When the Covid-19 pandemic fallout was still there, a fresh blow came from the Russia-Ukraine war and subsequent western sanctions disrupting food and energy supplies and causing inflation to surge worldwide.
Energy prices skyrocketed and the US dollar became stronger making import costlier and causing fast depletion of foreign exchange reserves in import-dependent countries such as Bangladesh. Global recession fears overshadowed Bangladesh's export growth prospects and domestic industries are badly affected by power outages, coupled with the latest record hike in fuel prices.
All these developments have turned the government's economic targets set in the 8th Five-Year Plan (2021-2025) far from reality, prompting planners to ask for a midterm revision of the targets to make them plausible.
Taking the worsening global scenario into account, the government in the national budget for fiscal 2022-23 has revised most of the projections downward, making many of the five-year plan targets almost irrelevant, experts have pointed out.
Most of the indicators have fallen far behind the target in just two years of implementation of the 8th Five-Year Plan (8th FYP) which aims to reduce the poverty rate to 7.4% by 2025 through 13.3 million new jobs with the support of 8.51% economic growth.
Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), says the 8th FYP has become ineffective in the current economic reality, with none of the indicators of planning, except the size of GDP, being close to reality. In this situation, she suggests a quick and logical revision of the plan.
Officials involved with the making of the development planning also feel the need for updating it.
Dr Md Kawser Ahmed, member (secretary) of the General Economic Division (GED), told The Business Standard that the Ukraine war has negatively impacted the Bangladesh economy like almost all other countries in the world and it has become impossible to achieve the 8th FYP targets amid the present gloomy economic situation.
Rizwan Rahman, president of the Dhaka Chamber of Commerce and Industry (DCCI), stressed the need for formulating a comprehensive road to recovery agenda aligning with global economic trends, local changes, and LDC graduation-led economic transition since this critical time demands regional and global integration through a global agenda of the road to recovery.
How the 8th FYP losing relevance
The 8th FYP, which has also aligned economic and social targets laid out in other long-term strategies including the Perspective Plan (2021-41) and UN Sustainable Development Goals (SDG), projected public spending to increase to 16.91% of the GDP in FY22, but the Finance Division lowered the allocation to 14.9% of the GDP in the revised budget for the fiscal year.
Public spending fell Tk7,9927 crore lower than the projection as the government mobilised revenue to the tune of 9.8% of the GDP, far lower than the targeted 11.16%.
The cumulative private and public investment stood at about 31.68% of the GDP in the last fiscal year following a target of boosting it to 32.73%. Investment worth Tk41,614 crore lower than projection reduced the GDP growth to 7.25%, while the target was set at 7.7%.
Moreover, the savings dropped to 25.45% of the GDP in FY22 against a target of 31.17%. Depletion of savings worth Tk74,971 crore in a single year blocked the way to increasing public spending and investment from the private sector.
Against such a backdrop, economists, business leaders, experts, and government officials have urged the government to revise the targets of the plan following an effective midterm evaluation.
Data deficits stand in the way
GED Member Kawser Ahmed told TBS that even though the plan was finalised after the outbreak of Covid-19 in the country, how long the pandemic would last could not be prophesied at its formulation level. Moreover, no one could predict a war between Russia and Ukraine, he added.
In this situation, the GED of the Planning Commission, the sole agency responsible for framing the five-year plan, also is seeking ways to revise the targets of the plan, but a lack of data on poverty and employment, caused by delays in conducting the Household Income and Expenditure Survey (HIES), and the Labour Force Survey by the Bangladesh Bureau of Statistics (BBS), is standing in the way, Kawser told TBS.
Stating that it is not possible to revise the plan without getting the results of these two surveys, he said the Bureau of Statistics has launched these surveys and that a midterm evaluation of the five-year plan will be done as soon as preliminary results, or even raw data, of the surveys are available.
Fahmida Khatun of the CPD told TBS that the political and economic philosophy of the government for the next few years is reflected in the five-year plan and, therefore, development will not be balanced if the plan is not attuned to present times.
A lack of information is a major obstacle to development, she mentioned. That the BBS has not been able to provide information on poverty and employment in the country for almost six years is unfortunate, she mentioned and urged promptness in survey work.
When will updated BBS data come?
The BBS in its Household Income and Expenditure Survey 2016 found that the poverty rate in the country was 24.3%. Following the rule of thumb based on GDP growth, the agency found the poverty rate in the country to be 20.5% in FY19.
In 2020, a project was taken up to conduct a fresh household income survey, but it could not be completed. As the project tenure expired last year, efforts are being made to extend it, Project Director Dipankar Roy told TBS.
Similarly, the tenure of the Labour Force Survey project has been extended till 2024.
Nonetheless, the results of the Population and Housing Census will play a major role in the evaluation of the ongoing five-year plan, said State Minister for Planning Shamsul Alam recently.
Achievements of past FYPs
The average GDP growth target of the First Five-Year Plan (FY73-FY78) was 5.5%, but the actual achievement stood at 4%.
The GDP grew by an average of 3.5% against a target of 5.6% set in the two-year plan for FY79 and FY80.
In the Second Five-Year Plan (FY81-FY85), the average GDP growth target was set at 5.4%, while the achievement was 3.8%.
The average GDP growth rate was 3.8%, 4.2%, and 5.1% during the tenures of the third, fourth, and fifth five-year plans, respectively, while the growth target was set at 5.4%, 5.0%, and 7.0%.
The average growth increased to 5.5% in FY02-FY06 and to 6.3% in FY06-FY10 during the tenures of two Poverty Reduction Strategy Papers (PRSP), which did not include any growth target.
After assuming power through the ninth national election, the Awami League-led government formulated the Sixth Five-Year Plan with a target to achieve a 7.3% average GDP growth in the FY11-FY15 period, but the economy grew by 6.3%.