The Asian Development Bank (ADB) rising inflation, said inadequate electricity generation, lower than expected domestic revenues and foreign aid, global economic slowdown and political instability important challenges are Bangladesh economic growth this fiscal year.
"Continuation of the high oil and energy subsidies means even lower allocations for priority social and physical infrastructure, the long-term growth prospects of the country," said the latest quarterly economic update (QEU) of the ADB Friday.
The Manila-based multilateral capital lender said at price in power and hampering the development of the sector and exerts pressure on the State budget through greater subsidies.
The ADB report also said that the estimated budget deficit at five percent of gross domestic product (GDP) could cross this fiscal year due to higher grant allocations.
He said: "More reminiscent of the banking system could stoke inflation, displace to undermine private investment and tax matters of discipline in the current year."
"On the other hand acts meet the deficit target of trimming annual programme (ADP) construction of essential infrastructure development."
The ADB map shows that Bangladesh supply energy scarcity say growing power supply and energy deficiency the binding to achieve the reduction targets growth, work and poverty in the sixth five year plan (FYP) limited.
The Government is to 2,157-megawatt (MW) power generating by 2012, but when gas does not improve availability, higher production, may be difficult to meet the targets, it added.
Increased attention is required for the production of investment in renewable and clean energy, completing the coal policy, import of makes and LPG, attract private investment and improvement of the capacity and governance in the sectors of energy and energy recommended.
The Manila-based lender praised the initiatives of the Government on major infrastructure such as Padma bridge and Dhaka elevated expressway.
Is it claimed however, that in road and significant increases, but efficiently use funding such assignments as well as monitoring of the costs and the quality of work, are essential.
The economic update said growth in agriculture probably slow to 4.6 percent in the fiscal year 2011-12 of 5.0 per cent in cost-cutting program, due to the high base in two consecutive years.
ADB proposes for continuous support from the Government irrigation systems for new areas under cultivation, bring cropping intensity through the dissemination of hybrid crop cultivation and create an incentive system to improve the profitability of agriculture in maintaining high agriculture to expand growth.
He said Bangladesh challenges for macroeconomic stability in program were rapidly rising inflation and the growing imbalance in external trade.
The Government has an expansive approach for the FY2012 budget to help to achieve a growth rate of 7.0 percent, while with the aim of containing inflation in 7.5%.
A higher economic growth with macroeconomic stability, lead, close coordination will contain the money and financial credit growth, inflation and balance of payments pressures to ease, while you a steady flow of credit to the private sector must be guaranteed, he said.
The economic update said: "Budget finance on the banking system should be closely monitored." "To achieve employment and poverty reduction, under the sixth FYP goals for growth, large investments in energy, transport, human capital and technological improvements are required."
Political and institutional reforms must be accelerated and capacity constraints need to on line agencies quickly addressed, to create conditions to support the better results in growth, notes.
ADB said that the industry growth is expected to 8.8 percent in edge
FY2012, with exports, maintaining the good trend, axial sectors respond incentives in fiscal year (FY) positively to the Government 2012 household, small and medium-sized enterprises (SMEs) and agro industry developed better due to the lively domestic demand and easier access to credit and growth in the housing and construction.
In order to ensure that the strong sector should be provided power, gas and electricity, reduced port services, improved, and the cost of doing business, the Bank suggested.
ADB' economic update said every six months (July to December 2011) monetary policy objectives continue to the Central Bank more stringent monetary policy stance on purely in credit expansion to control to preserve balance inflation and foreign trade.
The hope about the possibility of controlling monetary policy credit flows added on wasteful, fixed unproductive and with high risk, and at the same time appropriate credit from the productive sectors in industry, agriculture, trade and other services it.
ADB said: "Widening access to credit for the underserved productive sectors will be one of the main priorities under the current monetary policy statement."
"Regulating credit to unproductive sectors flows, and redirect them to the a great challenge, the close monitoring by the Central Bank be productive commercial banks credit."
The Asia Pacific regional lender said that behavior after remained a sharp decrease in prices the big stock market indicators in early December 2010. "Dhaka stock exchange (DSE) general index fell by 26.2 per cent from the level by the end of June 2011 the end of December 2010."
"The Government announced ad-hoc measures to stabilise the market, and improve the confidence of investors, including advice from commercial and merchant banks their profits, commercial banks, which forces the practice clients, the shares to sell, and remove to stop index breakers rely to reinvest." "Bangladesh Fund to stabilize the stock market, the Government has set up", added the economic update.
Source: thedailystar.net
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