Bangladesh Economic Update on December 2013

The Unnayan Onneshan (UO), in its current issue of Bangladesh Economic Update focuses on the overall economic condition of the country at the half way stage of FY 2013-14. The end of this calendar year also marks the completion of the tenure of the current government. This issue investigates the sector wise performance of the current fiscal year in light of the targets set in the annual budget, Medium Term Macroeconomic Framework (MTMF) and other national plans, policies and goals. It also attempts to
explore the current implementation status of the Annual Development Programme (ADP) and makes projection thereof. The seeds of the present challenges have been palpable and articulated in a number of publications of the UO. The economy is likely to experience a decelerating rate of economic growth for the third time in a row. In FY 2010-11, the rate of growth in gross domestic product (GDP) was 6.71 percent, which later declined to 6.23 percent in FY 2011-12, and further fell to 6.03 percent in FY 2012-13. The Unnayan Onneshan projects that the rate of growth in the present fiscal year (FY 2013-14) is likely to fall below the decadal average of 6 percent due to fiscal and monetary policy management trap, functioned by lack of policy farsightedness coupled with political contestations. The measures proposed in the budget, coupled with a contractionary monetary policy and orthodox exchange-rate management agreed as part of a three-year programme between the government and the International Monetary Fund (IMF) have led to slide in the rate of growth. As regards the fiscal management, there is a mounting pressure on collection of revenue from the beginning of the fiscal year. In the first quarter of the current fiscal year, tax revenue from sources such as supplementary duty (import) and excise duty has depicted a negative rate of growth at 5.66 percent and 24.03 percent, respectively from those of first quarter of FY 2012-13. Besides, relatively lower rate of growth