10 economic challenges for next govt: CPD

CPD Executive Director Mustafizur Rahman speaks at a press briefing in Dhaka yesterday.Photo: SK Enamul Haq

The Centre for Policy Dialogue sees ten economic challenges for the next elected government, which include farm input costs cut for a better boro harvest to ensure food security and tamed inflation.
“We feel ten major challenges are ahead. From its first day in office, the newly elected government will have to move on to ensure a good boro output, through taking measures to reduce prices of inputs like fertliser and diesel,” CPD Executive Director Mustafizur Rahman told a press briefing in Dhaka yesterday.
The local think tank organised this briefing session just six days ahead of the ninth parliamentary polls, through which the country eyes a transition to democracy two years after a rule of the military-backed caretaker government.
CPD, which usually conducts a review of the state of Bangladesh economy in every six months, said it had unveiled its analysis to alert the next elected government about the challenges it would face from the first day of assuming power.
Taking notes of the manifestos placed by the political parties to woo voters in the December 29 elections, it also expressed its desire for a continued monitoring of the pace of implementation of these manifestos.
“Promises offered by the political parties are feasible and they will have to make sure that those are implemented to boost economic growth,” said Rahman.
The CPD laid bare its analysis at a time when the global economic turmoil causes massive joblessness and slump in consumption spending. But Bangladesh is yet to be hit, as its exposure to global financial market is low, it said, adding that Bangladesh focuses on low-end products, so its main export item apparels remain uptick.
“Till date, signs are fine. It appears that we may be able to achieve the targeted export growth,” said CPD official. “But we will have to be watchful on the Christmas sales. There are chances of accumulation of inventory if sales are down. It may lead to deferred orders,” Rahman went on.
The global crisis would also make the fight against inflation easier because of a downturn in the prices of almost all commodities like fuel, fertiliser and edible oil.
On point-to-point basis, inflation sank to 6.12 percent in November from 7.26 percent in October.
“But global economic crisis will deepen and the situation will be critical in 2009. We need to prepare ourselves to counter any knock-on effects of the crisis,” warned Rahman.
The CPD also recommended measures to address the energy crisis including diversification of sources and framing of a coal policy. It also suggested a cut in inflation, continuation of the current accommodative monetary policy and maintenance of the pace of institutional reforms.
The CPD observes that some economic indicators, such as growth in agricultural output are favourable. Driven by buoyant credit expansion, industrial production, which lost momentum in FY 2007-08, has also regained.
“But the low level of investment is going to be a major concern for achieving the required level of growth,” said Rahman, although he observed that both local and foreign investment proposals have rebounded during the January-October period of 2008.
Referring to the power sector, the CPD executive director said power problem will worsen in the coming boro and summer season despite the fact that the generation of electricity has marked a marginal rise since the last fiscal.
He suggested that the new government should prioritise the framing of a National Coal Policy that addresses both investment and environmental concerns.
He also felt it urgent to resolve the offshore block issue with neighbouring India and Myanmar.
On FY 09 growth projection, Mustafizur Rahman said macroeconomic performance will depend on how the economic scenarios evolve in the second half of the current fiscal and how financial crisis and recession impacts on export, remittance, domestic resource mobilisation etc are tackled.
“But considering the on-going trend of the economy, achieving 6.0 percent growth rate target will be a pragmatic one,” he said.