“Most formidable challenges for the government now are to contain inflationary pressure and tackle the growing power deficit in the industrial sector.”
Such observations were made in a review paper of the CPD prepared under its programme Independent Review of Bangladesh’s Development (IRBD). Titled State of the Bangladesh Economy in FY2009-10: From Stability to Accelerated Growth, the review paper was released at a press conference on 11 January 2010 at its Dhanmondi office in Dhaka.
Professor Mustafizur Rahman, Executive Director of CPD, presented and explained various aspects of the review report to the media where the CPD IRBD 2009-10 team was also present.
This year’s mid-year report included analysis of areas such as public finance, monetary sector, real sector, external sector, inflation and price, and social sectors. The challenges for the FY2009-10 identified were revitalising investments, stimulating export sector, consolidating agriculture, maintaining fiscal balance, enhancing employment opportunities, combating climate change, enlivening development administration, continuing the reforms, and maintaining vigilance against potential inflationary pressure.
According to the CPD report, other areas of concern at this time for the government are shortfall in revenue collection against the target, decline in imports of capital machinery and raw materials, and in disbursement of term loans in large industries. The situation led to a slump in investment, the report pointed out. Besides, fall in production in large enterprises of the manufacturing sector, high excess liquidity in the banking sector, downward demand for loans, concern over interest of farmers and consumers, and pressure on manpower export due to global recession have put strain on the economic situation.
While dwelling on the report, Rahman said achieving 6 per cent growth as envisioned by the government in the current fiscal would be difficult as the recent increase in the demand for electricity and gas in the industrial production ranges between 8 per cent and 20 per cent. This may increase further in future. He observed that although the government has taken some steps in this regard this has been a stumbling block for industrial output and urgent actions are required to improve the situation.
The CPD Executive Director further said since July 2009, inflation has been on the rise, as official records showed that the rate of inflation was 6.71 per cent in October against 3.46 per cent in July 2009. Price volatility has also increased in recent times and careful monitoring in the coming months is needed to maintain macroeconomic stability.
Laying emphasis on higher output of Boro paddy, Rahman said achieving agriculture growth target mainly depends on the Boro output. Rahman expressed the fear that in the coming days production of rice may fall, but its price may rise in the global market which is likely to create a negative impact on Bangladesh. In this regard, he mentioned about maintaining interest in the agricultural production and keeping the price stable at the consumption level.
Paper Presented
State of the Bangladesh Economy in FY2009‐10: From Stability to Accelerated Growth
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