The New Nation - Internet Edition

Staff Reporter

Political stability, smooth transition of power to elected government are prerequisites for the development and economic progress of Bangladesh, said Hua Du, Country Director of Asian Development Bank (ADB).

Bangladesh needs to develop its human resources and catch up with huge foreign investment for infrastructure development, which would help reduce poverty and increase growth.

"We are looking forward to a peaceful transfer of power to the elected people's representatives in the upcoming elections which would bring benefit to the country's economy," she said to the media while releasing 'Quarterly Economic Update, Bangladesh' at ADB office in the city.

Replying to a query the outgoing ADB country Director said investment in power sector as well as infrastructure and communication development remained a big challenge despite increase in exports and inflow of remittances to help the country's economy on its growth trend path.

She said taking quick decision is also important for the Government to ease the electricity, gas and other infrastructure constrains so that production activities in different sectors can go unhindered.

She said ensuring good governance, efficiency and transparency in private and public sectors could also help in facing those challenges.

On the issue of GDP Hua Du said GDP is expected to grow by 6 per cent in FY 2008 because of bumper production of Boro even after flood and cyclone.

She said political uncertainty, weak infrastructure, vulnerability to natural disasters and volatility in oil and food grain prices are downside risks in the near and medium term prospects of GDP.

On the issue of inflation she said the rate of inflation reached 10 per cent in March of the current year, which was 7.2 per cent in June of the last year.

She said higher international food and non-food commodity prices, shortfall in domestic food grains production, distribution and retail management chain and monetary accommodation of previous years and panic buying made inflation higher.

Regarding food price inflation she said though the prices of food are declining but still it remain high. She said food subsidy to the poor and social safety net for them needs to be strengthened.

She said revenue performance improved after several years of poor performance. Revenue collection by National Board of Revenue rose by 23.1 per cent in July- March FY- 2008. The fiscal deficit in FY- 2008 is likely to increase to 4.8 per cent of GDP compared with 3.2 per cent in the preceding year.

The economic update mentioned rapid structural change and dramatic economic growth in telecommunications sector and high prices of construction materials affecting the implementation of Annual Development Programme (ADP) and exchange rate remained stable.