Economic reforms can make Bangladesh grow faster: WB
Global lending agency forecasts 7pc GDP growth for current fiscal
Certain economic reforms can hasten the economic growth of Bangladesh, says a new World Bank report released yesterday at the banks country headquarters in Dhaka. Terming Bangladeshs economy as one of the fastest growing one, the report titled The Latest Bangladesh Development Update: Powering the Economy Efficiently, has said Bangladeshs overall growth, however, will remain resilient, underpinned by strong domestic demand and structural transformation, but there is no room for complacency.
The report adds that Bangladesh requires comprehensive reforms in the power sector, including addressing inefficiencies in different stages of power supply and distribution, and reducing dependency on imported fossil fuels. The report urges more efficient pricing and the use of gas. By prioritising more efficient plants, Bangladesh can reduce idle gas capacity by eight per cent and electricity shortage by 15 per cent a year.
Further, the government needs to focus on smarter pricing of electricity through a cost-based pricing mechanism, better load management, and increased efficiency in electricity generation. Better load management alone could save USD1.65 billion annually in fuel cost. Bangladesh can also benefit from boosting regional trade and strengthening the cross-border electricity transmission network.
The report has, however, said much progress has been made in recent years, with access to electricity increasing from 47 per cent of the population in 2009 to 80 per cent in 2017. But, by 2030, electricity demand is expected to grow to 34 gigawatts, more than double the countrys current installed capacity.
In the report, WB forecasts 7 percent GDP growth for the current fiscal against the fiscal target of 7.8 percent with the robust private investment, increased exports and remittance inflows. The projection is lower than the Asian Development Banks estimate of 7.5 percent. Bangladesh is known for its remarkable progress in reducing poverty and creating opportunities for its citizens. It is among the 10 fastest growing economies in the world and has made commendable progress on human development, said WB Country Director for Bangladesh, Bhutan, and Nepal Qimiao Fan.
To achieve its growth aspirations, Bangladesh, however, needs to create more and better jobs by boosting private investment, diversifying exports and building human capital. The country also needs to make doing business easier, complete its mega-projects on a fast track, improve financial sector governance and ensure a reliable supply of electricity.
Further, the report added, sustaining the countrys export and remittance growth will be important. It also needs to focus on improving infrastructure, urban management, and environment conservation.
Bangladesh is known for its remarkable progress in reducing poverty and creating opportunities for its citizens. It is among the 10 fastest growing economies in the world and has made commendable progress on human development, said Qimiao Fan, World Bank country director for Bangladesh, Bhutan, and Nepal.
To maintain the current growth trajectory, it needs to promote entrepreneurship, innovation and structural transformation. Bangladesh should also focus on improving education, skills, nutrition and adaptability to enable its workforce to thrive in an environment of rapidly changing technology and global demands, the report says.
The report stresses the importance of increasing resilience to a possible slowdown in major export markets or a decline in donor support to address the influx of Rohingya refugees.
The country also needs to improve financial sector governance, including banking sector performance, especially the high share of non-performing loans (NPLs), which reached 10.4 per cent of all loans in the fiscal year 2018. These are concentrated disproportionately in the six state-owned commercial banks that accounted for 48 per cent of total NPLs, while the 40 private commercial banks accounted for 44 per cent of NPLs.
To realise its goals of achieving upper-middle income status, Bangladesh must make sure its economic fundamentals are sound, said Zahid Hussain, World Bank Lead economist and author of the report. As immediate measures, the country needs policies to contain inflation, correct the exchange rate, and remove interest rate distortions.
