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A Pre-Budget Analysis of Major Economic Challenges

Monthly Bangladesh Economic Update, April 2017

April 2017

The Unnayan Onneshan (UO), an independent multidisciplinary think tank, in its pre-budget issue of Bangladesh Economic Update calls for prudent fiscal management in dealing with potential economic risks and vulnerabilities in the year ahead.

In identifying the major economic challenges as regards the national budget 2017-18, the UO notes that waning capacity of the authority in implementing budget is looming large.

Both the collection of revenue and implementation of expenditure, especially Annual Development Program (ADP), have fell short of target in the current fiscal year.

The private investment stagnates, and public investment lacks quality resulting in cost escalation in projects. In addition, upsurge in illicit capital outflows bars capital formation in the economy.

Inadequate spending on social sector is likely to limit improvements in human development. Higher allocations for health, education and social security are indispensable to sustainable development.

 

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Debt and Deficit: Trends and Challenges

Monthly Bangladesh Economic Update, March 2017

March 2017

The Unnayan Onneshan (UO), an independent multidisciplinary think-tank, in its monthly publication of the ‘Bangladesh Economic Update’ March 2017, reveals that persistently increasing outstanding debt along with high debt-service payment every year is likely to lower development finance and escalate intergenerational debt burden in the future.

The research organisation in its eighth year of this monthly publication notes that at the end of FY 2015-16, the total outstanding domestic debt has increased by 17.7 percent while the total outstanding external debt burden increased by 10.1 percent. However, during the period of July-January of FY 2016-17, total outstanding domestic debt increased by 18.21 percent while foreign aid decreased by 16.53 percent compared to the corresponding period of FY 2015-16.

The debt-gross domestic product (GDP) ratio is on the rise since FY 2012-13. Statistics suggest that the outstanding domestic debt as percentage of GDP was 15.11 percent in FY 2012-13, 15.12 percent in FY 2013-14, and 15.23 percent in FY 2014-15, and 15.55 percent in FY 2015-16. In the first seven months of the current fiscal year (July-January of FY 2016-17), the ratio increased to 14.35 percent in compared to 13.76 percent in the corresponding period of FY 2015-16.

 

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External Sector: Recent Trends and Challenges

Monthly Bangladesh Economic Update, February 2017

February 2017

The Unnayan Onneshan (UO), an independent multidisciplinary think-tank, in its monthly publication of the ‘Bangladesh Economic Update’ February 2017 reveals declining growth in two major external sector indicators – export shipment and wage earner’s remittance, and consequential deficit in current account balance are likely to exert pressure on the country’s balance of payment.

Calling for a thorough reexamination of the current trade and industrial policies to address the structural bottlenecks and creation of a stable business climate to attract increased inflow of private investment including FDI, the UO urges for the adoption of new strategies aimed at expanding country’s productive capacities that enhance utilization of available resources through efficient entrepreneurial capabilities and increased production linkages.

Referring to declining rate of growth in inflows of wage earner’s remittance, the think tank shows that the inflow of remittance declined by 17 percent and amounted to USD 8112 million in July-February of FY 2016-17 compared to the corresponding period of the preceding fiscal year. On monthly basis, the remittance inflow stood at USD 936 million in February 2017 (a decline by 17.6 percent from February 2016), which is lowest in the first eight months of the current fiscal year.

 

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Monetary Policy Statement (January-June, FY 2016-17): A Rapid Assessment

Monthly Bangladesh Economic Update, January 2017

January 2017

The Unnayan Onneshan (UO), an independent multidisciplinary think-tank, in its rapid assessment of recently announced monetary policy statement for the second half of the FY 2016-2017 reveals that declining growth in private sector credit resulting in stagnant private investment and consequential unemployment especially of youth is likely to challenge the efficacy of monetary policy strategies.

The UO in its January issue of Bangladesh Economic Update 2017 cautions that without increasing the quality, mere growth in private sector credit by the targeted level – 16.5% for the second half of the current fiscal year – may prove ineffective in boosting private investment and achieving the target of growth in gross domestic product (GDP).

The think tank points out that private investment has remained stagnant and stood at 22.07 percent of GDP in FY 2014-15 and 21.78 percent in FY 2015-16, while increase in public investment from 6.82 percent in FY 2014-15 to 7.6 percent in FY 2015-16 has not succeed to create much needed crowding in for private investment.

 

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Year-end Assessment of Bangladesh Economy: Trends and Challenges

Bangladesh Economic Update - Year-end Review 2016

December 2016 YearEnd

The Unnayan Onneshan (UO), an independent multidisciplinary think tank, in its year-end assessment of the economy reveals that medium-term macroeconomic challenges in the forms of stagnation in ratio of private investment to gross domestic product, deceleration in rate of growth in collection of revenue, high concentration of single product in export basket and lower inflow of remittance, coupled with high youth unemployment loom large.

“The causes of elapsing prospects are more institutional. The gradual corrosion of institutions has constrained allocation of resources to channel efficiently into the productive sectors in order for the economy to get higher returns in terms of expanded productive capacity,” observes the last issue of the UO’s monthly Bangladesh Economic Update.

The Unnayan Onneshan notes that the stagnation in the ratio of private investment to gross domestic product (GDP) and ever increasing rise of capital flight, coupled with regulatory unpredictability in economic management have appeared to be the major challenge in the economy.

 

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