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Planning for prosperity: Ninth five-year plan focuses on growth, macroeconomic stability

Planning for prosperity: Ninth five-year plan focuses on growth, macroeconomic stability

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General Economics Division (GED) arranged a high-level meeting of a starring committee participated by secretaries of all of the ministries and divisions of the government on Thursday (4 July)

Mohammad Jahidul Islam

Publisted at 5:59 PM, Thu Jul 4th, 2024

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The General Economics Division (GED) of the Planning Commission has initiated the formulation of the Ninth Five-Year Plan, emphasising the restoration of a high growth trajectory while ensuring macroeconomic stability.

The new plan, to be implemented from July 2025 to June 2030 would catalyse enough public investment in education to ensure smart and skilled human resources and infrastructure for logistics, said officials of the planning commission.

Initiatives regarding the next five-year plan started while the majority of the goals under the ongoing eighth five-year plan remained unmeet.

The eighth plan being implemented since 2020 set a goal to achieve an 8.32% growth of gross domestic product (GDP) in the fiscal year 2023-24, but the Bangladesh Bureau of Statistics (BBS) found only 5.82% provisional growth in the last fiscal.

The government projected 6.75% growth for the next fiscal in the national budget, 1.76 percentage points lower than the eighth five-year plan target of 8.51%, as most indicators of the macroeconomy, including savings, investment, public expenditure, implementation of the Annual Development Programme (APD) remains far below than the target.

While the five-year plan aims to reduce inflation to 4.70% in the outgoing fiscal year, the average inflation for the previous 12 months till May stood at 9.73%.

Economists, experts and concerned officials of the Planning Commission said that most of the indicators of the overall economy taken in the eighth five-year plan ended in the current fiscal year have not been met due to various complications including weakness in planning, infection of Covid-19, Ukraine-Russia war.

GED arranged a high-level meeting of a starring committee participated by secretaries of all of the ministries and divisions of the government on Thursday (4 July).

State Minister of Planning Md Shahiduzzaman Sarker, former planning minister MA Mannan, and members of the Planning Commission attended at the meeting chaired by Planning Minister Abdus Salam.

The new plan aims to restore growth path and stability in the macro economy, GED Member Secretary Dr Md Kawser Ahmed said following the meeting.

New investments are required to ensure growth while infrastructure and incentives are required to attract private investment, he added.

According to the GED official, the government has to spend a huge amount to ensure skilled manpower and, development of infrastructure, which is why revenue mobilisation to be increased to achieve these goals.

He said that jute and jute products, leather and leather products, agricultural products, blue economy, and space economy to be prioritised in the next plan.
The official also said a separate chapter to be included in the new plan to address the challenges that would arise regarding loss of duty-free quota-free market access, reducing concessional loans, and provision of subsidies and incentives after graduation from LDCs.

The plan also will contain another chapter to find the way to meet the targets of the Sustainable Development Goals.

 The new plan highlighted goals to eliminate extreme poverty by raising the average GDP growth to 8%, raising the per capita income to $4,466, reducing the poverty rate to 11%, and eliminating extreme poverty by 2030, said officials of the planning commission.

A concept paper presented by the GED at the meeting revealed the main objective of the plan is to accelerate the pace of growth to regain momentum, strengthen macroeconomic stability, reduce poverty and make significant strides towards attaining upper-middle-income country status.

Even though the rate of inflation has risen to almost double the current five-year plan, one of the goals of the new plan under process will be to bring the prices of daily commodities under control.

It further stated that the poverty rate has come down to 18.7% and extreme poverty to 5.6% during the implementation of the ongoing eighth five year Plan.

The new plan further aims to reduce the poverty rate to 11% by 2028, and end extreme poverty by 2031, the paper revealed.

In the new plan, special importance will be given to increasing private sector investment and foreign direct investment, the concept paper said.

It revealed that about 90% of Bangladesh's economy is managed by the private sector and, the private sector is contributing more than 75% of the total investment.

Besides ensuring infrastructure development, electricity and fuel supply, importance will also be given to policy reforms to boost private investments, the paper revealed.

According to the review, the eighth plan aimed to increase private sector investment from 23.6% of GDP in 2019-20 to 26.1% in FY-2024.

However, the private investment downed to 23.51% of the current fiscal year, according to the provisional estimate of the Bangladesh Bureau of Statistics (BBS).

Apart from the investment, the goal of increasing savings in the tenure of the eighth five-year plan has also not been met, according to BBS.

The goal was set to increase the Gross National Savings to 33.03% in the outgoing financial year, but it will stand at 31.9% at the end of the year.
To attract private investment, the government's expenditure on infrastructure will be increased in the future under the ninth five-year plan.

The concept paper said that some major infrastructures such as the Padma rail-road bridge, metro rail in Dhaka, and tunnel under the Karnaphuli in Chattogram were built during the eight-five-year plan period.

Yet, the country's infrastructural landscape stands far short of meeting the demands of an upper-income economy, the concept paper says and added, the next five-year plan would focus more on nationwide connectivity and secure energy resources.

The plan will include constructing 12 expressways, converting all roads and highways to four lanes gradually and completing various Mass Rapid Transit projects by 2030. 

Attributing the failure in revenue mobilization, the paper revealed that, Bangladesh's tax-GDP ratio remains one of the lowest in the world, making public resources inadequate for funding infrastructures and social sectors.

The next five-year plan will emphasise the implementation of the new VAT act, tax policy reforms, alternative dispute resolutions and automation of tax management systems, to meet the growing financing need.

According to Planning Commission sources, the target was to increase the revenue GDP ratio to 12.9% last fiscal and 14.1% in the current fiscal, which was 9.4% in 2020.

The revised budget for the last fiscal year has set a revenue collection target of 9.5% of GDP. In the current fiscal year, the target of revenue collection of 9.7% of GDP has been announced in the budget.

Due to the discrepancy in revenue collection, the government expenditure is also not increasing at the expected rate.

Budget implementation in 2020 was about 15% of GDP, but the Eighth Plan had set a target of raising the rate to 17.9% in the fy2024.

However, the government expenditure rate on the contrary further decreased to 14.2% in the last fiscal year's revised budget.

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