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The Centre for Policy Dialogue
initiated its flagship program the Independent Review of
Bangladesh's Development (IRBD) as an annual exercise back
in 1995. This pioneering exercise, implemented under the
leadership of CPD's founding Chairman Professor Rehman
Sobhan, has continued to produce annual reviews of
Bangladesh economic performance each year over the past
years, the current one being the 14th volume in the series.
In line with the previous publications, the IRBD 2007
examines and analyses key macroeconomic performance
indicators of Bangladesh, in the fiscal year 2007. A major
objective of the IRBD series has been to raise awareness
about key developmental issues in Bangladesh and stimulate
an informed debate around important issues. The IRBD 2007
has been prepared with this objective in view.
As followers of the CPD's IRBD exercise will know, the IRBDs
are published in two volumes. The present volume, an
analysis of macroeconomic performance is accompanied by a
companion thematic volume on issues of long-term strategic
concerns.
The FY2007 witnessed some major developments both at global
and domestic levels. It has been a critically important time
for Bangladesh from the perspective of political
developments, having seen three consecutive governments -
the immediate past political government, the first caretaker
government and the second caretaker government. The present
volume of the IRBD 2007 analyses the performance of the
economy in FY2008 and also anticipates some of the likely
outcomes in the following year, through an economic outlook
for FY2008.
Chapter I of this volume presents an assessment of the state
of the Bangladesh economy in FY2007. The chapter mainly
concentrates on six major areas - growth-savings-investment,
poverty situation, public finance and financial sector,
monetary sector, real economy and external balance. It
presents an assessment of progress in each of the aforesaid
areas during the financial year. The discussion identifies
major challenges that need to be addressed in those areas in
the coming days and months. Evaluation of the performance of
the economy indicates a number of positive developments in
areas such as revenue collection, export growth,
manufacturing production, remittance flows and flow of
equity capital to the stock market. However, the economy had
to address a number of challenges in this year which had
serious adverse implications for the overall performance of
the economy, alongside standard of living of the people and
their welfare. A major issue of critical policy concern was
the price hike of essential commodities, particularly of
food items. Along with this, some of the other adverse
developments were a fall in gross disbursement of
agriculture credit, stagnant foodgrain production, acute
shortage of electricity, poor implementation of the public
investment programme, lower than expected disbursement of
foreign aid, etc. As is known, some of these adverse factors
are being passed on from one year to another and there is a
need to address these issues on an urgent basis.
Chapter II is based on a set of proposals to the Ministry of
Finance, Government of Bangladesh (GoB) that was prepared by
the CPD for consideration, during the national budget for
FY2007-08. The proposed measures cover areas such as revenue
generation, investment promotion, export expansion, growth
of local industries, balanced regional development, reform
of the tax administration, producers and consumers price
support and the needs of the marginalized group.
Chapter III of the present volume provides an analysis of
the National Budget for the FY2008 and the Revised Budget of
FY2007, which were placed before the country on 7 June 2007.
The FY2007-08 budget was a departure from the traditional
ones and distinct in nature since it was the first time that
a full year budget was presented by a non-party caretaker
government. The budget was expected to be free from
political pressures and less attuned to pressure from vested
interests. This section analyses the various proposals made
in the budget, evaluates these against the expectations and
highlights the outstanding areas that require further
consideration.
Chapter IV includes an interim report presented by the CPD
on recent trends in the economy during FY2007-8, their
implications for performance during the rest of the fiscal
year and identifies a set of structural and institutional
issues, which need to be addressed by the government. The
study recommends a number of suggestions for moving the
economy forward and highlights a feasible set of policies in
areas such as revenue earnings, revenue expenditure, Annual
Development Program, budget deficit, monetary and real
economic growth and external sector situation.
Chapter V provides a summary of recommendations from the
CPD's study on "Price of Daily Essentials: A Diagnostic
Study of Recent Trends", prepared for the Ministry of
Commerce, Government of Bangladesh. As will be appreciated
by the readership, creeping price of essential commodities
has been one of the major challenges faced by the caretaker
government. Higher inflation rates for prices of food (over
the price of non-food ones) and higher consumer price index
in rural areas (compared to urban areas) are two important
distinctive features of the current inflationary trend. It
is widely known that food price inflation hurts people with
low income, fixed income earners, the vulnerable and
marginalized groups. It has adverse implications for
investment and competitiveness of Bangladeshi exports. This
chapter presents a package of policy suggestions in view of
this.
The present IRBD volume also includes a dialogue report on
the "State of the Bangladesh Economy and Budget Responses
FY2008" organized by the CPD on 14 June, 2007 (Annex I). The
last section (Annex II) contains a chronology of the major
economic events that occurred during FY2007 and also covers
the period between July-November, 2007 of FY2008.
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