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Revenue Collection, Public Investment and Debt

Bangladesh Economic Update February 2014 

MEU-Feb-14

The current Bangladesh Economic Update reveals that fall in growth in collection of revenue, rising per capita debt burden and shrinking public sector investment may contract expansion of gross domestic product (GDP). Accordingly, the Update finds out contribution of different sources of revenue and searches the pattern of expenditure. In addition, the Update probes into the matter of increased deficit in the budget of the government leading to slimming down of private investment on the one hand and retrenchment of development expenditure on the other hand, since the government borrows from abroad to finance deficit and has to repay the loan with large amount of interest payment that increases non-development expenditure and causes government to reduce its development expenditure.

There has been found a reduction in investment and growth for the successive three years from those of the preceding ones. In FY 2010-11, the GDP growth rate was 6.71 percent, which declined to 6.23 percent in FY 2011-12, and further fell to 6.03 percent in FY 2012-13.The Unnayan Onneshan (UO) anticipates that the rate of growth in GDP in the current fiscal may fall below the decadal average of six percent and may reach as low as 5.65 percent.

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Monetary Policy Statement (January - June, 2014): An Assessment

Bangladesh Economic Update January 2014 

MONETARY-POLICY-STATEMENT-

The present issue of the Bangladesh Economic Update focuses on the currently announced half-yearly Monetary Policy Statement (MPS) for the period of January-June of FY 2013-14, by the central Bank, Bangladesh Bank (BB). The Update examines the current MPS in the background of falling growth in private sector credit, which leads to lower investment demand, resulting in lower economic growth in the country for the last three years in a row. In addition, the Update explicates the issue of rising inflationary pressure in the economy as well as implications on the common people.

The rate of growth of actual disbursement of credit to the private sector in July to September, 2013-14 over July to September, 2012-13 were 10.18 percent, representing a 5.32 percentage point gap.

At the same time, the overall inflation increased (7.35 percent)0.2 percentage point in December 2013 (point to point basis)from 7.15 percent in November 2013, meaning the monetary policy has yet to be proved to be successful in keeping inflation at targeted level which was 6.0- 6.5 percent (base year 2005-06).

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Dynamics of Deficit and Debt

Bangladesh Economic Update August 2013 

MEU August 13

The current issue of the Bangladesh Economic Update unearths the ‘deficit and debt’ situation on the economy of Bangladesh. More specifically, the study addresses the crucial question of whether the existing ‘deficit and debt’ situation may reduce the capacity of the government to continue its investment in physical and social expenditures. The further dealing of the report is how the management of ‘deficit and debt’ through borrowing from external and internal sources could affect the economy of the country.

There exists a correlation between ‘Deficit and Debt’ whereas deficit must be financed by borrowing from external and internal resources to meet up the shortage. Deficit, however, as a share of GDP is estimated at only 4.6 percent in FY 2013-14, which is not that alarming. The actual matter in this regard, is the financial management for this deficit as well as the utilisation of the debt.

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Declining Growth: Mismatches in Fiscal and Monetary Management- Half Yearly Assessment of the Economy of Bangladesh

Bangladesh Economic Update December 2013 

Half-yearly assessment Dec 2013

The Unnayan Onneshan (UO), in its current issue of Bangladesh Economic Update focuses on the overall economic condition of the country at the half way stage of FY 2013-14. The end of this calendar year also marks the completion of the tenure of the current government. This issue investigates the sector wise performance of the current fiscal year in light of the targets set in the annual budget, Medium Term Macroeconomic Framework (MTMF) and other national plans, policies and goals. It also attempts to explore the current implementation status of the Annual Development Programme (ADP) and makes projection thereof.

The seeds of the present challenges have been palpable and articulated in a number of publications of the UO.

The economy is likely to experience a decelerating rate of economic growth for the third time in a row. In FY 2010-11, the rate of growth in gross domestic product (GDP) was 6.71 percent, which later declined to 6.23 percent in FY 2011-12, and further fell to 6.03 percent in FY 2012-13.

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Banking Sector: Current Status

Bangladesh Economic Update December 2013 

December-2013

The current Bangladesh Economic Update focuses that the present situation of banking sector has been deteriorating in terms of growth of credit and disbursement and risk management. Besides this backdrop, questions are being raised concerning the far-sighted deregulation of the financial sector.
Growth in investment exerts impact on the growth in GDP. The decline in the growth in credit illustrates the poor condition of investment which might drag down the current growth in GDP.
For example, the government requires investment rate to rise at 32.0 percent of GDP for achievement of 7.2 percent rate of growth in GDP in FY 2013-14.

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