The country’s GDP growth as well as its foreign assistance had fallen drastically because of destructive activities during October-December last year, which affected the economy as a whole during the first half of the current fiscal year, a government report has said.
The projected GDP growth of 7.2% was not achieved because of the unrest during those three months, but the analysis of the country’s macroeconomic indices for the last six months shows that GDP growth might still reach 6.5%, Finance Minister AMA Muhith told parliament yesterday after placing before it the half-yearly (July-December) report on the implementation of the current fiscal budget.
Although violence by BNP and Jamaat-e-Islam activists cost lives and caused damage to property, citizens resisted and saved the country from economic ruin, the minister claimed.
The revised 6.5% GDP would be achieved if the government sped up its existing plans and programmes, he further said.
Credit from foreign sources has also declined compared to the last fiscal, but foreign grants have increased during the same period, Muhith said.
As per the half-yearly budget implementation report, the net foreign assistance declined drastically, by 64% during the first half of the current fiscal year, compared to the same period of the last fiscal.
Former finance adviser Dr AB Mirza Azizul Islam, however, rejected claims that violence slashed GDP growth.
He told the Dhaka Tribune that the ministry now wanted to slash budgetary goals as the finance minister had not set up “logical” budget targets, which was poor budget preparation.
Mirza also said: “Most of budget targets including the GDP and foreign assistance were overestimated in the budget announcement and I calculated that GDP growth is 5.6% instead of 7.2%.”
The overestimation might cause the budget deficit to increase and cause a negative impact on inflation, he added.
After six months, net foreign credit stood at Tk613 crore while during the same period it was Tk 1702 crore in 2012-13 fiscal year. The current fiscal year budget target is Tk21,068 crore. Foreign credit during the first half of the current fiscal year was Tk4,706 crore, compared to Tk4,982 crore for the same period last fiscal.
Foreign grants stood at Tk434 crore at the end of the first half of the fiscal, which was an increase of 33.53% compared to last fiscal year’s Tk325 crore, according to the report.
The overall expenditure in the first half of the fiscal stood at Tk76,881 crore or 34.56% of the total budget of Tk222,491 crore. For the same period of last fiscal, the expenditure was Tk63,848 crore or 33.32% of the total budget.
Total revenue earning was Tk64,715 crore, which was 38.6% of total earning target of Tk167,459 crore for the first half of the fiscal year; while revenue earning was Tk59,882 crore during the same period last year, according to the budget implementation report .
At the end of the first half of the fiscal, fund disbursement was 23.48% or Tk15,869 crore of the current fiscal year’s ADP worth Tk65,872 crore, which was also 20.64% of the total budget implementation.
During the last fiscal year, it was Tk12,815 crore or 23.33% of the total ADP of Tk55,000 crore, according to the report.
Budget deficit during the first half of the last fiscal year was only Tk3,985 crore, but this year it increased to Tk12,166 crore, which is about 22.10% of the total deficit of Tk55,032 crore budgeted for the current fiscal year.
As a result, borrowing from the banking system stood at Tk9,630 crore in the first half of this fiscal year, compared to Tk8,377 crore in the last fiscal year.
The finance minister said the government had tried to control bank borrowing, despite shortage of the deficit financing by foreign sources to meet the budget deficit.
In the second quarter of this fiscal, 10 big ministries and divisions spent only 26.38% of their allocation. These ministries and divisions received 82.7% allocation of the total ADP outlay.
Of them, Power Division spent 5.4 %, Road Division 29.4% and Bridges Division spent 3.1%. The railway ministry spent 32.9%, primary education ministry 39.8%, education ministry 29.2% and public works ministry spent 9.9%. The Local Government Division spent the highest amount of 41.1% during the half of fiscal year.
Former commerce minister and BNP chairperson’s adviser Amir Khasru Mahmud Chowdhury told Dhaka Tribune that the total responsibility for slashing the current fiscal year GDP growth falls on the present government.
“Awami government has stayed in power through state sponsor terrorism and in those circumstances local business confidence is always low,” he said.
He also said private sector business confident will not grow and foreign investment will not come to the country unless fair and creditable elections are held in the country. The former commerce minister also said the country’s growth rate is declining during the years of an Awami league government because of vast corruption among ministers, government officials and party men.
Jamaat-e-Islami working committee member Syed Abdullah Mohammad Taher told the Dhaka Tribune,
“The government has destroyed the country’s economy with their corruption and other activities. Now they are blaming the opposition, trying to shift the responsibility for their miss deeds,” He said.
