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Macroeconomy and budgets - from FY10 to FY19

Masih Malik Chowdhury | June 24, 2018 00:00:00


It is said that investments can expedite the growth of any economy. However, pragmatic and prudent management of budgets can consolidate such growth in an efficient manner. Again, good governance of the macro-economy will yield still better results for the economy. Indeed, innumerable micro units give rise to the macro-economy. As such, the microscopic entities of the economy need good governance with result-oriented financial management.

Bangladesh economy has passed through a gestation period during the last 25 years or more. And in the past decade, during the two tenures of the present government, it has entered a sustainable development or growth phase. It performed very well on the Millennium Development Goals (MDGs), making Bangladesh an example for the least developed countries (LDCs) striving to upgrade or elevate into MIC. Bangladesh has done well by achieving all the three features needed for becoming middle income country (MIC). Generally, only two out of three features are needed for securing elevation into MIC from LDC.

However, while such an achievement in the world's most densely populated country is attributable to government policies, many matters and issues have been ignored due to absence of good governance. With genuine good governance, our gross domestic product (GDP) growth would have been higher by at least 2.0 per cent. Again, the corruption perception index shows we have many stairs to climb yet. As such, appointment of an Ombudsman for promoting good governance should be considered.

Prioritisation of development projects are mostly done based on political biases instead of real needs. Since it is the tax money of citizens, we should remain citizen-centric and accountable to them while incorporating projects in the annual development programme (ADP), keeping in mind that the money comes from the people.

Bangladesh economy was long trapped in a 6.0 per cent GDP growth rate imbroglio. Successive governments tried to surpass it in the past, but was unable to reach such a goal. During the first six years of the current decade, the GDP grew at the rate of 5.57 per cent to 6.55 per cent until FY 2014/15. However, since FY 2015/16, it made a dynamic turnaround and achieved the GDP growth of 7.20 per cent. Indeed, the growth rate has been sustained in the subsequent two years as well at 7.28 per cent and 7.65 per cent respectively. It is projected to be 7.8 per cent during FY 2018/19.

Efficiency in spending public money is a prime concern in making economic growth materialise. Certainly, Bangladesh has been and is still an unevenly managed economy. However, with enhanced ADP allocations and increased budgetary figures, the economy took off gradually through better economic management. But good governance is yet to be seen in practice.

We can have a better investment figure in development by incorporating allocation in education sector as investment in ADP. If we look into total budget outlay, we can see that it was Tk 1,138 billion (Tk 1,13,815 crore) in FY 2009/10 and rose to Tk 4,645 billion (Tk 4,64,573 crore) in FY 2018/19. It shows a four-time rise. As we recap the GDP, it was Tk 7,975 billion (Tk 7,97,539 crore) in FY 2009/10 and expectedly jumped to Tk 25,839 billion or Tk 25,83,961 crore (estimated) in FY 2018/19. The GDP growth rate as are seen has been sustainable at 7.20 per cent to 7.8 per cent (estimated) between FY 2015/16 to FY 2018/19. The investment in the economy also rose in a dynamic manner. In FY 2009/10, education plus ADP was Tk 429 billion (Tk 42,887 crore) that has reached Tk 2,409 billion (Tk 2,40,944 crore) in the upcoming FY 2018/19.

Notwithstanding the absence of good governance, the ADP implementation rates have been between 90 per cent and 96 per cent during the period.

The time management of ADP projects have however grossly violated the micro-economic management efficiency guidelines in practice. Not all the money in ADP was invested in a timely manner. After 6/8 months of any FY, one could routinely observe that the ADP was at 20 per cent implementation level. This means the government pressed for its full implementation within the remaining 6/4 months of FY, and the agencies hurriedly spent huge amounts in a short time. Again, increased volume of spending most often failed to limit the expenditure and maintain the timeline. This caused the nation to suffer adversely. For example, ADP projects like flyovers and highways have been persistently given extensions without proper assessment of reasons and due consideration of financial management issues.

All these phenomena have however increased investment outlays by huge margins and unabatedly extended the timeline. Thus inefficiently executed projects took longer time and involved higher investments. There have been glaring examples of inefficient ADP projects that taxed the economy as well as the people quite adversely. These were not pro-people by any means.

For making larger allocations in Budget with better efficiency in terms of timeliness and effective utilization of resources for optimum benefits, we need to spend on capacity building for good governance. Many thrust sectors in the economy have huge appetites for investment. But these are mostly picked up on the basis of political priorities and not based on unbiased assessments. The needs of these thrust sectors have to be taken care of by applying due attention and diligence. Imparting training on technical aspects of projects to the staffs of executing agencies can yield good results in promoting good governance. The executing agencies should also attach top priority to preventing misuses and abuses of investment resources.

Steps should also be taken to limit the reckless extensions of project tenures by bloating the investment outlays. It will have direct impact on increasing the growth rate even without new investments. In the backdrop of global recognition for Bangladesh as a role model of economic development, it is now high time that we proactively revisit our limitations. This would surely augur well in our march towards the attainment of SDGs.

Masih Malik Chowdhury FCA is Past President (2015) of ICAB and Founder Partner of Masih Muhith Haque & Co. Chartered Accountants.

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