CPD sceptical about GDP growth assessment

A leading private think tank has deplored that economy's high growth performance are not reflected in key macroeconomic parameters.

It also raised a question regarding an array of recent steps to curb the volume of non-performing loans (NPLs).

The Centre for Policy Dialogue (CPD) said the country is maintaining higher economic growth over the years, but it is not reflected in the performance of key macroeconomic parameters.

Major parameters like private-sector credit, revenue mobilisation, private investment and employment generation are on the decline while productivity is far below the expected level, it added.

The contribution of demographic dividend, which is considered one of the strengths of the nation, to the economy also keeps falling in recent years, the CPD said.

The think tank made the observations at a programme in the capital on Tuesday to review the first 100 days of the incumbent government.

"When an economy grows, macroeconomic parameters also grow. But we don't see consistent changes of the indicators in accordance with growth," said CPD distinguished fellow Dr Debapriya Bhattacharya.

"Then what benefits will such higher growth bring for us?" he went on saying.

The noted economist said it is the government entities like the Bangladesh Bureau of Statistics (BBS), finance and planning ministries, and Bangladesh Bank (BB) need to offer answers to these questions.

He demanded full disclosure of the data considered to estimate the GDP (gross domestic product).

"We want appropriate estimation of growth so that the policies are not affected by any incomplete statistics," he said.

Reviewing the first 100 days of the government from January 03, Mr Bhattacharya said there were, apparently, lack of effort, enthusiasm and initiative.

The CPD observed that some facilities like tax waiver and interest rate cut given to certain quarters generated a mixed indication, he said.

"It seems a so-called group is controlling the state policies," Mr Bhattacharya cited.

Meanwhile, another distinguished fellow, Dr Mustafizur Rahman, laid emphasis on reducing inequality to ensure sustainable economic growth.

Laying emphasis on nourishing the demographic dividend, he said Bangladesh might put itself into a trap as a middle-income nation like many others did.

"Any decline in contribution by the young people is not a good sign for the economy," Mr Rahman added.

Sharing the CPD's review report, senior research fellow Towfiqul Islam Khan said the share of growth linked to demographic dividend fell to 13.84 per cent during 2010-2017 period from 24.45 per cent registered during 2000-2010.

Terming revenue generation a serious problem, he cited the finance ministry data and said that the total revenue shortfall comprising both tax and non-tax ones might reach about Tk 850 billion this financial year.

"Even if revenue collection is able to achieve the highest annual growth recorded in the last 10 years (23.4 per cent in FY '12), the shortfall for this FY '19 is going to be to the tune of Tk 720 billion," he said.

The researcher said the government recently announced lifting of the single borrower exposure limit for honest borrowers.

"But there is still no clear, concrete and quantifiable definition of an honest borrower," Mr Khan said.

CPD executive director Dr Fahmida Khatun said the BB on Sunday issued a circular revising loan classification rules to treat unpaid installment(s) of a term loan 'overdue' after six months of its (loan) expiry date.

"Is it a best practice?" she questioned.

She said the government looks set to curb NPLs through facilitating defaulters, which will ultimately encourage them and put pressure on banks' liquidity.

The private sector will face difficulties in getting formal finance from the banking sector, Ms Fahmida added.

CPD research director Dr Khondaker Golam Moazzem said pre-election gains in share prices have almost lost in post-election time.

The index of the capital market is moving between 500 and 600 points in a controlled way, he stated.

Mr Moazzem thinks, "It needs to be looked at whether there is any intervention by some quarters in the market."

Citing various challenges for a stable share market, he said there are some new companies whose share prices go down the face value.

"It means, the companies are not assessed or evaluated properly," he went on to say.

About the Awami League's election manifesto, the analyst said it also highlighted injecting more funds into the capital market, not focusing on governance.

"We cannot develop the market without giving serious attention to the issue of governance," he said at the programme.

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