7.2pc growth possible, but challenging: WB
Dhaka, June 20 (UNB) – The World Bank has said achieving 7.2 percent growth rate for Bangladesh in the next fiscal year might be possible, but it will be tough and challenging considering the crisis in Europe, internal infrastructural situation and energy crisis.
“It may be possible to achieve 7.2 percent growth but it may be challenging because of the crisis in Europe as well as Bangladesh’s internal infrastructure and energy crisis,” said Dr Zahid Hussain, a senior economist of the World Bank, on Wednesday.
He was addressing a press conference on the lending agency’s analysis on national budget proposed for the 2012-13 fiscal year held at its country office in the capital. World Bank’s lead country economist Sanjay Kathuria and Dr Zahid Hussain presented the analysis.
Dr Zahid mentioned that in the World Bank’s global economic outlook released earlier this month, the growth projection for Bangladesh for the next fiscal year had been stated 6.4 percent.
Dr Zahid as a senior country economist of the World Bank, however, said if the deficiencies and problems in the power, gas and road communication are addressed, it would be possible to achieve the targeted growth.
Replying to a question on the outgoing fiscal year’s growth performance of 6.3 percent, he said the rate is good and healthy considering the growth rates of the developing countries. “The 6.3 real GDP growth is a good performance in the present circumstances.”
Asked about the government’s decision to whiten black money for wooing investment, Dr Zahid said the rate of whitening undisclosed money is not significant under such facility given during the tenure of different governments since 1975. “Considering that experience, there might not be so much of money going for investment.”
Citing that the net foreign financing target of $ 2.3 billion in FY 13 is an ambitious target in light with what the country achieved ($1.4 billion) in FY 12, World Bank lead country economist Sanjay Kathuria said high-level discussion is going on between the government and the development partners as there is a huge commitment in the pipeline.
“It requires strong project management from both sides to foster movement by the development partners and also on the part of the government,” he said.
Replying to another question, Sanjay said even a project as large as Padma cannot have the capacity to change the disbursement profile dramatically.
The World Bank lead country economist in his FY 13 post-budget analysis showed that subsidies remain large as it had been projected to be 3.1 percent of GDP, equivalent to 1.5 times the total education budget and 3.5 times the health budget. He also observed that budgetary provision for subsidy (Tk 354 billion including Tk 100 billion arrears) may not be enough.
He also showed that subsidies have increased from 2.4 percent of GDP in FY 11 to 3.3 percent in FY 12 mostly to the contribution of BPC, BPDB, BCIC and BJMC.
Sanjay Kathuria observed that automatic price adjustment mechanism would help make subsidies in the budget more predictable.
He said private investment going down is a warning sign of growth sustainability and strongly indicates need for reforms in energy, power, land, infrastructure and ease of doing business.
Besides, foreign direct investment is critical to improve export and productivity of investment.
The World Bank lead country economist said holding on to monetary tightening and considerable cooling of international commodity price is needed to achieve the inflation target of 7.5 percent for the fiscal year 2012-13.
Citing lower private investment and national savings rate, Sanjay said private investment rate has declined from 19.5 percent in FY 11 to 19.1 percent in FY 12 alongside the fall in national savings from 26 percent in FY 11 to 25.2 percent in FY 12.
He also showed some evidence of crowding out during the July-April period of the current fiscal year as the net disbursement of industrial term loan has decreased to Tk 2,712 crore compared to Tk 5,273 crore during the same period of FY 11.
Besides, there has been a big slump in net disbursement of non-farm rural credit during the July-April period of the current fiscal year totalling Tk 7.3 crore, compared to Tk 232.5 crore during the same period of fiscal year 2010-11.
“It may be possible to achieve 7.2 percent growth but it may be challenging because of the crisis in Europe as well as Bangladesh’s internal infrastructure and energy crisis,” said Dr Zahid Hussain, a senior economist of the World Bank, on Wednesday.
He was addressing a press conference on the lending agency’s analysis on national budget proposed for the 2012-13 fiscal year held at its country office in the capital. World Bank’s lead country economist Sanjay Kathuria and Dr Zahid Hussain presented the analysis.
Dr Zahid mentioned that in the World Bank’s global economic outlook released earlier this month, the growth projection for Bangladesh for the next fiscal year had been stated 6.4 percent.
Dr Zahid as a senior country economist of the World Bank, however, said if the deficiencies and problems in the power, gas and road communication are addressed, it would be possible to achieve the targeted growth.
Replying to a question on the outgoing fiscal year’s growth performance of 6.3 percent, he said the rate is good and healthy considering the growth rates of the developing countries. “The 6.3 real GDP growth is a good performance in the present circumstances.”
Asked about the government’s decision to whiten black money for wooing investment, Dr Zahid said the rate of whitening undisclosed money is not significant under such facility given during the tenure of different governments since 1975. “Considering that experience, there might not be so much of money going for investment.”
Citing that the net foreign financing target of $ 2.3 billion in FY 13 is an ambitious target in light with what the country achieved ($1.4 billion) in FY 12, World Bank lead country economist Sanjay Kathuria said high-level discussion is going on between the government and the development partners as there is a huge commitment in the pipeline.
“It requires strong project management from both sides to foster movement by the development partners and also on the part of the government,” he said.
Replying to another question, Sanjay said even a project as large as Padma cannot have the capacity to change the disbursement profile dramatically.
The World Bank lead country economist in his FY 13 post-budget analysis showed that subsidies remain large as it had been projected to be 3.1 percent of GDP, equivalent to 1.5 times the total education budget and 3.5 times the health budget. He also observed that budgetary provision for subsidy (Tk 354 billion including Tk 100 billion arrears) may not be enough.
He also showed that subsidies have increased from 2.4 percent of GDP in FY 11 to 3.3 percent in FY 12 mostly to the contribution of BPC, BPDB, BCIC and BJMC.
Sanjay Kathuria observed that automatic price adjustment mechanism would help make subsidies in the budget more predictable.
He said private investment going down is a warning sign of growth sustainability and strongly indicates need for reforms in energy, power, land, infrastructure and ease of doing business.
Besides, foreign direct investment is critical to improve export and productivity of investment.
The World Bank lead country economist said holding on to monetary tightening and considerable cooling of international commodity price is needed to achieve the inflation target of 7.5 percent for the fiscal year 2012-13.
Citing lower private investment and national savings rate, Sanjay said private investment rate has declined from 19.5 percent in FY 11 to 19.1 percent in FY 12 alongside the fall in national savings from 26 percent in FY 11 to 25.2 percent in FY 12.
He also showed some evidence of crowding out during the July-April period of the current fiscal year as the net disbursement of industrial term loan has decreased to Tk 2,712 crore compared to Tk 5,273 crore during the same period of FY 11.
Besides, there has been a big slump in net disbursement of non-farm rural credit during the July-April period of the current fiscal year totalling Tk 7.3 crore, compared to Tk 232.5 crore during the same period of fiscal year 2010-11.
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