Challenges to macro-economy

Maintenance of macroeconomic stability will be a major challenge this year, particularly after the successive natural disasters -- floods and cyclone. The extent of damage caused by such disasters is quite severe. The supply-shocks in areas of food and other agricultural corps are too massive, likely to add fuel to the inflationary fire. The economic and social infrastructures have badly been hit by the natural disasters. The revenue earnings of the government will, in all likelihood, suffer a major setback at a time when the government's current expenditures will largely shot up. The fiscal deficit will widen. Both public and private investments will suffer. The development expenditure under the Annual Development Programme (ADP) are reportedly quite low in the first four and a half months of the current fiscal. Private investors are also pursuing a wait-and-see approach to their new investment programmes.
Yet another major worry is the escalating oil prices in the international market. The current account balance of the country will be under severe strains as a result. With export receipts not picking up, the situation will further worsen. Under such circumstances, it will require extraordinary efforts by the government to ensure a relative stability of the macro-economic situation under exceptionally difficult circumstances.
Abdus Sobur Mia
Dhaka University