WB backs BBS’s projected growth rate; predicts 0.7 % increase in growth in next fiscal ; It says 5.5 % GDP growth is good, respectable

By AKM Moinuddin

Dhaka, June 24 (UNB) - Supporting the BBS’s projected 5.5 percent growth in the outgoing fiscal, the World Bank (WB) predicts 0.7 percent increase in the GDP growth rate in the coming fiscal, if the government can ensure progress in investment, especially public investment, and financial management.
The WB thinks the 5.5 % GDP growth is good and respectable as it has been achieved in an adverse economic environment with the global recession, and natural disasters.
“The debate on growth rate projected by the Bangladesh Bureau of Statistics (5.5 %) and Finance Ministry (6 %) is unnecessary……we prefer the data of the BBS as it is the authority to provide such data,” acting WB country director Dr Zahid Hussain said on Thursday, while presenting the Bank’s views on the national budget.
The WB in its assessment report says that the proposed budget for the fiscal 2010-11 intends to be more self-reliant, infrastructure-friendly and inclusive, but it lacks a concrete roadmap for its implementation, specific directives on policy and institutional reforms.
“It’s an ambitious budget but we’re not saying that it’s unachievable. Desired economic growth with increased rate of ADP implementation will depend on three factors - fate (political stability, natural disaster), investment and financial management,” he said.
Dr Hossain observed that though the rate of ADP (annual development programme) implementation has increased in the outgoing fiscal, the implementation rate in the priority sectors like energy and infrastructure is not remarkable.
“A concrete policy stance and quick decision on the financial viability of the energy sector is needed to boost ADP implementation rate,” Dr Zahid said adding some tough decisions will have to be taken, and the sooner they are the better.
He said the government will have to ensure high implementation rate of investment programmes in key growth areas - energy, roads, railways, bridge, shipping and water resources.
Advocating subsidy in the power and energy sector, the WB economist said subsidy and additional allocation for power and energy sector would not hamper growth rather it would boost growth if power and gas supply can be increased through subsidy. But the subsidies will have to be made transparent through explicit provisions in the budget.
Replying to a question he said: “Foreign financing from donors isn’t increasing. If the ADP implementation rate, which is widely dependent on sufficient supply of electricity and gas, is increased, foreign direct investment will also see an uptrend.”
Explaining the WB’s stance on whitening undisclosed money, Dr Zahid said both political and non-political governments have allowed such scope in the past “It has not worked in the past, and there is no reason why we should think that it will work in the future.”
He said there are two arguments on whitening undisclosed money. One is that it will boost individual investment and the second argument is that it will increase government’s revenue income but it should be ensured that the undisclosed money will be invested in productive sectors.
“But our previous experience tells if we expect economic impact on investment and revenue through giving scope for whitening undisclosed money, it won’t be justified.”
The WB wants to see progress in enhancing the financial and administrative authority of local government institutions, greater efficiency and transparency in implementing new VAT Act and activating the newly established PPP (public-private partnership) scheme to ensure desired economic growth.
The WB assessment finds that inflation has eased but monetary growth is still high and continuation of vigilance is a must to check it. It suggested the government reduce its reliance on National Savings Certificates (NSCs).