Bangladesh Economy under stress December 29, 2011Posted by bdoza in BANGLADESH.
Tags: Bangladesh economy
For months, there was speculation that the economic state of Bangladesh is not going well. Many of the government machinery including the Prime Minister were denying the fact. Now it is the Finance Minister himself who disclosed the state of economy in discrete language in a conference in Dhaka.
Finance Minister said that the present GDP growth rate at 6.7 %. He expressed that he is not sure where will it end in the midst of this economic crisis and state of inflation. Finance Minister acknowledged that the investment in Bangladesh is very poor. For about a decade the investment rate is close to 24%. When a country dreams of getting a GDP growth rate at 7 or 8% , then this investment is not enough
FM was speaking at the 11th Annual Conference of South Asian Network for Economic Research Institute in Dhaka.
He also tried to explain the logic of borrowing money of the government from the bank blaming it on the inflation in thw international market, that is also increasing the inflation in the local market. He said that they thought to contain the budget deficit within 5% of GDP. But limiting the budget deficit becomes difficult for the government due to inflation.
There are two reasons of budget deficit for the government, one is increase in govt subsidy For delayed rise in fuel price and second one is non-utilization of foreign fund.
He defended the government expenditure in Bangladesh is not high saying that in Bangladesh the government expenditure was nevwr above 15%. He said that if the foreign investment and internal investment is increased then the government expenditure will also be increased.
In reply to the criticism in the media and by the economists of electricity production at high price, he said that he is not worried about the situation as because the increase in electricity production raised the investment to 41% last year.
Finance Minister acknowledged that the price of essentials was high troughout the year and it disheartened them.
He added that Bangladesh welfare oriented government has extended subsidy to agriculture, food distribution, electricity and fuel oil. He opined that they should have to be more attentive to oil price. But it couldn’t be done increase fuel price and inflation in the international market.
He also said that accurate poppulation census is important for preparing budget and in bangladesh there is difference in cencus, someone telling it 15 crore and other as 16 crore.
We assume that the straight acknowledgement of Finance Minister will prevent people from unnecessary speculation and make the government more pragmatic and solve the economic problem and prevent the political uncertainty.
An ordinary citizen