable mid-term policy is needed on undisclosed money, earned locally or from abroad.

“For that, a law to deal with dubious property can be formulated. Many countries have such a law,” he added.

A section of Bangladesh Income Tax Ordinance provides for legalising money not disclosed in tax returns by paying tax at regular rates with a 10 percent fine.

CPD Research Fellow Toufiqul Islam Khan was the key speaker at the event.

Executive Director Prof Mustafizur Rahman and researchers Khondaker Golam Moazzem and Anisatul Fatema Yousuf were present.

Dr Bhattacharya made several suggestions aimed at securing the maximum benefit from the agreements to be signed with India during Prime Minister Narendra Modi’s upcoming visit to Dhaka.

He said: “The motor vehicle agreement will be signed. Infrastructure has to be developed to benefit from it.

“We’ve heard that an inland water transit and trade agreement will be signed. Development of infrastructure is needed for that too.”

“What is needed more is to make it clear the benefit when Indian goods are transhipped through Bangladesh or when Indian goods will go to (another part of) India via Bangladesh.

 

Published in Daily Sun

Bring concealed assets under tax net: CPD

Monirul Alam

Bangladesh needs a special law to bring concealed income and assets at home and abroad under taxation in order to accelerate inclusive economic growth for equitable development, said Dr Debapriya Bhattacharya on Monday.

“Under this (proposed) law, a citizen must disclose his or her income and property at home and abroad. Otherwise, they should be highly penalised. Such a move may work to bring undisclosed assets to formal economy,” he noted.

The distinguished fellow at the Centre for Policy Dialogue made the observations at the launch of the ‘State of Bangladesh Economy in FY15’ of the private economic think tank at CIRDAP Auditorium in the capital.

Debapriya said many Bangladeshi citizens own and maintain assets in the names of their relatives or others else.

“Only a special law can curb this trend of concealing income and property. It may also be friendly to business and investment by creating a level-playing field and increase revenue for the government.”

The noted macro-economist and public policy analyst said absence of a law may deepen the crisis of huge capital flight out of the country, which ultimately hinders economic growth.

“We’ve seen over the years that budgetary move to whiten undisclosed or black money brings no success. We should come outof such initiatives. It’s not so easy to confront the holders of concealed income. But I’d say sort of stability exists in the country now and time is ripe to enact the law.”
Presenting the report, senior research fellow Tawfiqul Islam Khan said capital flight is taking place through over-invoicing the value of imports of some goods, including capital machinery like aircraft, compression ignition internal combustion piston engines and machines.

“The scope for capital flight is more in zero-duty imports. Since capital machinery import is duty-free, such scope here is much,” CPD Executive Director Prof Mustafizur Rahman pointed out. In India, a new black money bill passed by parliament this March made mandatory the disclosure of undisclosed property of citizens to realise tax with a provision of penalty on the basis of the current market value of the assets.

As per the law, The Hindu reported on March 22, undisclosed assets would include overseas property in the name of the assessee and those in which he is the beneficiary. Giving an illustration on how tax would be charged, ‘The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill 2015’ says tax liability on an overseas property would be computed on the basis of its current market price. However, Debapriya said property tax and tax on inherited property could also be new and prospective instruments to spur revenue as the government runs short of resources to implement annual development programmes and others.

He advocated that the government keep unchanged petroleum prices on the local market to give state-run BPC (Bangladesh Petroleum Corporation) some space so that it could pay back bank loans to minimise overdue loan liabilities. The economist said the subsidy policy needs to be reviewed.

Debapriya cited that the national economy is now a modern one in its characteristics and it holds prospects of much more growth than the current performance.

“We observed erosion in quality of fiscal planning as well as in the national planning on macro aspect that hindered growth,” he went on.
In his presentation, Tawfiq said farmers are being deprived of fair prices of their crops, especially that of Boro paddy for the last few years. “Its negative impact will be visible in economy immediately.” He added that the country has viability for sustainable growth subject to prudent fiscal planning and special care of the agriculture sector. “If policies are well on, the country for sure will graduate from LDC category by 2024.” CPD additional research director Khandaker Golam Moazzem also spoke.

 

Published in Dhaka Tribune

CPD study: 60% entrepreneurs agree money laundering taking place through banking system

Tribune Report

More than 60% large entrepreneurs strongly agreed that money laundering was taking place through formal banking system in Bangladesh extensively, according to a Centre for Policy Dialogue (CPD) survey.

Nearly 61% entrepreneurs feared that the investment environment could deteriorate further in coming days, said the survey made between January and April this year.

They (entrepreneurs) also mentioned that corruption, inadequate infrastructure, inefficient government bureaucracy, government instability and limited access to financing are the major impediments towards private investment.

CPD research fellow Towfiqul Islam Khan presented the survey report at a media briefing on State of the Bangladesh Economy in FY2014-15 (Third Reading) as part of CPD’s Independent Review of Bangladesh’s Development (IRBD) programme in the city yesterday.

Given the high interest on lending charged by the domestic banking sector, over 53% supported allowing foreign loans for private investment to a great extent.

The survey also revealed that 67.8% respondents possessed a rather pessimistic view as regards the ongoing initiatives to improve infrastructure in Bangladesh and 76.7% expressed doubt over the prospects of timely implementation of infrastructure projects.

“Much of the capital flight might occur through under-invoicing of capital machinery and those items with zero duty,” said CPD Executive Director Professor Mustafizur Rahman.

After analysing import shipment data of 30 items for July-March, the CPD like previous year indicated that the possibility of illicit financial flow through import of capital machinery was taking place.

It found that growth payments jumped abnormally 23% against capital machinery import during the first nine months of the current fiscal year.

This rise in imports of capital machinery failed to reflect in private investment, which is still perceived to be stagnating, it said.

The survey was also identified that 30 import items valued more than Tk100 crore witnessed 100% growth during the period.

More precisely, four of the items in categories of aeroplanes and other aircraft, compression-ignition internal combustion piston engines, and machines for treating metal including electric wire and transformers, showed very high growth in their value, it said.

 

Published in New Age

Revenue, investment, fair price for farmers key challenges: CPD

Staff Correspondent

Centre for Policy Dialogue executive director Mustafizur Rahman speaks at a report releasing programme in Dhaka on Monday. CPD distinguished fellow Debapriya Bhattacharya and research fellow Towfiqul Islam Khan were also present, among others. — New Age photo

Revenue growth, tapping more foreign assistances, sluggish exports in the US market, ensuring fair prices for farmers and accelerating private investment would be key challenges for the government in the new fiscal year.

The Centre for Policy Dialogue has identified the challenges in its review report on the country’s economy it released at a programme in the capital on Monday.

Moderated by CPD executive director Mustafizur Rahman, the programme was attended by CPD distinguished fellow Debapriya Bhattacharya and research fellow Towfiqul Islam Khan, among others.

Towfiqul said the government had already faced challenges to handle the issues in the outgoing fiscal year despite low level of inflation, stable exchange rate, positive balance of payment and falling commodities prices in the global market.

He said the challenges were going to define the benchmark for the new fiscal year to be started from July.

Since 2012 private investment has stagnated. Scenario remained unchanged after credit to the private sector stood 13.6 per cent until March 2015.

The imports of capital machinery until that period was impressive, but the local think-tank alleged that illicit fund flew outside the country through the import of capital machinery.

Towfiqul said CPD’s rapid business environment assessment survey revealed that investment climate could further deteriorate because of corruption, inadequate infrastructure, inefficient government bureaucracy, government instability and limited access to financing.

The CPD assessed that the revenue-GDP ratio would decline for the third consecutive fiscal year including the outgoing one because of a weak fiscal framework.

It noted that additional Tk 59,000 crore revenue collection over the actual revenue target in the outgoing fiscal year should be sought by the government.

The government is facing daunting task to revamp revenue mobilisation by widening the existing tax net and finding new sources, it added.

The CPD observed that major competing countries performed better than Bangladesh in terms of increasing their apparel exports during July-March of the outgoing fiscal year.

It also observed that illegal migration from the country should be stopped for the sake of legal migration since remittance helped the country in many ways.

Fair price of rice has been illusive for the farmers in the outgoing fiscal year due to import of rice from neighbouring country India.

The CPD noted that the government slapped additional duty but the farmers could not avoid big losses.

The think-tank suggested massive changes in rice procurement policy and subsidy payment system in the coming fiscal year to protect the sector that still employs largest workforce.

It noted that lack of utilisation capacity for foreign resources might remain a weak area.

It said dependence on domestic financing increased while utilisation of foreign loans and grants remained weak. It is important to give adequate attention to the infrastructure project by the foreign assistance, said CPD officials.

They said the government was facing another challenge due to falling prices of commodities including fuel oil in the international market.

A major challenge in the new fiscal year would be to take advantage of the declining trend in the global commodity prices and opt for more growth-friendly expansionary policy, they said.

 

Published in The Financial Express

Money laundering rampant through banking channel

FE Report

Many leading entrepreneurs believe extensive money laundering takes place through formal banking channel, mainly under cover of imports.

Such siphoning of money-best known as capital flight in terms of economics-might be done mainly through capital machinery imports or such other imports by means of invoice manipulation.

Centre for Policy Dialogue (CPD), a leading private think tank in the country, unveiled such findings at a programme held on Monday at the CIRDAP auditorium in the city.

Earlier in 2014, the CPD had indicated the possibility of illicit financial outflow through import of capital machinery. And, in the meantime, there have been reports on large amounts of money from Bangladesh being stashed into foreign banks.

The Centre conducted a survey involving 60 leading entrepreneurs as respondents through a well-devised questionnaire. It was styled ‘rapid business environment assessment survey’.

Based on the survey outcome, the think tank said some 62.5 per cent of the respondents believe that money laundering was taking place through the formal banking channels.

But the study stopped short of elaborating on what means the businesses follow to manage the banking system in taking the money out.

On a query, the policy research agency said this is actually just done on “perception basis”.

“The respondents are leading entrepreneurs of the country. Their views are based on their perceptions,” CPD fellow Towfiqul Islam Khan told the FE.

A major finding in the survey apprehended that the investment environment in the country could deteriorate further for some counter-productive factors.

Some 60.7 per cent respondents believe that the existing environment could deteriorate, and they identified five major reasons why.

These are: corruption in the public sector, inadequate infrastructure, inefficient government bureaucracy, government instability, and limited access to financing. The leading and established businesses were covered in the CPD survey, the Centre officials claimed.

Given the high interest on lending charged by the domestic banking sector, most of the survey respondents (53.5 per cent) supported allowing foreign loans for private investment to a great extent.

On a welcome note, the CPD said the central bank has started scrutinising bills of entry (BoE) received from commercial banks to unearth possible capital flight in the form of capital-machinery import.

 

Published in The Daily Star

Higher growth hinges on reforms: CPD

Star Business Report

The Centre for Policy Dialogue yesterday urged the government to boost reforms and set up five independent commissions for better management of the economy.

“The prevailing macroeconomic stability along with lower price levels will support such a plan,” the CPD said in its review of Bangladesh economy for the outgoing fiscal year.

The recommended commissions are for the areas of agriculture price, local government financing, public expenditure review, financial sector reform and a statistical commission to validate the macroeconomic correlates.

Towfiqul Islam Khan, a research fellow of the CPD, made a presentation on the report, while Debapriya Bhattacharya, distinguished fellow, Mustafizur Rahman, executive director, and Khondaker Golam Moazzem, additional research director, also spoke at a discussion on the report at Cirdap auditorium in the capital.

The CPD’s report on the economy was based on the data available for the first nine months of fiscal 2014-15.

“Bangladesh needs to carry out institutional and policy reforms fast, if it wants to go beyond the 6 percent plus growth rate,” Bhattacharya said.

Rahman said the government did not pay due attention to different reform initiatives needed to boost the economy and create much needed employment.

The report found that the current fiscal year is closing with a number of macroeconomic advantages, such as lower inflation, declining interest rate, stable exchange rate, manageable fiscal deficit, positive balance of payments and augmented foreign exchange reserves.

Also, the low level of global commodity prices, including that of oil, has provided some respite in terms of resources needed to meet subsidy demands.

Some of the fault lines of the elapsing fiscal year included unachieved revenue targets, low flow of foreign assistance, sluggish exports to the US market, and failure to ensure incentive prices to rice farmers, the think tank said.

Acceleration of private investment remained an illusive target and bridging the infrastructure gap did not experience much discernible success, the report said. Private sector credit growth was only 13.6 percent during July-March this year.

The CPD said all these opportunities and challenges are going to define the benchmarks for 2015-16.

The review report also questioned the GDP growth estimate of 6.51 percent for the outgoing year, as a quarter of the year was badly affected by political turmoil.

Manufacturing is estimated to have achieved a significantly high growth of 10.3 percent despite severe disruption in the supply chain during the political turmoil, the report said.

The services sector’s estimated growth rate of 5.8 percent in fiscal 2014-15 is a surprise to the CPD as the sector was affected by political unrest.

“A more disaggregated analysis is necessary to determine how the manufacturing sector could achieve such growth, which represents a moderate share of between 19 and 20 percent in GDP,” the report pointed out.

The think tank also urged the government to be practical in setting the revenue growth target as it found a shortfall of Tk 25,000 crore for the outgoing year.

The CPD called upon the government to be cautious while borrowing to finance the budget deficit. “There may potentially be pressure for domestic interest payments in fiscal 2015-16 in view of the buoyant sale of national savings instruments during the current year,” it said.

The implementation of the annual development programme (ADP) remained underperforming business as usual. According to data for the first 10 months of the fiscal year, actual spending under the ADP was 51.8 percent of the originally planned allocation of Tk 80,315 crore.

The CPD also analysed the updates on 26 projects under this year’s ADP that were supposed to help boost growth and employment. Fourteen of the 26 projects were supposed to be completed in the current year. A total allocation of Tk 21,392 crore was needed for timely completion of these projects, but only Tk 5,362 crore was earmarked for these projects in the revised ADP.

Subsidy requirements are expected to remain as a downside in the upcoming fiscal year amid low oil prices in the global market, the CPD said. Bangladesh Petroleum Corporation (BPC) is expected to make a profit of around Tk 2,000 crore and no longer requires subsidies in the outgoing year.

The think tank predicts that the surplus may be partially passed through to source the Bangladesh Power Development Board’s planned demand of Tk 7,500 crore in fiscal 2014-15. The CPD suggested that, rather than a price rationalisation, adjustments of administered prices should be considered as part of a single package.

For fiscal 2015-16, the government should consider a marginal adjustment of electricity and gas prices and keep the petroleum prices as they are, the CPD said, adding that it is rather important that the BPC uses its profit to repay its long-standing loans to state-owned banks.

The think tank also raised a question over the impressive growth of payments against capital machinery import — 23 percent during the first nine months of the outgoing year. The CPD reiterates its demand to investigate this growth in capital machinery imports.

Bhattacharya hailed the growing bilateral relationship between Bangladesh and India, especially the recent development in the motor vehicle deal involving Bhutan and Nepal. He also said the proposed coastal shipping connectivity will reduce export-import business costs between Bangladesh and India.

He, however, raised questions over Bangladesh’s expenditure on infrastructure that will be used by India as there is no clear policy on the issue.

 

Published in New Nation

CPD for economic reforms to achieve growth breakthrough

Staff reporter

Speaking at a seminar, country’s think tank Centre for Policy Dialogue (CPD) fellows on Monday observed that the country should take advantage of its current macroeconomic stability to drive economic and institutional reforms in order to break the stagnant six percent growth.

The observations emerged at a media briefing on “State of the Bangladesh Economy in FY2015 and the Closure of Sixth Five Year Plan,” at CIRDAP auditorium in the city.

The media briefing was jointly organised by CPD and Independent Review of Bangladesh’s Development (IRBD) programme. Speaking the media briefing, CPD Fellow Dr Debapriya Bhattacharya underscored the need for a great extent of economic reform for reducing poverty and economic disparity from the country.

Considering the present situation of the country, most of the economic indicators are positive and a good number of positive development activities were executed in the country. The CPD fellow suggested for formulation of five independent committees to look after the development programmes of the government across the country.

Dr Debapriya Bhattacharya underscored that the question is whether Bangladesh economy can reach its potential growth targets through enabling policies and congenial political environment in the years to come before 2021.In this regard, the seventh five-year plan, policy coherence, strengthened governance and quality of public expenditure will be critical for realising the growth and development targets as set in the Vision 2021, he also said.

CPD Research Fellow Towfiqul Islam Khan presented a key note. The aim of the paper is to mainly  looked at macroeconomic management in FY2015 and outlook for FY2016, recent dynamics of rice price in Bangladesh, assessment of progress of fast track projects and analysis of implementation of the sixth five-year plan (SFYP).He mentioned that Bangladesh economy is experiencing a number of macroeconomic advantages including lower inflation, declining interest rate, stable exchange rate, manageable fiscal deficit, positive balance of payment, augmented foreign exchange reserve and low level of global commodity prices including that of oil.

However, acceleration in private investment remained an illusive goal while NBR’s tax revenue collection growth was below target despite having import duty and supplementary duty collections on track. The fiscal planning for FY2016 will require significant mid-term corrections to achieve a realistic revenue target, noted Towfiqul Islam Khan.

CPD Executive Director Professor Mustafizur Rahman mentioned that overall progress was unsatisfactory and the government should take responsibility for successful completion of the projects at economically viable cost with good governance.

Additional Director of CPD Khandaker Golam Moazzem and Research Fellow of CPD Towfiqul Islam Khan, were also present the media briefing.

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