Finance ministry says slow remittance, low revenue and dull investment will hamper GDP growth
Rejaul Karim Byron
The finance ministry has identified some risks to the economy — slow remittance inflow, low revenue collection and a dull investment demand — that it said will slow GDP growth in the current fiscal year.
The risks originate from the ongoing political uncertainty and a slow recovery in the global economy, the ministry said.
The ministry prepared a report on the macro-economic situation in the first quarter (July-September) of the current fiscal year and the report was placed at a meeting of the fiscal coordination council last week.
The GDP (gross domestic product) growth rate may hover around the average growth in last five years — about 6.2 percent — against the government’s target of 7.2 percent for the current year.
The report prepared by the Finance Division under the ministry said, if the negative inflow of remittances continues, it will put pressure on the balance of payments over which the government has been in comfort since it assumed power.
Remittances declined by around 8 percent in the first quarter of the current fiscal year compared to the same period a year ago, according to the report. Manpower export also dropped by about 39 percent during the period when 100,249 people went abroad for jobs against 139,647 in the same period last year.
The report said manpower export to Saudi Arabia and the UAE fell significantly causing the drop in the figures.
The government has signed agreements with Malaysia and Bahrain on manpower export and Hong Kong has expressed its interest to take female workers from Bangladesh.
The report said the ministries concerned should take prompt initiatives to send manpower to the countries as per the agreements. However, a Bangladesh Bank official said work permits of many workers in Saudi Arabia have expired and they had to spend extra amounts on renewing those.
The official said many expatriate Bangladeshis in Saudi Arabia even had to take money from home which had a negative impact on remittance inflow.
However, the finance ministry observes that export performance is still satisfactory but the economic downtrend in Europe and the withdrawal of Bangladesh’s Generalised System of Preferences (GSP) by the US may hamper exports.
The report also said revenue collection may fall short of target due to weak imports. However, the National Board of Revenue data do not support the assumption.
In the first quarter, revenue earnings were higher at the import level than the same period in the previous year.
During the period this year, import duty collection was 22.6 percent of the target, while import level VAT collection was 22.9 percent and supplementary duty 21.9 percent. In the same period last year, the figures were 20.7 percent, 23.1 percent and 21.2 percent of the targets respectively.
However, VAT and income tax collection at the local level was less in the period than the previous year.
VAT collection at the local level was 18.7 percent of the target, down from 20.3 percent in the same period last year. On the other hand, income tax collection in the first quarter of the current fiscal year was 15.1 percent of the target, while it was 16.2 percent in the same period last year.
The overall revenue collection of the NBR was 18.1 percent in the first quarter of the current fiscal year, against 18.7 percent in the same period last year.
NBR officials said the cause of the slow revenue collection at the domestic level was political violence including shutdowns.
The government targets to keep inflation at 7 percent in the current fiscal year, but the ministry sees several challenges such as a possible rise in wages in the public and private sectors and disruption in commodity supply.
Other challenges are high inflation in India and a price hike of fuel and food grains in the international market.
Source: The Daily Star
