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  • Jan 6th, 2004
  • Comments Off on Bangladesh on course for growth forecast
The governor of Bangladesh's central bank said on Monday the country was on course to achieve at least 5.5 percent economic growth in the current fiscal year, a modest improvement over the previous year.

The government's last forecast, made at the start of the fiscal year that ends in June 2004, was for 5.5 percent growth, up from 5.3 percent in the 2002/03 fiscal year.

"We are on course to achieve at least 5.5 percent GDP growth in this fiscal year," Fakhruddin Ahmed told Reuters in an interview.

The governor said inflation was accelerating at a tolerable level, foreign exchange reserves had jumped by half in the past year and government revenue was also rising.

Increased agricultural crops, exports and remittances were among the factors fuelling the economic growth, Ahmed said.

"This is a welcome trend and we will strengthen efforts to maintain the growth," he said.

Ahmed forecast inflation to rise to five percent in 2003/04 from three percent in the previous year, which he said was indicative of more economic activity, industrialisation and higher buying capacity of the people.

But independent economist Debapriya Bhattacharya warned the price rises were in food prices and utility services, and he warned of further increases unless prices were kept under control.

"Inflation is soaring with price hikes of food and non-food items, implementation of development programmes is disappointing, while the level of corruption and law and order situation are not suitable for investment," said Bhattacharya, the executive director of Centre for Policy Dialogue.

The government was striving to halve the number of people living in poverty by 2015, with help from overseas donors, Ahmed said. Nearly half of the country's 130 million people now live in poverty, official statistics show.

Bhattacharya said the poverty alleviation target was achievable, as per capita income was growing three percent annually, but much depended on income distribution.

"If the government fails to ensure appropriate and equitable distribution of income among the rich and poor, the goal may remain elusive," he said.

Another analyst, Dr Atiur Rahman of Bangladesh Institute of Development Studies, said the government needed to accelerate annual GDP growth to seven percent to meet its goal of wiping out poverty by 2015.

"Current economic trends suggest that such growth is possible if the government is able to achieve higher investment, rein in corruption and improve law and order," he said.

In the fiscal year's first five months through November, government revenue rose 9.7 percent, compared with the same period last year, to 95.18 billion taka.

The government has projected fiscal revenue to climb 16.2 percent in 2003/04, outpacing 14.5 percent growth in spending. Analysts say the current government deficit is around four percent of GDP.

Foreign Exchange reserves jumped 52 percent to $2.62 billion at the end of December, from a year earlier, Ahmed said.

Copyright Reuters, 2004


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