Speakers at a programme said Wednesday although Bangladesh is on track to achieve the middle-income status by 2021 it still faces challenges like public financial management, lack of capacity in utilising resources and absence of good governance.
Experts from various countries recommended a long- term development plan target and not any target to implement political agenda.
Their observations came at a working session on the second day of the three-day regional meeting styled "Financing Graduation Gaps of Asia Pacific LDCs" at the city's Sonargaon Hotel, where 55 officials from 12 LDCs from the Asia-Pacific region have gathered.
The Economic Relations Division in association with the ESCAP and the United Nations Department of Economic and Social Affairs are organising the event.
In the 6th session titled 'Resource Utilisation Capacity Building for Bridging Graduation
Gaps of LDCs to Middle Income Status', Bangladesh Bank (BB) governor Atiur Rahman said superficially comforting picture is not the whole story. There are trends signalling worrisome weakness in resource utilisation capacity, particularly in the public sector.
"Annual ADP allocations routinely remain under spent; for quite some years now, actual fiscal deficits have tended to remain well below four per cent of GDP against the budgetary announcements of around five per cent," he said while addressing the session as the chair.
The noted economist said project implementation typically remains plagued with time and cost overruns; implementation lags in donor supported projects have swelled cumulative unspent donor aid in pipeline to several times their annual commitments.
Utilisation of PPP allocations has progressed at less than snail's pace. Arguably, enhancing resource utilisation capacity alone could largely close Bangladesh's graduation gap out of the LDC labeling, without requiring much more in additional resources, Mr Rahman added.
He said delays in resource utilisation in development projects persist not due to lack of procedural guidance but rather despite plethora of implementation guidelines and elaborate monitoring arrangements involving line ministries and others including the Planning Ministry's IMED.
Senior secretary of finance division Mahbub Ahmed, a discussant, said major economic indicators like growth rate, inflation rate, interest rate, exchange rate and budget deficit are in a comfortable zone. All institutions are important but financial institutions are more important as these influence the structured economic incentives in society, he said.
"We have doubled our revenue and expenditure. Still we have deficiency in our public financial management particularly in the area of taxation. Our tax-GDP ratio is still less than 10," he said, adding: Our state-owned-enterprises are making loss and public investment projects take long time for preparation and implementation.
Mr Ahmed observed the government needs to devise an effective mechanism to improve allocation efficiency in cross sectors, ministries and projects. In addition to that operational, administrative and technical efficiency need to be improved by setting effective rules and institutions, he said.
Bank and financial division secretary M Aslam Alam, another discussant, said mere resource mobilisation is not enough and capacity of Bangladesh for resource utilisation is indeed insufficient.
Citing examples of utilising annual development programme (ADP) budget, he said although Bangladesh can now utilise 90 per cent of ADP, there are still problems in using the external resources committed by the development partners mainly due to lack of capacity constraint.
"The key issues in public sector capacities centre on skilled human resources, systems, procedures, rules, regulations, guidelines, technology and good governance that matters for capacity building for resource utilisation," said Mr Alam.
In another session titled 'Mobilising Resources to close the graduation gaps: Exploring synergies between international support measures for LDCs and national resources', Policy Research Institute (PRI) chairman Zaidi Sattar said Bangladesh is really poised to graduate and it will happen by 2021.
He said Bangladesh will cross the GNI per capita within a next few years as it exports 95 per cent of its manufactured products which no other LDC countries do.
"As far as economic vulnerability is concerned, Bangladesh will stand out as it exports 95 per cent of its manufactured goods which no other LDC countries do," he said.
"We have a mono-product export basket. But it is not going to be an issue of vulnerability for Bangladesh," said Mr Sattar.
