Finance minister wary of external shocks amid Covid-19

Finance Minister AHM Mustafa Kamal has identified “external shocks and the possibility of slower global economic recovery” as the main challenges to Bangladesh’s economic rebound amid the Covid-9 pandemic.

The minister, however, does not see any internal challenge as they have taken at least five measures to weather the economic fallouts from the pandemic.

“In the event of slower global economic recovery, the government will make every effort to stay on the original growth trajectory,” Mr Kamal told the FE in an exclusive interview recently.

When asked about the impact of the Covid-19, the minister said that given the pandemic situation, they had recently revised the GDP (gross domestic product) growth target downward to 7.4 per cent from the original 8.2 percent, aligning it with the 8th Five-Year Plan (8th FYP).

“We are confident that our economy will fully rebound in FY2021, and we will be able to achieve the revised GDP growth target of 7.4 per cent.”

Mr Kamal further said the government had taken several measures including 23 stimulus packages involving Tk 1.24 trillion, special incentives for the ready-made garment (RMG) sector, the main driver of the country’s exports, and the adequate fund flow for development work.

“Revenue generation has been enjoying around 4.0 per cent growth. The domestic resource mobilisation will be in tandem with the inflow of external resources, including budgetary support from multilateral development partners.

“In addition, we are in a position to increase our external debt, as we are one of the lowest debtor countries in the world.”

“Thus, we will have enough fiscal space to match the expenditure target and for that reason I am optimistic about achievement of the targets in the current fiscal too,” he added.

The finance minister also sounded confident enough on creating more than 11 million jobs and raise the GDP-investment ratio to 36.99 per cent during the 8th FYP period to FY2025 due to the government’s several prudent policies and measures.

Replying to the governance issue in the financial sector, Mr Kamal said they were working hard to ensure discipline and good governance in the financial sector that would ultimately enhance people’s confidence and brighten the country’s image aboard.

On a query about the fiscal pressure amid big stimulus packages, he said eventually there would not be any extra burden in view of budgetary allocation as that would not require funding from a single year’s budget.

The government would consider more stimulus packages to help the businesses stem the possible economic fallouts from the pandemic, the minister said.