PRSP allocation raised to $49.6b

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FE Report
The government has revised the fund allocation of the three-year poverty reduction strategy paper (PRSP) to US$49.60 billion from the original $45.60 billion which was initiated by the caretaker government in October 2008.
Presided over by Prime Minister Sheikh Hasina, the government's highest economic policy-making body -- National Economic Council (NEC), approved the increase Tuesday, member of the General Economics Division Prof Shamsul Alam told the FE.
The GED under the Planning Commission revised the country's lone development strategy paper in mid-December reflecting the ruling Awami League's pledges in the election manifesto and impact of the global economic meltdown.
GED member Prof Shamsul Alam said the revised three-year PRSP would require $49.60 billion public investment to attain 6.5 per cent economic growth in its final implementation year 2010-11 fiscal.
In the three-year PRSP, the government has targeted $37.1 billion mobilisation from domestic resources while the rest $12.5 billion has been projected as resource gap.
In the original PRSP, adopted by the last caretaker government in 2008, the resource gap was $9.01 billion against the total public expenditure target of $45.60 billion.
Prof Shamsul Alam said the government would mobilise $29.80 billion from revenue income and the remaining $7.3 billion fund through domestic bank borrowing during FY2009-FY2011.
"The $12.5 billion resource gap has been proposed to be minimised through foreign aid from different multi-lateral and bi-lateral donors," he said.
The GED member said if the government could increase the revenue income growth by 19 per cent annually it would not require to borrow from the external lenders.
In the revised PRSP, the economic growth projection has been trimmed down to 6.0, 6.0 and 6.5 per cent respectively from FY2009 to FY2011 as the global financial meltdown has hit the local economy.
The caretaker administration in its second PRSP set a target to achieve 7.2 per cent gross domestic product (GDP) growth by FY2011.
In the election manifesto, the ruling Awami League promised to bring down poverty rate to 25 per cent from 40 per cent by the year 2013 and steer the country's economy to a good shape by the time it ends its tenure and bring unemployment rate down to 15 per cent from existing 40 per cent.
Mr. Alam said they had suggested to mobilise more funds from revenue earnings through expanding the tax-net up to upazila level, inviting public private partnership investments, ensuring investment of at least 50 per cent remittance to the productive sectors and borrowing from the local banks and financial institutions.
They have estimated $4.17 billion resources gap on an average per annum during the three-year PRSP implementation period.
"Every year the government receives $2.0 billion foreign aid. The remaining $2.17 billion gap will be mobilised from the local resources through the above measures," said Prof Alam.