Finance Minister AMA Muhith forecast Monday a downsized economic growth at 6.5 per cent instead of the 7.2 per cent target set for the current fiscal year, in view of the restive politics during the last three months of the calendar year 2013.
"It is true that the growth target of 7.2 per cent will not be achievable following economic losses caused by destructive activities during October to December last," the finance minister said while presenting the half-yearly report on the state of Bangladesh economy in parliament --- the Jatiya Sangsad (JS).
"By analysing economic indicators until December last, we now hope that the economy may expand at the rate of 6.5 per cent this fiscal year (FY)," Mr. Muhith said.
"We'll be able to attain 6.5 per cent growth in the economy. And we have all preparations and possibilities to be a middle-income country by 2021," he said.
He said there are many reasoning in support of attaining 6.5 per cent growth this fiscal year (2013-14).
He said the World Bank and the International Monetary Fund (IMF) forecast GDP growth for 2013-14 fiscal year at 5.7 and 6.0 per cent respectively.
He said Bloomberg projected the growth target at 6.3 per cent, while Bangladesh Bank at 6.0 per cent.
"I'm not that frustrated about the GDP target as many indexes have surged. Aus production also witnessed a boost," he said.
However, the finance minister sounded optimistic about attaining the target of 7.2 per cent growth in gross domestic product (GDP) in the first quarterly report placed before the national parliament this month.
He said the 12-month average inflation stood at 7.5 per cent until December last against 8.7 per cent a year earlier.
He said the tax revenue grew by 12.2 per cent to Tk 503.38 billion until December last.
He said total revenue mobilisation remained 8.1 per cent higher than that of its last corresponding period, and it is 38.6 per cent of the budgetary target.
"Revenue mobilisation usually expedites during the last part of a fiscal year. If we assume that such type of trend will happen this year too, then the ongoing trend in revenue mobilisation is satisfactory."
Mr. Muhith said annual development programme utilisation stood at Tk 188.04 billion until December last. It was Tk 166.04 billion during July-December in 2012.
"The export receipt grew by 16.6 per cent to US$ 14.7 billion," Mr. Muhith told parliament.
He said import expenditure had expanded nearly 14 per cent to $18.75 billion during the July-December last.
Mr. Muhith said letters of credit (LCs) both in terms of opening and settlement grew by 10.6 and 11.6 per cent respectively.
"The growth of LCs in both opening and in settlement was negative during July-December in 2012," Mr. Muhith said.
The finance minister, however, said the luxury items' imports have fallen and this will affect import duty collection.
"In my mind, attaining the import duty target this fiscal year will be hard," Mr. Muhith said.
He also said the government has taken move to realise arrears from many governments departments including Eastern Refinery. "This move will help reduce the gap between revenue collection and the target."
Mr. Muhith said the utilisation of foreign aid also fell slightly during July-December period.
According to him, foreign aid utilisation dropped more than 2.0 per cent to 18 per cent.
Mr. Muhith said the budget deficit has increased 1.0 per cent during July-December last against 0.4 per cent over the same period in last fiscal year.
He said foreign grants have surged in the first half of the fiscal year amid fall in foreign aid.
He noted borrowing from the banks has increased a little during July-December.
"We'll try to keep borrowing from the banking sources within target," he said.
He said earnings from non-baking sources, including national savings certificates, have compensated the bank borrowing.
The finance minister said Bangladesh Bank has been pursuing a 'somewhat contractionary monetary policy' to tame the inflationary pressure.
"This will help reduce inflation," he observed.
He said indexes in the share markets remained stabilised as a result of different measures taken by the government.
"There was no steep rise and steep fall in the price indexes," Mr. Muhith added.
He said remittance earnings play an important role in stabilising the macro economy.
He said expatriates, who have been living in Saudi Arabia, spent a significant income for the purposes of passport renewal and visa legalisation.
He also said many Middle East countries have taken move to change their respective demography.
"These have affected our remittance earnings," Mr. Muhith said.
He said remittance inflow has dropped by 8.4 per cent during July-December.
