Revised PRSP to cost $49b

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FE Report
Implementation of the revised Poverty Reduction Strategy Paper (PRSP) would cost the government nearly $49 billion, according to the final estimate done by a high-powered committee, headed by Planning Minister A.K. Khandaker.
There would be a resource shortfall of US$12.5 billion during the implementation of the PRSP, spanning over a period of three financial years (2009-11), according to official sources.
The high-powered committee sat Wednesday to fix the estimated cost of the revised PRSP.
Finance Minister AMA Muhith, Economic Adviser to the Prime Minister Dr Mashiur Rahman, Bangladesh Bank governor Dr Atiur Rahman, finance secretary, representatives from general economic division (GED), economic relations division, national board of revenue were also present.
The ruling Awami League in March this year decided to recast the PRSP-II, designed by the last caretaker government, with a view to accommodating its election pledges and addressing the problems created by the global economic recession.
The GED under the planning ministry revised three-year PRSP a month back projecting a total public expenditure of $51.08 billion, leaving a fund shortfall of $14.07 billion.
But the parliament asked the GED to rationalise the cost to help reduce the projected resources gap.
"As per direction of the parliament, the GED in consultation with the finance ministry has projected the new cost which was vetted by the high-powered committee Wednesday," a senior planning ministry official said.
Emerging from the meeting. AMA Muhith said: "We will shift to five-year plan from FY 2011. But until then, we will implement the revised PRSP. There will be no other PRSP from July 2011."
Professor Shamsul Alam, member, GED, said they had suggested mobilization of more funds by expanding the tax-net up to upazila level, inviting public-private partnership (PPP) investments, ensuring investment of at least 50 per cent of the remittance earning in the productive sectors and borrowing from the local banks and financial institutions.
"Every year the government receives $2.0 billion in foreign aid. The remaining gap of $2.17 billion will be met from the local resources," Prof Alam told then FE.
He said: "The cost of implementation of the PRSP has now been finalised. We will accommodate the cost in the revised PRSP within first two weeks of this month. Then it will be placed before the national economic council by third week this month for getting approval."
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 $45.58 billion.
The last caretaker administration framed the second PRSP in October last year with the objective of boosting economic growth to 7.2 per cent by FY2011.
In the revised PRSP, the gross domestic product (GDP) growth projection has been trimmed, mainly because of the global financial meltdown effects.
The government has targeted 6.5 per cent GDP growth in the final year of the revised PRSP.
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.