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Three roadblocks to 8pc growth

Finance ministry lists impediments to higher growth

Rejaul Karim Byron
The finance ministry has identified three hurdles to hitting higher economic growth: the slow growth in private investment and revenue and the lumbering and uneven developmentspending.
The findings are part of a report
prepared by the ministry for the cabinet division to list the economic achievements of the Awami League government in its last tenure.
The report says that it has long been established that the economy's natural ability to grow is 6 percent; to grow beyond that, some form of stimulus is needed.
To achieve an 8 percent growth, the investment-GDP ratio should be 32 percent, a substantial increase from the past several years' 21 -22 percent.
The causes for the stagnant private investment are infrastructure deficit, land inadequacy and complexities in land registration, the report said. However, statistics show that the GDP-private investment ratio has gradually been shrinking in the last three fiscal years. In the last fiscal year, it decreased by 0.36 percentage point year-on-year to 21.39 percent, according to Bangladesh Bureau of Statistics.
As for development spending, while it is gradually increasing, the slow pace of implementation and the end-centric spending has been failing to ensure quality development expenditure.
For instance, in the first quarter of the current fiscal year, only 9 percent of the total allocation for annual development programme has been spent, which is the lowest in fouryears.
To bring qualitative changes to the implementation of development projects, regular and meaningful monitoring is required as well as ensuring accountability where necessary, the report said.
However, in this regard, Planning Minister AHM Mustafa Kamal last week admitted that there are various flaws in implementing the ADP and told reporters that they have identified a number of steps which will be fully implemented from the next fiscal year.
About the slow revenue growth, the report said at the beginning of the government's last tenure, 100 percent of the earning target was achieved, but in fiscal 2012-13 92 percent could be reached and in fiscal 2013-14 82 percent.
The present reform programmes including addressing the VAT law related complexities have to be expedited to continue the government's development spending and to keep debt management at a stable level.
To enhance non-tax revenue earning, the rates should be made "more logical", the report said.
In the first three months of the fiscal year, non-tax revenue earnings fell 37 percent year-on-year, according to finance division statistics.
In the July-September period of the current fiscal year, non-tax revenue stood at Tk 6,496 crore, down 37.56 percent year-on-year. Tax revenue, on the other hand, increased only 9.52 percent year-on-year to Tk 28,289 crore during the period.
Meanwhile, the report also held a picture of the progress made in various sectors of the economy during the immediate past term of theAwami League-led government.
During the time, per head income almost doubled and stood at $1,190 in fiscal 2013-14. Poverty and extreme poverty rates which were 33.4 and 19.3 percent respectively in 2009 stood at 24.3 and 9.9 in 2014.
As the intensity of poverty eased, the average life expectancy increased to 70.29 years now from 69.04 years in 2009.
The report also mentioned the increase in exports, remittance and foreign currency reserves during the five-year period.