The New Nation - Internet Edition

Pulack Ghatack

The economy is expanding poorly with low implementation of the Annual Development Plan (ADP), though the Government has earned substantial revenue in the current fiscal year.

The overall growth of revenue earnings has recorded 24.73 per cent growth in the first five months of the fiscal year and 36.73 per cent of the target of the budget for revenue collection has already been fulfilled.

But, the ADP implementation until November this fiscal was only 16 per cent, the lowest compared to the corresponding periods of the last three years. The ADP implementation rate of the first five months in 2005-06 and 2006-07 fiscal years were 19 and 20 per cent respectively. Of the Tk 26,500 crore ADP for FY 2007-08, only Tk 4,168 crore was spent during July-November.

The Government, however, is mulling to cut down the development budget to narrow down the deficit. But ultimately that will lead the economy to a lower growth in the current fiscal year, analysts observed. The target for GDP growth in current budget has been set at 7 percent. But the GDP forecasts have become totally confusing with the latest projection of BB.

The central bank in its latest monetary policy stance projected a GDP growth of 6.0-6.2 per cent in 2007-08, less than the Bangladesh Bank's independent Policy Analysis Unit (PAU) projection of 6.5 percent, but half a percentage point more than that World Bank's 5.5 percent.

The planning ministry data show Tk 2,542 crore or 15 per cent of the ADP's local component was spent, while the spending was Tk 1,626 crore or 17 percent of its foreign component that comes in the form of project aid.

In 2006-07, Tk 5,200 crore or 20 percent of the ADP was spent in first five months.

Noted economist Dr Atiur Rahman however said that the Government was following a prudent fiscal policy. While talking to this correspondent he said, budget deficit would come down due to it.

"But, the poor implementation of ADP will definitely hamper economic growth. Public investment will be affected with it. It is an inefficiency of the Government," he added.

In the current budget, total current expenditure is set at Tk 52900 crore while total development expenditure is set at Tk 28520 crore. The overall budget deficit is projected at Tk 22310 crore (4.2 per cent of GDP) to be funded by Tk 4260 crore in foreign grants, Tk 6310 crore in net foreign borrowing, and Tk 19280 crore in domestic borrowing including bank borrowing of Tk 7250 crore.

In 2007-08 fiscal year, the targets for overall revenue earnings and expenditure have been fixed at 10.8 per cent and 16.4 per cent of GDP respectively.

In the first four months of the fiscal year NBR tax revenue registered a 22.5 per cent growth over the corresponding period of 2006-07.

The NBR collected income tax of Tk 739.11 crore during the first five months (upto November) of the current fiscal, which was 193 per cent more than the correspondent period of the previous year. It collected Taka 252.11 crore in 2006- 07.

The collection of Value Added Tax (VAT) and excise duty has already increased by 20 percent in the first five months of the current fiscal than the same period of the previous year, he added.

Bangladesh Bank in its latest monetary policy statement said the flow of foreign funds also notably increased over the same period in the previous fiscal year.

As such the government's net borrowing from the banking system has been much lower than the programme limit although the Government is currently facing the challenge of funding the massive rehabilitation and reconstruction programme after the floods and cyclone.