A noted economist yesterday warned that the upturn in economy showed by increased investment in recent months had been restrained. prognosticating another spell of stagnation, reports UNB.

"It seems that the achievements in the macroeconomy have been slackening." said Prof Wahiduddin Mahmood. Chairman of the Economics Department of the Dhaka University, while exchanging views with the members of the Economic Reporters' Forum (ERF).

The Centre for Policy Dia logue in collaboration with the ERF organised the dis cusaion on Experience with Economic Reform: A Review of Bangladesh Development at the National Press Club to discuss tts review on the state of country’s economy

Prof Mahmood said the

E:rease in savings, a low in-tion and piled up foreign exchange reserve would be an opportunity for the country's economic development if the rate of investment could have been increased.

But. Prof Mahmud noted, the economic indicators started moving in reverse di rection since last April when forex reserve began eroding while the rate of savings dropped and current account deficit rose.

The private-sector credit expanded significantly last year, indicating a pick-up In economy ending the stagna tion. he said, information that private-sector credit sr by 22 per cent in 1994-

But a fat food bill during the credit expansion caused inflation, which forced the authorities prematurely to rein in credit growth, he

said, referring to the recent central bank measures.

According to him. credit grew only by 4 per cent in first four months (July-Octo-fref) of the current fiscal which might stand at best at 12 per cent at the year-end.

All could be avoided, the economist said, if local consumption tax as well as income tax had been increased with the liberalisation of import which caused consumption liberalisation.

But. In reality, income from direct tax remained well bellow the target for last two years, he said, fearing that the tax-GDP ratio could show downslide again In future.

While indicating a possible uneasy situation in external sector. Dr Mahmood asserted that the devaluation done recently by the central bank was not enough.

"According to me, we have to do more real devaluation.”

He also called for political motivation for increase in resource mobilisation in order to raise investment level further.

Taking part in discussion, Debapriya Bhattacharya questioned the Industrial growth rate calculated tty the Bangladesh Bureau of Statistics (BBS).

Claiming that the Industrial growth rate Is at least 1.7 times inflated, he said there Is no credibility of the rsting. "Statistics are politically influenced before publishing."

Bhattacharya, a senior research fellqw of BIDS, also found 33 per cent of the enterprises registered during 1991-94 period missing while 40 per cent of term loan given by the prlvate-sec-

tor banks non-performing.

Another BIDS research fellow. Dr Abu Abdullah pointed out a stagnation in agriculture in 1991-94 fiscal alter a modest growth of 2-3 per cent during the previous five years and blamed it mainly on faulty supply of fertiliser and crunch in irrigation expenditure.

Prof Rehman Sobhan. Executive Chairman of the Centre for Policy Dialogue, said the real crisis was that people were not aware of the stagnation in crop production since 1989-90 and there was no indication from the government or the donors.

He also pointed at the absence of government strategy to cope with the crisis. Ana still there is no planning for facing such a crisis in future, he said.

Prof Muzaffar Ahmed, who carried out the education part of the CPD review, observed that qualitative investment in education and health sectors remained low while a huge investment took place for quantitative expan-, sion.