Growth Projection

Salehuddin disagrees with World Bank, International Monetary Fund

National unity needed to fight back coronavirus outbreak

Shakhawat Hossain | Published: 12:14, Apr 18,2020 | Updated: 02:33, Apr 19,2020


Salehuddin Ahmed

Former Bangladesh Bank governor Salehuddin Ahmed said that he disagreed with projections of a mere 2 per cent growth in gross domestic product made by World Bank, International Monetary Fund and Economist Intelligence Unit for the outgoing fiscal.

The projection was unacceptable since it was made on the basis of eight months data which were not so bleak, he said at an interview with New Age focusing on events and happenings that unfolded following the COVID-19 outbreak.

The county’s GDP growth would be over 5 per cent, thanks to good harvest of Aman and Boro, two major cereal crops, and robust inflow of remittance in the first eight months, he explained.

Though exports and imports were slowed down, the country’s economy could not lose six percentage points when the global economy would lose only two percentage points as per WB assessment, he said.

The WB, IMF and the EIU said Bangladesh’s GDP growth would plunge to 2.0-3.0 per cent in the outgoing fiscal as preventive measures like protracted shutdown to stem the spread of the outbreak are set to exact a heavy economic toll.

The country last witnessed a less than 3 per cent GDP growth (2.83 per cent) in 1989-90 due to a devastating flood.

Salehuddin, who lead the country in tackling the global recession in 2008, said a two-year comprehensive plan should be implemented to overcome the economic losses due to the COVID-19 outbreak.

He said that the implementation of stimulus packages would be very challenging since most of them were loan schemes and to be distributed by commercial banks under the supervision by the Bangladesh Bank.

He sadly noted that the supervision capacity of the BB over commercial banks became weak in recent years under the present political regime.

Only dedication and higher capacity of the banks could ensure the much-needed higher credit growth in the private sector, he said.

He also noted that the BB was yet to use the statutory liquidity ratio to increase the supply of money and offer anything to the expatriate Bangladeshis returning home from foreign lands.

He urged that the government should increase diplomatic efforts so that the countries in the Middle East did not send the Bangladeshi workers, known as ‘unsung heroes’ back home. 

Terming the cash assistance of Tk 760 crore announced by the government for the jobless informal sector workers insufficient he said identifying the beneficiaries and distribution process would be more difficult a task than the cash transfer.   

He emphasised need for engaging all political parties and non- government organisations to prepare a non-partisan list of beneficiaries.   

Otherwise, chances were high that corruption would infect the cash distribution scheme like what happened to the food distribution programme, he said.

Since April 14, the government has suspended the open market sale of rice, only a week after the operation began targeting the poor, citing its inability to control crowds and the theft of rice.

Besides, he added, the government has been struggling to maintain the health system which was a cause for concern.

Salehuddin said that the nation was learning a good lesson for it failed to decentralise the health services in rural areas and paying the penalty for spending less on healthcare. 

To him, there is no scope for the government neglecting the health sector any more amid criticism that Tk 25,732 crore accounted for 4.92 per cent of the total budget of Tk 5,23,190 crore or 0.89 per cent of the gross domestic product, one of the lowest in South Asia.

He hoped that the new budget should be utilized to begin the process of meeting the World Health Organization standard of 15 per cent of total budget or five per cent of the GDP for the health sector. 

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