Abu Sazzad: Riding on export income and higher remittance inflow, the Finance Minister AHM Mustafa Kamal is expecting to attain 8.2 pc GDP growths in the ongoing fiscal year 2020-21, but such expectation is contradictory with reality, experts said.
They lamented that the attainment of GDP growth in the last fiscal was contradictory, but this time, the comment on higher GDP growth is simply a mockery. Such kind of absurd GDP growth is not a rational approach of the finance minister when most of the people are facing severe hardship to manage their minimum requirements. Expectation for higher growth is good, but absurd expectation is unrealistic and insanity.
Despite Covid-19 pandemic, only the remittance inflow attained steady growth which is continuing till the last month. According to Bangladesh Bank data, the last fiscal 2019-20, the inflow of remittance reached record $18.21 billion. Country’s foreign exchange reserve exceeded US$39 billion mark recently as the inflow of remittance remained upward in the first two months of the fiscal year along with gradual improvement in export earnings. Experts said, the remittance inflow and reserve position is impressive, but such reserved is able to pay only 6 months import payment. On the other hand, the export income is far behind its monthly target.
According to the Export Promotion latest data, country’s export income was declined by 11.72 percent in the last (August) months of the current fiscal. Export target was $3361 million in the last month, but achievement was $2967.16 million. Although, manufacturing sector export started by taking government incentive, but the income is far behind from the target. RMG export income gained a nominal growth from the target. The RMG export growth was only 1.81 percent from the target.
Besides, most of the export oriented sectors have failed to achieve the export target. In the first two months (July to August), the export of frozen & live fish and plastic products declined drastically by 21.80 percent and 16.10 percent respectively from the target. On the other hand, agriculture products, manufactured commodities, chemical products, leather products and jute goods export attained a nominal growth of 0.27 percent, 1.35 percent and 3.54, 0.26 percent, 0.80 percent respectively in the first two months.
Meanwhile, the entire industrial sector is facing severe difficulties for importing of raw materials, hampering production. Stakeholders are facing difficulties to open letter of credits (LCs) for importing raw materials and capital machineries.
Except manufacturing sector, all sectors are facing acute liquidity crisis concentrating COVID-19 outbreak. Beside, delay in disbursing government declared stimulus loan packages worth Tk 1.03 trillion is posing threat to revamp business and economic activities in the country.
In this backdrop, country’s export earnings from the service sector stood at US$6.13 billion registering 5.56 per cent negative growth in the just-concluded fiscal year 2019-20.
On the other hand, informal sector is facing difficulties to sustain their existence. Nearly 52 million (13 million in urban areas and 39 million in rural areas) of the 61 million employed persons are employed in the informal economy which contributes more than 40 percent to GDP.
Although, the agriculture sector maintained higher production, people are now failing to afford the price of the essentials including rice and vegetables. Experts said, the unplanned development is not sustainable. The government failed to achieve the rice procurement target, imposing severe threat on food security. The recent price hike of onion is also increasing difficulties to balance income and expenditure. However, the current situation of the agriculture sector is imposing serious threat for future food security of the country, they added.
According to the monthly consumer price index provided by the Bangladesh Bureau of Statistics (BBS), the food inflation rose to 6.08 percent in August. The annual inflation rate increased slightly to cross the 6 percent mark again in June. Higher inflation in the recent months is pushing people into more vulnerability in terms of managing the minimum requirements, said experts.
Under this circumstances, how the finance minister is expecting to achieve 8.20 percent GDP growth for the ongoing fiscal, questioned the experts. Recently, the Asian Development Bank (ADB) has forecasted that Bangladesh may attain 6.80 percent GDP growth in the current fiscal.
According to government estimates, GDP growth rate has fallen to 5.24 percent in FY 2019-20 from 8.2 percent in the previous fiscal year. Most of the experts contradicted with the government data on GDP growth.
Meanwhile, the overall revenue collection fell by 22.07 per cent to only Tk 123.34 billion in July last, the first month of the current fiscal year (FY), as compared to that of the same month of last year, according to the latest NBR data.
In the same month last year, the National Board of Revenue (NBR) had collected Tk 158.28 billion in revenue. It also fell by Tk 70.44 billion short of the month’s target of Tk 193.78 billion. Actually, the revenue collection situation is imposing threat to balance income and expenditure of the government. The government is forcing to borrow from internal and external resources to meet the budget deficit. Apart from this, higher borrowing from the banking sector and lower investment to the private sector is impeding the economic growth of the country.
Talking to Daily Industry, Executive Director of the Policy Research Institute Ahsan H Mansur said, 8.2 percent GDP (gross domestic product) growth target is absurd. On the other hand, former adviser to the caretaker government Dr AB Mirza Azizul Islam said, the GDP growth projection is not realistic. The 8.2 percent GDP projection is controversial with reality, he said. He rose questioned on the achievement of such higher target.
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