Travel  |  Business World  |  Women's World  |  Entertainment

Change Your Life!

Asian Development Bank’s publication delves into Bangladesh economy

News
Sports
Chat
Travel
Dhaka Today
Yellow Pages
Higher Education
Ask a Doctor
Weather
Currency Rate
Horoscope
E-Cards
B2K Poll
Comment on the Site
B2K Club

February 28, 2001 

Dhaka-- – Staggering political impasse following government-opposition confrontation would pull back an expected 5.5 percent growth of the country’s economy, cautioned worried donors.

“The confrontation between the government and the opposition on religious issues, in particular, is conveying disturbing signals,” said Quarterly Economic Update (QEU), a publication of Asian Development Bank (ADB), launched here yesterday (Tuesday).

It says the failure of the ruling party and the opposition to reconcile differences through dialogue and well-established democratic norms continued to deepen the political impasse.

ADB estimated a GDP growth rate of 5-5.5 per cent in Fiscal 2000-2001, more or less at the same rate attained in the previous fiscal, provided the projected agriculture growth is realised and the recent recovery in the industry sector is sustained.

The QEU expected another bumper harvest and 7-9 per cent growth in the manufacturing sector to boost the economy while cautioned about continued fiscal deficit and weak balance-of- payments position (BOP).

“The government should take appropriate measures to strengthen the balance of payments to sustain the growth rate of the economy,” ADB resident representative in Bangladesh Phiphit Supaphiphat told a press conference at its office.

Deputy resident representative Omkar Shrestha briefed about the Bank’s operational programme of USD 347 million for Bangladesh in 2001, which was USD 275.1 million last year, while senior economist Narhari Rao detailed the state of the economy of Bangladesh as observed in the QEU.

Despite the export growth being encouraging, Phiphit said, the overall BOP remained weak that reflected in the very low levels of foreign exchange reserves, barely enough to provide two months’ import cover.

“We are particularly concerned about the increasing fiscal deficits,” he said. “It is important that the growth rate of revenue collection is maintained along with prioritization of government expenditure to reduce the fiscal deficit.”

The ADB executives also spoke about concern vented by other donors over Bangladesh’s confrontational political scenario that is harming economic activity.

According to the QEU, the fiscal deficit in FY2001 is unlikely to be lower than the budget estimate of 6.1 per cent of GDP in spite of a relatively good revenue performance that grew 20.3 per cent in first half of the current fiscal compared to same period last fiscal.

“The major challenge before the government is to ensure that there is no further slippage in collection efficiency and the current decline in the growth of revenue collection is arrested in the remaining part of the year.”

The donor agency’s Economic Update observed growth of government borrowings from the banking system didn’t come down although there had been healthy growth in revenue receipts during July-December 2000 period.

“This suggests that expenditure levels are probably higher than projected in the FY2001 budget,”

It said government loan from the banking system increased 22.2 percent over the year ending December 20, 2000. Since the beginning of FY 2001, government borrowings from the banking system have increased 13.0 percent.

Part of the increase in expenditure is flood-related, but it is also likely that locally funded ADP expenditures are higher than anticipated in the budget, viewed the QEU about the imbalances that are bad for macroeconomic situation.

“For the remaining period of FY 2001, escalation in aggregate expenditures is likely as the country approaches the general elections.”

The donors predicted that an increase in expenditure in excess of the budgeted amount would increase the fiscal deficit further, straining the fragile macroeconomic stability. “To maintain macroeconomic stability, it is important that expenditure is strictly prioritized.”

The QEU said in the remaining months of the current fiscal the pressures on the reserve position and current account of the BOP would depend largely on the government’s continued success in arresting the outflow of foreign exchange and improving investors’ confidence.

Omkar Shrestha outlined four operational programmes with an assistance of USD 347 million, including 130 million hard loans, for Bangladesh in 2001.

Of the programmes, USD 42 million earmarked for small-scale water resources development in the rural areas, USD 170 million for southwestern region power sector development, USD 80 million for 2nd non-formal education and USD 55 million for northwestern road corridor improvement project.

Besides, he told newsmen, ADB would provide USD 6 million for 13 technical assistance projects.

The update on the economy, including analysis of some key sector issues, would be prepared each year in March, June, September and December as part of the ADB’s process of shifting operational activities closer to its clients by expanding the role of resident missions.

Send This News to a Friend