DOT Desk
The country’s development efforts saw a significant boost in the outgoing year with public spending-led accelerated growth, LDG graduation eligibility and rolling out of the Delta Plan 2100, reports The Daily Sun.
Increased public investment and strong consumption led the country to post the highest ever 7.86 per cent growth in FY18 with $1,751 per-capita income, according to analysts.
In the calendar year 2018, another milestone for the country’s economy was achieving the UN recognition for eligibility to graduate from Least Developed Country (LDC) status.
A holistic and comprehensive development plan called ‘Delta Plan 2100’ also got the nod to harness the country’s huge potentials of being a deltaic region and to sustain the ongoing development efforts.
The massive plan focuses on water resources management, ensuring food and water security and tackling disasters in a disaster-prone country.
With the plan, the government expects to increase GDP growth by another 1.5 per cent in the near term by 2030 by making a hefty $37 billion investment.
In face of a slow private investment, growing public investment and bounce back in inward remittances played a catalyst role in the posting of 7.86 per cent growth, up from 7.28 per cent in FY17.
Economic analysts think that public investment actually was able to create higher demand for investment in the country, particularly private investment and production, while better foreign remittance led to strong consumption.
“I think the impressive growth was mainly driven by more public investment. Private investment and remittance also contributed a lot to it,” renowned development analyst Dr Zaid Bakht said.
He explained that public investment has been able to successfully create a demand for investment in the country in the context of low private investment.
On the supply side, growth was, however, driven by a faster-than-expected growth in industrial output and a sizeable farm sector growth despite crop losses due to flash floods last fiscal year, analysts added.
Public investment rose to 7.97 per cent of GDP from 7.41 per cent in FY17 while private investment saw a modest increase from 22.83 per cent to 23.10 per cent, raising the investment-GDP ratio to 31.23 per cent from 30.51 per cent a year earlier.
In FY18, Tk 1,64,085 crore allocation was made for ADP, which was nearly double the size of ADP three years ago, with hope of higher growth in line with mid and long-term development vision.
ADP implementation hit the highest rate at 93.71 per cent in the year with Tk 1,47,703 crore spending out of Tk 1,57,594 crore revised ADP outlay, much higher than 87 per cent execution in FY17.
Asian Development Bank analysis showed that the growth was led by a steep rise in private consumption as remittance recovered and higher public investment.
“This outcome reflected strong progress in implementing large public sector projects, notably the Padma Bridge and Dhaka metro rail,” ADB noted.
In the last five years, ECNEC approved a total of 1,336 development projects with a total Tk 15,72,814 crore budget, planning ministry officials informed.
The ADB also recognized private investment’s contribution to the growth as its share is about 75 per cent in the country’s total investment.
Remittance inflow bounced back in FY18 to $14,98 billion, 17.30 per cent up from $12.77 billion receipts one year ago, as the central bank took some measures to encourage NRBs to use the legal channel to send home money.
In 2015-16 fiscal year, the amount was $14.93 billion while it reached $15.32 billion in 2014-15 fiscal.
UN Committee for Development Policy (CDP) in March officially declared the eligibility of Bangladesh for graduating from LDCs to a developing nation.
Bangladesh earned the eligibility in terms of all the three key criteria: Gross National Income (GNI) per capita, Human Assets Index (HAI) and Economic Vulnerability Index (EVI).
According to the UN’s graduation thresholds, GNI per capita of a country should be $1,230 or above. Bangladesh’s GNI per capita was $1,610 at the end of the 2016-17 financial year.
For the HAI, a country must score 66 or above and for EVI 32 or below. Bangladesh scored 72.9 and 24.8 in the two indices respectively.
Bangladesh, however, will have to maintain the thresholds for the three indices till the country’s final graduation from the LDC category, which the UN will declare in 2024.
With a better and systematic water resource management under ‘Delta Plan 2100,’ the government expects to achieve more prosperity by the year 2100.
The short-term measures of the plan will be implemented by 2030, while the mid-term ones by 2050 and the long-term by 2100.
The government will need $37 billion by 2031 for ensuring food and water security and fighting disasters, according to the plan.
Execution of the plan will require GDP’s 2.5 per cent resources, including 0.5 per cent from the private sector, to implement new projects and improve and maintain infrastructure. By 2030, $29.6 will be needed every year, according to the plan.
“It is the country’s largest plan. Such a big plan has not been formulated in any other country. The plan focuses on how we want to see the country’s water management by 2100,” commented Planning Minister AHM Mustafa Kamal after approval of the plan.
“Water is our largest resource. We firmly believe that we won’t lag behind in agriculture if we can properly utilise our water resource. At the same time, we will be able to further consolidate our economy,” Kamal added.
The Delta Plan will give priority to six areas — coastal, Barind and drought-prone, haor and flash flood-prone, the Chittagong Hill Tracts, riverine and urban areas.
At least 80 projects under various ministries and divisions have been selected for implementation by 2030. Of them, 65 are infrastructure projects and 15 others for enhancing institutional capacity, efficiency and research.
Funds for the 80 projects would come from the government, Green Climate Fund (GCF), development partners, foreign direct investment and the private sector. The country is likely to get $2 billion in assistance from GCF every year.
Currently, the government spends 0.8 per cent of the GDP for Delta management projects and programmes.