Impossible to meet growth target as economy under pressure

The government is borrowing the most from the banking system and if it continues, the government’s bank borrowing may cross the target

On the basis of various indicators, it is apparent that our economy is under tremendous pressure even though there is no recession yet. In essence, the country's economic progress is not satisfactory at all.  

Export growth is not good at all. In fact, this area has been experiencing negative growth over the last few months. The negative growth exceeded 17 percent in October. The growth was 7 percent during the July-October period. 

The import of capital machinery and industrial raw material has declined considerably. As a result, the government's revenue collection is not reaching the target. In fact, there is a big shortfall. This is creating big pressure on the government's fiscal management. The government has to borrow a large amount of money from internal sources to finance the budget deficit. 

The government is borrowing the most from the banking system because the sale of savings certificates has dropped due to various restrictions. 

If such borrowing continues, the government's bank borrowing may cross the target, and private entrepreneurs will be deprived. 

According to the latest Bangladesh Bank data, private sector credit growth has dropped to 10 percent, which is worrying. 

And if private sector investment does not pick up, there will be no new employment and no rise in revenue collection. In fact, the government will have to borrow again to finance the budget. 

The government should take effective initiatives after analysing this information. At first, the government should analyse the reason for the slump in export earnings. It has to find out if the problem is in the demand side or in the supply side.  

If there is a demand side problem, we have to find the reason for the decline in exports. Different countries including Vietnam and Cambodia are doing better than us in garment exports to the international market – then why are we lagging behind, what is our problem?   

We have to find the reason for it and solve the problem. Increasing exports by devaluing the Taka will not bring in any sustainable positive results. 

And the overall investment friendly environment in the private sector is not improving. Our position in the World Bank's 'ease of doing business index' is still 168, which means that 167 countries are above ours. 

On top of that, our rank is not good in the corruption index either. The government has to pay attention to the problems in the long run. 

Analysing all the factors, I apprehend that the GDP growth target will not be fulfilled in the current fiscal year too. Economic growth was shown to be 8.1 percent in the last fiscal year, but I do not agree with that figure. Again, for the current fiscal year, the GDP growth target has been set at 8:2 percent which will be impossible to meet. 

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