State of the Bangladesh Economy in FY 2007-08 and Outlook for FY 2008-09
 
     
  Books contents:

The current volume titled State of the Bangladesh Economy in FY2007-08 and Outlook for FY2008-09 has been prepared by the Centre for Policy Dialogue (CPD) under its flagship programme which has come to be popularly known as the IRBD Programme (Independent Review of Bangladesh’s Development Programme). The present volume, which is the fifteenth in the IRBD series, carries forward the tradition of CPD’s effort, initiated back in 1995, to come up with an independent civil society perspective on major macroeconomic developments in Bangladesh, on a regular basis. Since its inception, the IRBDs have been prepared under the inspiring guidance of CPD’s founding Chairman Professor Rehman Sobhan who had envisioned IRBDs as a vehicle to promote informed debate on key economic issues of interest and concerns to the citizens of the country as a tool to influence policy making in Bangladesh. IRBD exercise was meant to serve as an instrument to hold policy makers accountable for the stewardship of the development process and development outcomes in Bangladesh. It is hoped that the current volume upholds the tradition of this lofty ideal. In this connection, it is to be noted that the various sections of the present volume were prepared in consultation with relevant stakeholder groups; findings were presented and discussions held at CPD dialogues with participation of key stakeholders.

In line with the earlier exercises, this year’s IRBD volume examines and analyses key macroeconomic performance indicators of Bangladesh in the immediate past fiscal year, i.e. FY2007-08. As is known, this was the first time that a non-party Caretaker Government (CTG) completed a full fiscal year. And this happened in the midst of some major developments at both global and domestic fronts. The present volume provides an analysis of both the success and failures of economic governance in the challenging period of FY2007-08.

As on the previous occasions, the present IRBD volume is accompanied by a thematic volume. This volume titled Recent Inflation in Bangladesh: Trends, Determinants and Impact on Poverty focuses on the issue of high inflation that was a critical feature of macroeconomic developments in FY2007-08. The volume has been brought out as a separate publication.

FY2007-08 passed through some challenging times both in the domestic front mainly because of consecutive natural disasters and global front, mainly owing to high inflationary pressure. Whilst some of the steps taken by the CTG in the area of reforms and governance are likely to leave positive long term footprints, certain other steps added to uncertainty and undermined investment environment. Chapter I of the current volume is a stocktaking of the merits and minuses of the progress made in six major areas of the macroeconomic management in FY2007-08: growth-savings-investment, public finance and financial sector, monetary sector, real economy, external balance, and social sector. Analysis of the performance indicators reveal that such areas as revenue collection, gross disbursement of agriculture credit, export growth, manufacturing production, remittance flows and flow of equity capital to the stock market registered positive developments during this period. At the same time, price hike of essential commodities, erosion of purchasing power of the poor, rise in fuel price, acute shortage of electricity, and poor implementation of Annual Development Plan (ADP) somewhat overshadowed the positive gains in other areas. Nevertheless, the determined efforts by the government, with limited resources at its disposal, in coping up with the after effects of two consecutive floods and cyclone Sidr, certainly deserve appreciation. In view of these, discussion in this chapter on the outlook for FY2008-09 also identifies major challenges to be addressed over the next fiscal year.

Analysis of the National Budget for FY2008-09 and the Revised Budget of FY2007-08 is presented in Chapter II. This chapter puts various budget proposals under close scrutiny and examines the implications of the budgetary proposals for macroeconomic governance and the economy.

Chapter III underscores a set of proposals which CPD prepared for the Ministry of Finance, Government of Bangladesh (GoB) in view of the then upcoming presentation of the National Budget for FY2008-09. This policy document focused on such critical areas as general fiscal measures, export promotion and import substitution, social sector and social protection schemes, price stabilisation/support, sectoral measures and regional development, and restructuring of the tax administration, and came up with concrete recommendations pertaining to these areas.

With a view to assessing the performance of the economy during the first half of FY2008-09, the CPD produced an interim IRBD report which is presented in Chapter IV of this volume. The report highlights ten major challenges to be faced by the newly elected government, cross referencing the issues with manifestos of major political parties. The report then puts forward a number of policy recommendations for the new government.

This present IRBD volume is accompanied by two annexes titled State of Bangladesh Economy and Budget Responses FY2008-09 and a Chronology of Major Economic Events during July, 2007 – December, 2008. The first annex presents a report on a dialogue organised by the CPD on 17 June 2008. The second annex is a compilation of major economic events taking place during the mentioned period.