Leading economists Saturday stressed augmenting overall industrial productivity and employment generation by recomposing sectoral contribution to gross domestic product (GDP) for achieving sustainable development.
Political will is a must to address these challenges, they said, as the government eyes higher economic growth by breaking the barriers.
The economists were speaking at a session titled 'Macro and Financial Policies' during the inaugural day of a two-day conference of Bangladesh Economists' Forum in the city with Planning Minister AHM Mustafa Kamal in the chair.
Speaking on the occasion, the minister underscored the necessity of a vibrant capital market for smooth industrial growth in the country.
"We have everything but confidence," he said regarding the financial sector. "It should be restored at any cost."
All concerned, including the central bank, should take necessary steps in this matter of confidence building, the minister told the meet.
He took exception to what is dubbed as bank boom. The country does not require too many state-owned commercial banks (SoCBs), he categorically said, adding that one Sonali Bank is enough to meet government requirements.
"The government has planned to offload shares of SoCBs gradually," he informed the economists.
Bangladesh Bank (BB) governor Atiur Rahman spoke of resilience of the financial sector in weathering internal and external adversities.
"….the financial sector has performed fairly well overall in supporting steady, stable and inclusive growth in the real economy, upholding its own systemic stability through episodes of domestic and external shocks, including the global financial crisis," the governor told the session.
He also said regulators in the various financial-sector segments will likewise need fast upgrading of their capabilities of supervising a much more open and hence a much more vulnerable financial sector than before, besides essential freeing up from government's encroachments on their operational independence.
"Access of businesses and households to medium-and longer-term financing is inadequate. Let alone long-gestation large infrastructure projects, even modest projects like hospitals and hotels needing financing of ten years or longer tenor usually have to make do with five to seven year tenors at most, leaving themselves exposed to cash-flow difficulties going forward," he noted.
The central bank chief opined redressing the longer-term funding gap would require policy and market reforms to bring in new long-term savings and to create alternative liquidity-augmenting mechanism at the long-term end.
"Life insurers and pension and provident funds carrying long-term liabilities are the main sources of long-term funds, as they need long-term assets to match the liabilities," Dr. Rahman observed.
He also said poverty is receding faster with sustained spell of inclusive growth, and with steadily rising per capita GNI (gross national income) already at US$ 1190 Bangladesh is well on course for coming out soon from the low income and least developed country group categorizations.
Salehuddin Ahmed, former BB governor, said the urban population of Bangladesh has grown at a yearly average rate of 6.0 per cent since independence, at a time when the national population growth was 2.2 per cent.
As a result, urban population has grown six-fold, compared with a 70 percent increase in rural population, he added.
As per recent estimate, about 40 million people (25 per cent of total population) currently live in urban areas, which is projected to cross 80 million by the year 2030, according to the former BB governor.
"Drastic changes in the physical, economic and social structure in the urban areas resulting from rapid urbanization has been posing serious challenges for sustainable urban development in Bangladesh," Dr. Ahmed said while presenting his paper on Urban Finances for Urban Development in Bangladesh at the session.
He also said urban areas are now afflicted with innumerable problems ranging from law and order situation to deteriorating environmental conditions.
The dependence of local-government bodies, including urban ones, on central government for finance must be reduced, the former central bank chief added. "The best way to achieve fiscal decentralization in the true spirit of overall decentralisation is to set a permanent local government finance commission (LGFC) in Bangladesh," he noted.
He also said the commission members (including the chairman) should be selected carefully and the commission should be given full "autonomy" and should not be under any ministry and should only be answerable to the national parliament.
Hamid Rashid, senior advisor for macroeconomic policy of the United Nations Department of Economic and Social Affairs (UNDESA), stressed that Bangladesh needs higher labour productivity growth for achieving sustainable development. He also said authorities concerned should take necessary measures to ensure both cash and non-cash incentives for workers to enhance productivity.
Taking part in the session, Hassan Zaman, chief economist of the BB, said a vision for the economy in 2030 must include greater demand by senior policymakers for unbiased professional analysis within government agencies so that officials are not tempted to only produce an unrealistically rosy outlook or only share results which higher levels will feel good hearing.
In addition he noted that by 2030 the BB should have full oversight overall all banks as by then the capital account will be more open and so the banks need to be stronger to deal with more volatile capital flows and more complex financial products. He added that by then private equity would be a more important source of financing companies.
Professor Selim Raihan also spoke on the occasion.
Thrust on redefining GDP composition
FE Report | Published: June 22, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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