Centre for Policy Dialogue (CPD) held the decline in government's expenditure and the fall in export responsible for the major concerns of country's economy.
The CPD, a civil society think tank, came up with the observations while presenting an assessment report titled 'State on the Bangladesh Economy in FY2020-21 (First Reading)' on Monday, reports UNB.
The virtual function was addressed, among others, by CPD executive director Fahmida Khatun, distinguished fellow Mustafizur Rahman, and research director Golam Moazzem while senior research fellow Tawfiqur Islam Khan presented the keynote paper.
The CPD said public expenditure fell by a large amount during the first four months of FY2021 compared to the pre-COVID-19 situation. It found a substantial fall in development expenditure, with a 35.1 per cent decline in annual development programme (ADP) expenditure compared to the corresponding period of FY2020.
Operational expenditure was also lower, the CPD said, adding, "This happens due to the needs triggered by pandemic." With a view to saving about Tk 33,661 crore from the ADP in FY2021, the Finance Division has allowed ministries and agencies to spend only 75 per cent of the fund allocated by the government for ADP in FY2021, the CPD mentioned.
"The remaining 25 per cent can't be spent on operation under any circumstances," it said adding that the rest 25 per cent of the allocation has been put on hold since the Finance Division fears that it will be difficult to achieve the revenue target to achieve under the pandemic.
According to the CPD, export Bangladesh's earnings declined by 16.9 per cent and missed the growth target by a large margin of 12.2 per cent.
"The volatility in export earnings continued during the FY2021," the CPD observed adding that the total export earnings declined by (-) 1.1 per cent during the July-January period of FY2021.
"This implies that the total export earnings will require growing by 70.4 per cent during the remainder of FY2021 if the annual growth target of 21.8 per cent has to be reached," it mentioned. The CPD, however, made a positive observation that industrial production for large and medium industries increased by 7.7 per cent during the July-October FY2021 period while the corresponding figure for FY2020 was 5.4 per cent as per the BBS data.
Describing this scenario, Mustafizur Rahman said the government should think of stimulating the domestic demands to overcome the setback in export as the global demand is unlikely to make a turnaround anytime soon.
Tere should be a second stimulus package by the government to promote the small and median industrial sectors, he said adding that the remittance inflow made a 38 percent growth but it is not normal as there is no data about remittance outflow.
Farida Khaiun said the weak banks are a major area where the government should focus on for enhancing governance. She also recommended that weakly-governed banks should not be allowed to distribute stimulus package fund as they would create further p-Robles in the economy. Golam Moazzem said the government should give extra focus on food stocks as the global food market is volatile.
"Right now, our food reserve is 700,000 metric tons, which is about half of the required 1.5 million tons", he said adding that local traders may now take advantage of the situation to create a crisis in rice market by raising prices. He said the government should immediately raise the rice stock to 1 million metric tons through import on G-to-G basis.