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Targets Hanging in the Balance

A Rapid Assessment of National Budget 2015-16 

MEU June 2015In view of the current economic structure of Bangladesh, allocation of resources must be channeled efficiently into the productive sectors in order for the economy to get higher returns in terms of expanded productive capacity and resultant increased gross domestic product (GDP). Despite commendable progress in achieving growth in GDP, it is considered that the country has been missing the opportunities to capitalise on its resources and potentials to embark upon rising as a middle-income country by 2021. The causes of missing opportunities are, however, more political than economic. The characteristic of the national budgets – long on targets, short in reality – is mainly due to the lack of political will in the country. In recent years, the low implementation status of the national budgets has further accentuated the lack of political will induced shortfall in achieving targeted rate of economic growth in the country. The current national budget is tabled against the backdrop of three major economic challenges – shortfall in the achievement of economic growth vis-à-vis the target, low implementation of development expenditure, and lack of business confidence induced declining private investment.

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Major Economic Challenges: A Pre-Budget Analysis

Bangladesh Economic Update, May 2015 

MEU May 2015The current issue of Bangladesh Economic Update identifies ten major economic challenges causing shortfall in growth in gross domestic product (GDP) vis-à-vis target, slack private investment, and shortfall in collection of revenue vis-à-vis target. The Update presents a thorough scrutiny of the challenges that the economy has undergone during FY 2014-15 and should take into consideration while declaring the budget for FY2015-16. The Update, however, also presents a critical analysis of the trends of selected economic indicators with respect to three overarching policy issues – expansion of productive capacity, effective provision of social services to the citizens, and sustainable development – that must be taken account of before setting off for the formulation of national budget 2015-16. Finally, the Update attempts to develop an institutional reform measure that specifying the functions and responsibilities of the administrative structure of current fiscal management would confirm the effectiveness of economic management in the country through enhanced capabilities and greater accountability of responsible authorities. The target of rate of growth in GDP has been being set over seven percent in recent years, whereas the actual has been sticking to around six percent. The slow rate of growth in GDP can however be ascribed to mainly three issues – stagnant private investment, shortfall in revenue collection and low implementation of ADP along with lack of infrastructural developments.

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Expenditure on Social Sector vis-à-vis Public Spending: An Assessment

Bangladesh Economic Update, March 2015 

MEU March 2015The current issue of Bangladesh Economic Update aims at assessing the trend of public spending in connection with the allocations for social development – improvement in education, health, social security and welfare, and housing. The Update finds that on the one hand public spending assumes an increasing trend in Bangladesh, but yet the country lags far behind other developing countries in accumulating the public spending up to the mark in order to expedite economic growth and accelerate the declining rate of poverty. On the other hand, allocations of public spending for social sectors as percentage of the total programme spending have recently undergone decreasing trends signaling inadequate investments in social development and posing challenges to the formation of human capital in the country. The Update puts particular emphasis on the necessity of an effective fiscal management system that would help the government increase public spending and thus channel adequate resources to such sectors as education, health, social security and welfare, and housing, thereby ensuring the provision of public services and facilitating the formation of human capital in Bangladesh.

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Balance of Trade

Bangladesh Economic Update October 2013 

october-meu-13The current Bangladesh Economic Update focuses on the current situation of trade. It further concentrates on factors and policies that have been exerting pressure on the external sector.

The country has been experiencing a negative balance of trade over the years, despite a fall in trade deficit. The reason behind this decline in trade deficit has been a greater decrease in import than that in export. Trade deficit declined from USD 9310 million in FY 2011-12 to USD 7010 million in FY 2012-13, after increasing over the years to reach at peak in FY 2011-12. Trade deficit as a percentage of GDP reached at 8.10 percentage of GDP in FY 2006-07, the highest between FY 2001-02 and FY 2012-13.

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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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