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Revenue Collection: Recent Trends & Challenges

Bangladesh Economic Update, February 2015 

MEU February 2015The current issue of the Bangladesh Economic Update attempts to assess the state of revenue collection against the backdrop of the running prolonged political stalemate, continuous shortfall in revenue collection from its target for several fiscal years, and its consequential impact on public investment. The Update also examines the contribution of different sources to the total collection of revenue and analyses the pattern of expenditure, the deficit trend and deficit financing. The biggest challenge in revenue mobilisation this year will be the fulfillment of the target of revenue under the existing political unrest. The economy already has passed half of its way of the current fiscal year but the revenue collection is much lower than its target and already has fallen short of its target. The historical data shows that in the year of election the rate of growth in revenue collection falls due to stagnant economic activities arisen from political violence and turbulence. The current continuous countrywide blockade coupled with the several hartals over a month is hampering economic activities badly. Export to different countries has started to fall; small and medium enterprises are incurring losses; bank credit is falling, and sluggishness in investment in private sector is ongoing. Revenue has fallen short of its target in previous two consecutive years where economic situation was comparatively good. So, considering the historical trend, it can be predicted that the shortfall will be large which will affect the trajectory of growth of the economy.

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Monetary Policy Statement (January-June, FY2014-15): A Rapid Assessment

Bangladesh Economic Update, January 2015 

MEU January 201 jpeg

The current issue of the Bangladesh Economic Update focuses on the recently announced half-yearly Monetary Policy Statement (MPS) for the period of January-June of FY 2014-15 by the central Bank, Bangladesh Bank (BB). The Update examines the current MPS in the background of three major economic issues affecting the growth of the economy – sluggishness in investment due to inflation targeting policy formulation and current political uncertainty, crisis in banking sector due to increase in default loan, and huge capital flight due to slack surveillance and oversight. Following the scrutiny, the Update reveals that the growth in private sector credit may fall short of target in view of the observed trend of unachieved targets in previous occasions. It has,however, been cautioned that this trend of shortfall in targets of growth in private sector credit may further worsen the sluggish rate of private investment triggered by current political uncertainty, and cause the rate of growth in gross domestic product (GDP) not to reach the target of 7.3 percent in FY2014-15. Till November of FY2014-15 when the political unrest did not reach the current level, the BB remained far away from its target of 14 percent growth in private sector credit set for the period of July-December of FY2014-15. It is, therefore, argued that the target of 15.5 percent for the January-June period of FY2014-15 seems to be unrealistic amidst the current state of severe political uncertainty since January 2015.

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Trading Away the Ebb: Half Yearly Assessment of Bangladesh Economy

Bangladesh Economic Update, December 2014 

MEU Dec 2014

The Unnayan Onneshan (UO), in its current issue of Bangladesh Economic Update aims at carrying out half yearly assessment of the economy for FY 2014-15 against the backdrop of current economic management by the new government of which 154 members of parliament get unelected in the national parliament election of 2014 which is widely questioned because of its quality of not being participatory as country’s one of the largest political parties did not take part in the election. Following a rigorous scrutiny of the major macroeconomic indicators, the Update puts forward a seven-point policy measure as well as a particular call for an inclusive political dialogue that reducing the exigencies of current political uncertainly will ensure consolidation of democracy through regular transfer of power and cause the economy to grow faster.The Update reveals that the rate of growth in gross domestic product (GDP) may fall short of the target of 7.3 percent in FY 2014-15 due mainly to increasing savings-investment gap, unsatisfactory collection of revenue vis-à-vis target, declining rate of growth in agriculture and manufacture, disarrays in external balance, infrastructural underdevelopments, institutional weaknesses and political uncertainties.

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Energy Security: Trends & Challenges

Bangladesh Economic Update, November 2014 

MEU Nov 2014

The current issue of the Bangladesh Economic Update attempts to reveal current nature of power and energy situation to evaluate the energy security in the country. Shortage of power supply, depletion of gas reserve, and frequent price hikes in energy are not only exerting immense pressure on current production, but also posing a serious threat to energy security.Energy security is simply defined as the uninterrupted supply of energy from available sources at a reasonable price with even distribution (IEA, 2014; EU 2014). Diversification in power generation capacity, stable price level and infrastructure development determine the secure supply of energy .On the other hand, dependence on concentrated suppliers, lack of expertise, and unfavorable political situation, both the internal and the international can peril the energy security of a country.Based on the definition of the energy security, it can be said that Bangladesh has to walk a long way to secure its energy sector. Increase in population, expansion of production in agriculture and industry, fast urbanisation, and development in road and transportation have increased the demand for energy but the supply is not sufficient to satisfy the demand.

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Debt and deficit: Recent Trends

Bangladesh Economic Update, October 2014 

MEU October 2014

The current issue of the Bangladesh Economic Update analysing the current trends in deficit and debt reveals that increases in per capita debt, share of GDP and debt service payment have been lowering public spending on physical and socio-economic infrastructure and escalating intergenerational debt burden in the future. Deficit as percentage of GDP is increasing which is not that alarming level but swelling every year can be menacing for the economic growth. The expenditure – both the development and non-development expenditure – is increasing but collection of revenue is not at desirable level to cover the expenditure. In order to meet up this gap, debt from domestic and external sources is mandatory. Debt is, however, common for both the developed and developing economies but success of a country depends on prudent use and efficient management of debt. In this regard, financing and managing the deficit in a best possible way becomes a challenge for the government. Debt may be considered as a fiscal stimulus which has a multiplier effect on economy if it is used for productive purpose otherwise the debt make the problem worse (Leech, 2012). The per capita debt burden of Bangladesh has been mounting rapidly since FY 2009-10, and debt as a share of GDP is high.

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