It says failure to ensure factor safety standards can affect overall export
The World Bank on Sunday expressed its doubt about achieving the government’s target of GDP growth at 7.2 per cent and revenue collection to Tk 1,36,090 crore in
the upcoming fiscal year 2013-2014.
‘Achieving gross domestic growth at 7.2 per cent is unlikely because of political uncertainty in the country, sluggish growth in world trade, image crisis in international arena and struggling global economy,’ the multilateral lending agency said in its budget analysis.
Earlier, the WB projected that the country’s GDP would grow at 6.2 per cent in the next fiscal year.
Terming the revenue collection target at 20 per cent growth over the current fiscal year ambitious, it said that projected revenue collection from income tax, value-added tax and duties might not be possible in the existing domestic and international economic situation and under the government’s revenue measures taken for the next fiscal year.
Zahid Hussain, lead economist of WB Dhaka office, presented the analysis at a news briefing held at its country office. WB country director Johannes Zutt also spoke at the programme.
The WB also said that political uncertainties over the next few months centring the next general polls would create challenges in fiscal policy implementation and administrative oversight would need to intensify to overcome the challenges.
At his presentation, Zahid termed the proposed budget as a mixed bag composed of opportunities and challenges.
‘The budget will be supportive in attaining projected GDP growth if the government can overcome the challenges such as revenue mobilisation, deficit financing and implementation of annual development programme,’ he said.
He suggested that the government should identify some key projects from various sectors and focus on them for completing the projects in the upcoming fiscal year as those would play an important role in GDP growth.
The international lending agency identified seven such projects including Dhaka-Chittagong Highway Upgradation, Construction of 3rd Karnaphuli Bridge, and Bangladesh Railway Sector Improvement Project from transport sector and eight projects mostly related to power generation from power sector.
Zahid said that speedy implementation of those projects would be supportive in achieving GDP growth, export growth and accelerating investment scenario in the country.
The WB, however, stated that the government would face severe problem in recovering possible shortfall in revenue collection as it would be able to meet up the deficit from funds keeping in the proposed budget as block allocation.
‘There will not be a major problem if revenue collection falls short by Tk 5,000 crore or some other amounts. There are some fiscal space in the non-development budget such as Tk 15,360 crore which is kept for investment in shares and equities and the government could adjust the revenue deficit by these funds,’ Zahid said.
Policy and institutional reforms are needed more attention for achieving budgetary targets, he said adding that improvement in productivity and quality of development expenditure also important for the country.
The WB said, ‘Though growth projections made for export, import and remittance are possible to achieve, those targets are not consistent with 7.2 per cent GDP growth.
It also termed the foreign financing target to meet
up budget deficit as ambitious as the government would have to expedite the implementation process of foreign-aided projects many times.
Zahid said that around 14.7 per cent of incremental revenue would come from 14.7 per cent nominal GDP growth but the government did not clear that from where the remaining 5.3 per cent incremental revenue would come.
In reply to a question, Zutt said that WB’s financing at government’s prioritised development projects would indirectly help the government in implementing the Padma Bridge project.
‘The WB is not financing directly in the project but it’s financing to other prioritised development projects can make a contribution to build the bridge. The government could freely shift its own resources in building the bridge because of our financing to other projects,’ he said.
Regarding garment sector, Zutt said that the failure of the government and the RMG factory owners in ensuring the safety standards in factories can largely affect the country’s overall export in the days to come.
Zutt said the reputation risk posed by the ‘unspeakable, preventable tragedies’ of Tazreen fire and Rana Plaza collapse is going to stay in the way of the RMG export for a long time, if no serious attempt is taken by the government and the private sector to address the challenges of the safety issues.
-With New Age input
