The country’s economy has showed stability but failed to find steam in the first half of the current fiscal as private investment— the driving force of economic growth — is yet to pick up despite positive internal and external environments.
Centre for Policy Dialogue (CPD), a leading civil society think tank, came up with the above assessment over the performance of key sectors of the country’s economy during the first half of FY2015-16 at a press briefing in the city yesterday.
“We have seen stability but no vibrancy in the economy,” said CPD distinguished fellow Debapriya Bhattacharya.
Even after falling interest rate, easing inflation, stable exchange rate and declining global commodity prices, there was weakness in the economy, particularly in the private investment, he said.
Listing weaknesses of the economy, he said: “Investment registration with the Board of Investment dropped, FDI slowed down, the number of IPOs declined, and on the other hand, term industrial loan and import of capital machinery were down and revenue collection was poor. These were the reflections of weak economic activities.”
“Under the situation, we are taken aback,” he said.
Debapriya claimed that private investment failed to get support from banks as the sector was now in crisis because of insider lending in private banks and political lending in the state-owned banks.
He said disciplined politics, protection of political rights, peace and security are very important for boosting the private investment.
CPD research fellow Towfiqul Islam Khan presented a keynote paper on the state of Bangladesh economy in FY’16, saying as the country’s economy moves into the second half of the current fiscal, a number of challenges have emerged.
He added that addressing those challenges will be crucial to realising the potentials of the country’s economy.
External sector was able to demonstrate resilience, the keynote paper said, adding that the declining flow of remittance and volatility in export earnings, however, remained a concern.
“Inability to take advantage of the relative macroeconomic stability to stimulate private sector investment remains an enduring concern,” added the keynote speech.
On falling fuel oil prices that slipped to the 11-year lowest in the international market, CPD Executive Director Professor Mustafizur Rahman said time is ripe to pass the benefits of lower oil prices to the consumers.
“Prices of gas, oil and power should be adjusted in a coordinated way to bring balance to their prices, he added.
He advised moving from social safety net to universal social security for ensuring security protection for every citizen of the country.
Debapriya commented that lower oil price has given the government to take breath that was strangulated by poor revenue collection and inefficiency in foreign aid utilisation.
“This breathing space should be shared with the commoners.”
To bring dynamism in the economy in the next six months, CPD has put forward a set of reformations, including in the areas of banking sector, public expenditure management and PPP to yield the aspired results.
“Success will also be underpinned by the state of political predictability and overall public security concerns,” it said.
In short-term initiative, Debapriya suggested considering to cut policy rate and devaluation of local currency against greenback.
“Once policy rate is lowered, there will be positive impact on interest rate and inflation. Taka devaluation will boost export competitiveness.”
In mid-term initiative, he said big reformation is needed in the public investment.
“We have seen some measures taken by the government to improve annual development expenditure, but the result was marginal. Expenditure of money does not refer to the implementation of project with efficiency, as no evaluation is made over the benefit of the project implementation.”
Laying emphasis on quality statistics for ensuring transparent and accountable development effort, Debapriya said: “We have seen in different times that statistics lost its quality.”
