The country's political situation was stable. There was no significant threat of movement from the opposition parties. More workers have traveled abroad compared to previous years. Power situation has improved slightly. Despite such a positive environment, the fiscal year 2016-17 has experienced a downward trend in four major economic indicators.
Remittance is a major source of foreign currency for Bangladesh. But remittance inflow in fiscal 2016-17 has been the lowest in six years -- a phenomenon that can be viewed as a dark cloud over an otherwise buoyant economy. Compared to the previous year, the remittance inflow has declined by nearly 15 percent. There was no speed at export. Export earnings were 6 percent less than the target.
The Annual Development Program (ADP) implementation rate was the lowest among the last eight years. The finance ministry had expected a bigger amount of foreign aid from development partners but it suffered a major setback in the outgoing fiscal year. The information was found from the sources in the Ministry of Finance, Ministry of Planning and Export Promotion Bureau (EPB).
The country's export is widely dependent on garment sector. Alternatives have not been created in the country. Diversification of products is not growing. Bangladesh cannot go ahead with exports for these reasons.
In addition to that the taka is getting stronger against the dollar. For these reasons, the remittance is decreasing. After last year's terrorist attack at Holey Artisan Cafe, temporary stagnation took place in the big development projects. That is why there is a great negative impact on the implementation of the projects under the ADP. The ministries and the departments could not spend the loans from development partners. For these reasons, economists believe that the ADP implementation and foreign loan use are low.
Export earnings have decreased by 6 percent. The latest data of the Export Promotion Bureau (EPB) says export targets in the last fiscal year were $37 billion. But the export earnings were $34.83 billion. The earnings have fallen by $2.17 billion. Of this, the growth in the garments sector is only 0.20 percent. The EPB informed earlier this week that the export growth in the readymade garment sector has been the lowest among the last 15 years.
In the last fiscal year, 89 percent of the ADP has been implemented which is the lowest in the last eight years. Earlier, 90 percent ADP was implemented in the fiscal year 2009-10.
However, Planning Minister AHM Mustafa Kamal at a recent press conference claimed the highest ADP has been implemented in the FY16-17. He said although it seems to be a little less in percentage, it is the highest implementation in terms of the amount of money. The planning minister said in the last fiscal year, the ministries and divisions spent a total of Tk 1 lakh 6 thousand and 820 crore. But in the previous year, the amount was Tk 87 thousand and 67 crore.
In the last fiscal year, Bangladesh received $770 million less than the target from its development partners. Bangladesh was due to receive $4.17 billion. But, it received $3.40 billion. Earlier in the 2015-2016 fiscal year the development partners gave Tk 3.56 billion. The information was found in the updated report of the Economic Relations Division (ERD). ERD officials mentioned last year's Holey Artisan terror attack for not getting the desired amount of foreign loans.
Dr. Debapriya Bhattacharya, Distinguished Fellow of Center for Policy Dialogue (CPD) has blamed lack of efficiency of the implementing agencies for weak ADP implementation and less spending of foreign aid.
Former chief economist of Bangladesh Bank Biru Paksha Paul said to The Asian Age, "Bangladeshi products' global market is gradually being occupied by some other countries like Vietnam, Sri Lanka, China etc. Besides, Bangladesh is lagging behind with infrastructural development which is another reason for decline with export earnings. On the other hand, financial crisis is still going on in some parts of Europe which is why they have reduced purchasing foreign commodities including Bangladeshi goods."
Migrant workers sent home $12.77 billion last fiscal year, down 14.47 percent year-on-year, according to data from the central bank. It has progressively become a matter of concern for the government.
The inflows were lower every month except May last fiscal year. In June, $1.21 billion flew in, down by 17 percent from a year earlier.
The International Monetary Fund (IMF) last month cited the declining remittance as a risk factor to the economy.
Over the last 10 years, remittances accounted for 8.5 percent of the country's gross domestic product on average, close to eight times the foreign direct investment flow into Bangladesh, according to the IMF.
Former Bangladesh Bank Governor Dr Saleh Uddin Ahmed told The Asian Age, "Gulf countries have reduced workers' salaries due to fall in fuel prices. So, the Bangladeshi expatriates cannot send much money home."
Speaking to The Asian Age, Policy Research Institute (PRI) Executive Director Dr Ahsan H Mansur said: "Remittance downturn is highly alarming. Last year some eight lakh people traveled abroad for employment. But remittance inflow has not increased on equal terms. It should be investigated. Lower remittance may seriously damage the country's economic pace."
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