Published in Dhaka Tribune on Sunday 23 August 2020
7th Five Year Plan: Most areas in economy fare better than targets
Export, tax, investment lag behind
Most targets in the areas of business and economy included in the Seventh Five Year Plan (FSYP) were achieved with a few sectors even overshooting their goals, while estimates on investment and exports failed to grow.
The FSYP ended on June 30.
The government has termed the achievement as milestone as almost 90% targets in the 5-year plan were achieved by the deadline.
Economists also have opined that success had come closer to their targets.
Both policymakers and economists believe the major targets could have attained fully, if the Covid had not hit the local and global economies.
“As a whole, we were able to achieve about 90% targets of FSYP, where infrastructure and electricity saw great achievements,” Dr Shamsul Alam, Member of General Economics Division (GED) told Dhaka Tribune.
Some targets such as GDP growth, poverty alleviation and increasing tax to GDP ratio and investment could not have reached, he said. This was largely for the Covid-19 pandemic, which hit the economy badly in the last four months of the FY20, added Alam.
However, the GDP target had been achieved in FY19, when it had hit 8.15% against the target of 8% included in the plan, he added.
“Apparently, it seems that the Seventh Five Year plan has closely reached its target but in consideration of macroeconomic indicators, it lagged a little bit behind,” Centre for Policy Dialogue (CPD) research director Khondaker Golam Moazzrm told Dhaka Tribune.
Moazzem said in holistic approach the pandemic had cast a negative impact in achieving targets as it hit the major economic indicators like other countries.
What should be the major focus for the next Five Year Plan
“In setting the targets in the next Eighth Five Year Plan, the government should not take into consideration the pre-Covid macroeconomic trend for the next five years,” suggested Moazzem.
The government should take into account the changes in the macroeconomic indicators and emerging challenges caused by the pandemic. Targets must be realistic as there would be recession in the post- Covid period, predicted the economist.
Policymakers should focus on revenue generation, private investment and special attention should be given on attracting Foreign Direct Investment (FDI) to generate employment, he suggested.
Targets fared well
In the Seventh Five– Year Plan, the government set the target to achieve per capita income to $2009 by the deadline. However, it hit $2064 by the deadline of June 30.
The target on poverty alleviation was also overshot by lowering its menace to 18.6% than its 20% target included in the plan. In 2015, the poverty rate in the country was 24.8%.
While the GDP growth in the last fiscal year shrank to 5.24% but, it overshot the target in FY19, when the country recorded 8.15% growth against the target of 8% projected in the plan.
For the agriculture sector, the government set to achieve 3.34% growth, but 3.11% was achieved in FY20.
Targets lag far behind
In accelerating the economic growth, the government set target to increase investment to GDP ratio to 34.4% by the end of FY20, but it ended by achieving only 31.75% in the set deadline of the 5-year plan.
On the other hand, Foreign Direct Investment (FDI) lagged far behind as the country in 2019 had received only $2.87 billion in FDI against the target of $9.56 billion.
Exports target also remained unattained. In the FY20 Bangladesh export earnings stood to $33.67 billion against the target of $54.1 billion.
On top of that, the tax to GDP ratio stood at about 9.27% in FY20 against the target of 16.1%.