“Sluggish implementation of public investment programme and slow progress in energy and power sectors are the binding constraints for growth during the current fiscal year,” said Dr Debapriya Bhattacharya, Distinguished Fellow, CPD while presenting the CPD report on State of the Bangladesh Economy in FY2010-11. Prepared under CPD’s Independent Review of Bangladesh’s Development (IRBD) programme, the study report was released to the press on 4 January 2011 at its office. The study observed that the ADP implementation rate was 20.4 per cent during July-November which was 22.6 per cent during the same period in the last fiscal year. This was due to lower utilisation of project aid. In this regard, Dr Bhattacharya stated that availability of funds (local or foreign) is not the problem for the government to implement its investment plan, but what is lacking is adequate capacity to spend or invest.
According to the report, positive movements were visible in areas such as NBR registering 24.8 per cent growth in revenue collection during the first five months against an annual target of 16.8 per cent last year. The economy has also gained momentum with enhanced export receipt, strong industrial credit flow and growing import demand for capital machineries. He, however, warned that if the manufacturing sector does not experience a broad-based boost in promoting structural change, achieving 6.7 per cent economic growth in the current fiscal year will be really challenging. The CPD study team was also concerned over unhealthy trend in the capital market, rising food inflation, deteriorating balance of payments situation due to weak remittance inflow and growing trade deficit. In order to counteract rising commodity prices (including fuel and food), volatile capital market, slow recovery of investment demand and pressure on balance of payment, fiscal and monetary policy need to be complementary with fiscal policy taking the lead and monetary policy being accommodative in nature to the emergent to each other’s needs. The CPD study observed that the recent high growth in the capital market might be linked to lack of investment opportunities in productive sectors, weak performance of the regulatory authorities, market manipulation and various anomalies in the financial sector.
Dr Bhattacharya also mentioned that there is apprehension as regards the loan arrangement under negotiation with the IMF, and urged the government to disclose the conditionalities attached to the loan. Apart from senior CPD staff, the press briefing was attended by a large contingent of journalists from both print and electronic media.