The Aslan Development Bank (ADB) has critically examined the reform programmes executed by member countries in 1996 but suggested that they would need "a long way to go" to promote their economic stability. reports BSS.

While making an observation that rapid progress in reform is the key to South Asia's success, the ADB in its annual report 1996 said, "rapid progress in policy front is clearly the key to South Asia's economic success over the medium to long-term, especially since the external environment is likely to remain favourable."

The ADB examined the reforms in the South Asian countries and said that these countries continued to "share a nuclear of fundamental features Including low per capital income growth and dependence on external resources to supplement the domestic saving efforts." arj • , ■

The programmes of these countries. Afghanistan. Bangladesh. Bhutan, India, the Maldives. Nepal. Pakistan and Sri Lanka, are not sufficient for rapid economic progress, the ADB report said.

With regard to Bangladesh, the bank said that it

(Bangladesh) introduced a number of reforms in fiscal, financial and external reforms in 1995-96 financial year to beat a swathe of unfavourable factors that were impairing its economic growth but the progress was limited.

On the fiscal side, the tax administration was strengthened and corporate income tax reduced. In the area of financial reform, some steps were taken to improve the banking system.

Bhutan in 1996 made significant progress in financial sector reform with the introduction of government-security auctions and the conversation of the unit trust of Bhutan into a second commercial bank in 1996.

India made progress in broadening and deepening the economic and structural reforms during the 1996-97 fiscal at a slow pace. The Reserve Bank of India lowered the statutory liquidity ration and cash reserve requirements and further liberalised deposit rates. The country also adopted new guidelines for expenditure management and took up steps to continue the privatisation programme.

India, however, needs to bolster domestic savings and investment to ensure sustainabll-

ity of the growth process and malntian macro-economics stability, the report observed.

The Maldives government, challenged by the demand for reforms in the tax system, financial sector, exchange and trade system, needs to introduce new taxes, draft commercial and bankruptcy law to achieve its medium-term objectives of sustaining adequate level of economic growth.

Nepal has taken up several steps towards attaining economic stability by controlling the budget deficit, limiting internal borrowing. Strengthening revenue administration and maintaining price stability. It has also taken steps to improve efficiency of customs operation, sustain rural land use, protect environment and create employment opportunities for the rural poor, the report added.

Pakistan is undertaking widespread reforms to increase the competitiveness of the econpmy and to spread the,benefit of development low income groups. Trade reforms, focusing on reduction of tariff rates and restructuring of the customs system, and tax reforms, scaling down personal and corporate Income tax rates, are underway. privatisation plan in the energy, industry and finan-

cial sectors are also progressing.

Pakistan is. however, facing major macro-economic chaL lenges of reducing the fiscal deficit and narrowing the current account deficit, the report observed.

Sri Lanka Is attempting to restore macro-economic stability. the report said, to bring inflation under control, and create an environment for normal growth to resume. An important element in the exercise is to reduce the budget deficit to about 5 per cent of GDP.

About the economic performance of the South Aslan Nations the report said that in 1996 Bhutan. India, the Maldives and Sri Lanka experienced a slowdown in their growth rates while Bangladesh. Nepal and Pakistan continued to make good progress.

The growth rate in Bangladesh in 1995-96 fiscal was 4.7 per cent, while it wgs 6 in Nepal and 5.9 per cent in Pakistan.

Bhutan registered 6.4 per cent GDP. the Maldives 6.5 and Sri Lanka 3.8 per cent in 1996. while India made 6.8 per cent GDP in 1996-97 fiscal. The data of war-ravaged Afghanistan was. however, not available.