The Financial Express

Lacklustre economic indicators weaken fiscal framework

| Updated: August 31, 2021 09:05:07

Lacklustre economic indicators weaken fiscal framework

Bangladesh's premier trade chamber, MCCI, finds some less-promising economic indicators-revenue mobilisaiton and public expenditure in particular-are weakening the country's fiscal framework.

The Metropolitan Chamber of Commerce and Industry, Dhaka, calls for the policymakers to take appropriate measures for addressing some major areas of concern, in the process of recovery from the covid damage.

"The fiscal framework continues to be weak in view of poor achievements, more specifically, both in terms of revenue mobilisation and public expenditure," it says in a review.

It noted unemployment situation and low investment as also a challenge in the country.

"A significant increase in public and private investment is necessary to maintain competitiveness and generate further growth," the premier chamber body says.

It feels that the policymakers should focus on strategies for post-covid recovery and concentrate on policies to upgrade various private sectors so that more successful revenue-earnin streams can be generated and reinvestments from existing investors attracted.

Bangladesh, like many other countries of the world, struggled with the number of infections and the new-normal covid-19 measures such as social distancing, wearing masks, virtual meetings, online classes etc. since reporting its first case on 08 March 2020.

However, the recovery period is uncertain, but much depends on vaccination and the strength of the global economy.

"Non-availability of mass vaccination may appear to be one of the critical factors for slower economic recovery."

The trade-promotional organisation says the economy had been showing some signs of recovery in April-June quarter.

The stimulus packages comfort the business groups, from large firms to petty micro-enterprises, which eventually helped the economy to get a boost again.

It noted that export and remittance are two important drivers of the economy, and amid the pandemic, both the areas had done well.

"Robust remittances and export earnings had facilitated Bangladesh's economic recovery in the just-concluded fiscal year (FY21)."

Year on year, exports in FY21 grew 15.10 per cent and the remittances grew by 36.11 per cent.

The inward remittances have huge positive impact on rural economy to sustain the domestic consumption demand, which has multiplier effects on other economic sectors, especially the small and medium industry.

The MCCI noted that the rate of inflation is under control and foreign-currency reserves are in a satisfactory position.

The exchange rate has long remained stable while the balance-of-payments situation is also in positive trajectory, it noted.

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