Investments in personal accounts remain standstill

Finance Minister Abul Hasan Mahmud Ali has presented the budget for the fiscal year 2024-25 in the National Parliament. Budget allocation for the new fiscal year was indeed a very crucial task. The new Finance Minister has efficiently accomplished this task.

The most complex challenge in the budget for the new fiscal year (2024-25) has been identified as mitigating the tolerable level of high inflation while ensuring public welfare. Several measures have been taken in the proposed budget to reduce inflation. The effectiveness of these measures will determine how much control is achieved over inflation.

At this moment, it is imperative to take effective initiatives to increase investment in personal accounts. Especially, if investment environments are not improved, neither local nor foreign investments will be attracted in the desired volume. For a long time, there has been stability in personal investments, although there is no political instability in the country, there is a kind of economic uncertainty prevailing for a long time. The GDP growth rate is not proportional to the growth of personal investments.

In the fiscal year 2021-22, the rate of personal investment was 24.52 percent of GDP. In the subsequent year, it slightly declined to 18.14 percent. In the fiscal year 2023-24, personal investment may account for 23.51 percent of GDP. Due to the decline in personal investment growth, new industries are not emerging in the country. This is creating problems in creating new employment opportunities. If new employment opportunities are not created, poverty alleviation programs will be adversely affected.

For a long time, we have been unable to create a conducive environment for business and commerce in the country. A recent survey by a local non-governmental research institute has confirmed that there has been a deterioration in the business environment in the country. A few years ago, Bangladesh ranked 176th among 190 countries in the World Bank's Ease of Doing Business Index. This indicates that there is no conducive environment for business and commerce in our country. Consequently, both local and foreign investors are not very enthusiastic about investing here.

The GDP growth target for the fiscal year 2024-25 has been set at 6.75 percent. However, international organizations have predicted an even lower growth rate. From the fiscal year 2009-10 to 2023-24, Bangladesh had the highest average growth rate of 6.71 percent among any country in the world. Remittances from expatriate Bangladeshis have decreased. Although there has been a significant increase in this account in May, overall the situation in this sector is not good.

High inflation has been the biggest problem for the economy. In the past two years, inflation has remained above 9 percent for most of the time. In May, overall inflation rose to 9.89 percent. Among them, food inflation is above double digits. Our failure in revenue collection cannot be denied in any way.

Author: Economist, Professor and former Finance Advisor to Caretaker Government.