The World Bank has contradicted the estimated growth for the current fiscal by the government.
The analysis was put forward by World Bank lead economist in Dhaka office Zahid Hossain on Monday while speaking at a press briefing on ‘Bangladesh Development Update: Building on Resilience’ at the multi-lateral lender’s Dhaka offices.
“We have national income growth of 2.7 percent while the employment growth is 2.2. If this is the picture, our growth rate will not exceed 6.5 percent,” he said.
The government, after calculating data of the first 10 months of the fiscal, has recently said that economy would grow by 7.65 percent in the current fiscal ending in June.
“This is an exceptional rate and it will create problem in future. The GDP growth has increased but employment has not increased proportionately and it is also true for poverty reduction,” Hossain said.
In his opening remarks, World Bank Country Director Qimiao Fan warned that the government-offered saving schemes might disrupt the economy.
“The means of financing the deficit, mainly through the issuance of National Savings Certificates, has become increasingly expensive. It also brings significant distortions in the financial sector, which is facing tightening liquidity and double-digit lending rates,” he said.
The country head of the global lender was of the view that the government should re-prioritise its expenditure to invest more in critical infrastructure project to increase competitiveness.
He warned that it might be difficult to manage fiscal deficit if the government continues to pump money to state-owned banks.
“As the economy generates the wealth of a middle-income country, it also needs to generate the revenue for public services and investment of a middle-income country,” he said.