Finance minister Abul Maal Abdul Muhith announces today the national budget for the next fiscal year of 2018-2019 with the banking sector woes overshadowing mixed performances of the other major economic indicators in the outgoing fiscal year.
Budget implementation was weak, private investment improved marginally, banking sector continued to deteriorate and external sector exposed to some risks despite a record-high GDP growth in the year.
Remittance earnings rebounded after negative growth in previous fiscal year (FY 2016-2017), export earnings growth remained sluggish while import payments experienced a phenomenon growth putting pressure on trade balance and current account balance.
Revenue mobilisation lagged behind the target while implementation of the annual development programme could not make any breakthrough in the year.
Experts and business leaders said that the overall economic performance was modest and mixed with some challenges in the outgoing FY18.
They said that healthy economic growth and stability could not bring momentum in the private investment mainly because of lack of confidence of investors and in absence of improvement in investment climate.
The banking sector suffered with lack of good governance with rising non-performing loans, increased family control and slack regulations of Bangladesh Bank, they added.
According to the latest provisional estimation of the Bangladesh Bureau of Statistics, the country’s gross domestic product or GDP growth would be 7.65 per cent in the outgoing fiscal year, highest ever in the history of the country.
The Centre for Policy Dialogue in its state of the Bangladesh economy report (third reading) released on Sunday said that the emerging external scenario should be a matter of concern for the policymakers as it came under pressure in the face of high import payments.
According to BB data, the country’s trade imbalance stood at a record high of $13.20 billion in July-March while current account balance also reached negative $7.08 billion due to higher import payments.
Import payments (including customs clearing and forwarding) grew by 24.50 per cent to about $43.6 billion in July-March.
The CPD said that the performance of the banking sector remained off-track and was plagued with a large amount of NPLs and poor compliance in FY18.
Export earnings grew by only 6.66 per cent in the 11 months (July-May) of the current fiscal year and stood at $33.72 billion.
Remittance inflow in the July-May period rose by 17.48 per cent to $13.57 billion rebounding after negative growth in the previous fiscal year (FY2017).
World Bank Dhaka Office lead economist Zahid Hussain told New Age last week that the year could be termed as mixed one as there were some positive and some negative elements in the economy.
Though there are debates over the government’s estimated GDP growth at 7.65 per cent, economic growth remained healthy, he said.
‘The banking sector, however, was the biggest risk for the economy and most negative feature in the outgoing fiscal year with some major scams, irregularities and indiscipline in the fourth generation banks like Farmers Bank,’ he said.
There were lack of initiatives to address the problems and the role of Bangladesh Bank as a regulator became weaker in the year, he said.
The share of private investment to GDP increased only by 0.15 percentage point to 23.25 per cent in FY18 from 23.10 per cent in the previous fiscal year.
Policy Research Institute executive director Ahsan H Mansur said that economic performance was modest in the year amid macroeconomic and political stability.
The banking sector was the worst performer in the year due to slack monitoring of the regulator, rising NPLs, liquidity crisis, he said.
Crisis in the external sector was also rising as deficit in balance of payment created problem in financing, he said.
Ahsan said that trade imbalance might reach record $18 billion and current account balance $10 billion by the end of the year.
According to the planning ministry, the government agencies implemented only 52.42 per cent of the total ADP in the July-April period.
The National Board of Revenue is also set to fail to achieve its original revenue collection target as it faced a shortfall of Tk 30,000 crore in the first 10 months of the outgoing fiscal year.
Former Dhaka Chamber of Commerce and Industry president Asif Ibrahim on Wednesday told New Age that the GDP growth rate was good, exports rebounded after showing signs of slowing down and domestic and foreign investment showed an upward trend with increase in the private sector credit in the outgoing fiscal year.
However, more efforts were required to improve the overall investment climate, particularly in ease of doing business reforms, he said.
Hard infrastructure projects needed faster implementation, he added.
‘The overall performance of the outgoing fiscal year was one of guarded optimisms and we need to change our gear to maintain the pace,’ he said.
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