Bangladesh holds sustainable position in economic growth in consideration of macroeconomic performance. However, the increasingly globalised economy of the country is facing a number of challenges and therefore, it is urgent need to identify these challenges with view to ensure continuation of the growth performance.
Speakers said this at seminar on ‘An analysis on Macroeconomic performance of Bangladesh’ organized by the Institute of Chartered Accountants of Bangladesh at CA Bhaban on Thursday (15 May 2014).
Moazzem Hossain, Editor of the Financial Express was present as the Chief Guest. ICAB President Showkat Hossain FCA delivered the welcome speech while Council Member and Past President Anwaruddin Chowdhury FCA moderated the program as Session Chairman. ICAB Council Member Md Shahadat Hossain FCA presented the key-note paper.
Speaking as chief guest Mr Mozzem Hossain said Bangladesh can do better for advancement of economy in terms of macroeconomic level. To attain a middle income country status by 2021, substantial amount of investment is required. In this regard, government should encourage local investment by reducing bureaucratic tangle and financial corruption.
He said currently the Gross Domestic Product to investment ratio is around 25 per cent adding it should be at least 32 per cent to reach that goal.
The FE Editor urged the professional accountants to carry out detail study on the size of the shadow economy.
He said Bangladesh has some strategic advantages over its competing nations to grow more faster.
He said the economic growth over the last two decade were significant saying the country should have been advanced more as it has a number of advantages like huge working population accompanied by and cheap labour.
He said land productivity still remain the below even southern part of India let alone the other agriculturally rich nations.
He said the land productivity should be enhanced to rise its food production.
Showkat Hossain said that in consideration of Macroeconomic Performance, evident shows that Bangladesh holds the sustainable position in economic growth as the GDP growth rate is on an average 5% to 6.5%. He further said that on the policy side, a good record on growth seems to have benefited from impressive macro stability. Inflation hasn’t touched double digits for almost two decades, while public and external debt situation is fairly comfortable, he added.
Describing improvement in health sector, education sector and social protection of the poor, the ICAB president said, Bangladesh has surpassed most low income countries (LDCs) in this regards. However, to achieve the desire growth, the country is facing some challenges and therefore, it is urgent need to identify the challenges to ensure further development in economic infrastructure, good governance, improved and competent financial sectors, export competitiveness, effective education and health system, employment and workforce with gender equality, advancement of science and technology, demography and environmental sanctuary, balanced urbanization and better agriculture management, etc.
He said, inclusive growth implies a direct link between the macro and micro determinants of growth and captures the importance of structural transformation for economic diversification and competition. To ensure a sustainable economic growth the government should have to take a strategic Financial Management Policy, Mr Showkat further added.
He said, special care for capacity building of small and medium enterprises (SMEs) in the emerging trade order is necessary for substantial poverty reduction.
The keynote presenter elaborated the country’s macro performance and the development of economy in his paper. He forwarded some recommendations to attain desire growth in macroeconomic level performance. He said that on the basis of present fiscal policy, steps are needed to make the economic growth more dynamic; to protect the high rate of inflation, to reduce the inequality of the society the government should take steps to increase the share of direct tax. He also said that for increasing the share of direct tax new tax payers need to be identified.
He mentioned that five percent of high income level people are holding almost 27% of GDP. According to this information five percent of the population i.e. seven million people’s average yearly earnings is more than Tk 300,000 which exceeds the minimum threshold of taxable income. So, the number of tax payers of the country should be almost seven million but at present Tax Identification Number (TIN) holders are only two million.
To keep the inflation within the tolerable range through controlling the demand pull inflation the central bank should bring down the annual money and credit growth at a reasonable rate, the paper presenter said.
Some recommendations are: The program for social safety which has been taken by the government may be continued with larger form. In addition to that subsidization of products like providing goods and services that everyone needs cheaply or freely (such as food, healthcare etc), governments can effectively raise the purchasing power of the poorer members of the society. But to remove the objections as mentioned earlier and to ensure their proper distribution assistance of various professionals may be taken.
Minimum wage legislation which has been introduced by the government for the garment workers the minimum limit and area of industry may be increased to make consistent with the prevailing inflation and raising the income of the poorest workers.
To create employment opportunity for resolving unemployment problem in the country through increasing the growth of small and micro enterprises the government should take effective steps to ensure sufficient amount of credit by creating marketing opportunity to sale the products of small and micro enterprises.
According to present government accounting system there is no reconciliation between accumulated budget deficit and amount of government debt which is essential to confirm both the balance. Apart from this there remain lots of anomalies such as difference between balance of government debt as per record of ministry and record of Bangladesh Bank, balance between Bangladesh Railway and Bangladesh Bank and so on. Due to non reconciliation of those differences, frauds and errors may remain undiscovered. To ensure the transparency and accountability those issues may be resolved with the assistance of professional accountants.
Overall budget size may be kept within BDT 2500 billion i.e. maximum 15% over the previous year’s budget. Unnecessary development activities may be avoided to reduce the pressure on deficit budget, government debt, interest expenses and finally to keep control over inflation of the country.
Sufficient amount of budget may be allocated for health sector for providing maximum health service to the rural poor and hard core poor people. Sufficient amount of budget may be allocated for providing training to the small and micro entrepreneurs and small investors in the capital market.