Sunday, 01 October, 2023
Sunday, 01 October, 2023

FY24 budget: No big news in private investment

English Desk
  31 May 2023, 09:55

All industrial imports, ranging from raw materials to capital machinery, have slowed down due to the dollar crisis, while the industries have been suffering from an energy crisis.

All of these issues have eventually translated into a production slump and a low export.

On the flip side, the prevailing low interest rate could not reinvigorate investments in the private sector. The investments are growing, but not at the expected pace.

According to the Bangladesh Bureau of Statistics (BBS), investments are expected to total Tk 13,870 billion upon completion of the ongoing fiscal year 2022-23, with a year-on-year growth rate of 9 per cent. Of the amount, some Tk 10,490 billion has been invested in the private sector, resulting in a growth rate of 7.81 per cent.

In financial calculations, investments are usually compared to the country's gross domestic production (GDP). Bangladesh now has an investment-to-GDP ratio of 23.64 per cent, which was 24.52 per cent in the previous fiscal year. The private sector investments have almost come to a standstill over the past seven years.

According to experts, private investment is now one of the major concerns in the economy. If the current situation does not improve quickly, new job creation will stall and inflationary pressure will not subside.

In this context, finance minister AHM Mustafa Kamal is all set to present the budget for fiscal year 2023-24 in parliament on Thursday. It will be Tk 7.6 trillion budget where the minister is expected to face a big challenge to reduce inflationary pressure and stimulate private investments.

Zahid Hussain, former lead economist of the World Bank's Dhaka office,that there have long been different sorts of problems in the investment sector. For example, investors have to move from office to office, or they do not find suitable land. The government has launched economic zones and a one-stop service (OSS), but they are yet to be fully implemented and come into effect.

It means that no initiatives that can have a major impact on investment have reached the final stage. Additionally, the dollar crisis has appeared as an additional concern for investments.

Zahid Hussain also said there is a large negative growth in the import of capital machinery due to complications in opening letters of credit (LCs) amid the dollar crisis. This is why the investments did not meet expected levels.


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