GDP Growth has now become a political number: the CPD

[bluesky]

No, no, Dr. Fahmida Khatun is a Jamati now.

Of course, whoever says negative to the BBS standing is technically a Jamaati. Whatever wiki says about her, could it be that wiki itself is infested with BD Jamaatiis?

"Prior to joining CPD Dr. Fahmida Khatun was a research fellow at the Bangladesh Institute of Development Studies and held positions at the United Nations Development Programme and USAID. She was a faculty member at universities in Bangladesh and England".[1]

These CPD Jamaatis do not know national economics, but our CPD brats claim themselves to be our greatest economics. So, I asked if they know even how to use logarithm in doing calculations.

 

[idune]

Bangladesh’s GDP growth number does not hold water

Almost a year ago, in this column, I wrote about the obsession of our policymakers with the growth of Gross Domestic Product (GDP) ("Our incomprehensible obsession with GDP", May 19, 2019). I discussed in brief how GDP is estimated, and its inherent weaknesses which is why this indicator should not be taken so seriously.

Highly acclaimed economists have discarded this measure long ago as an indicator of economic prosperity. Among others, Nobel Laureate and Columbia University Professor Joseph Stiglitz has written time and again that the traditional way of measuring GDP is inaccurate and outdated. In the report "Mis-measuring Our Lives: Why GDP Doesn't Add Up", Stiglitz along with Nobel Laureate Professor Amartya Sen and Professor Jean-Paul Fitoussi talked about people becoming worse off even with higher average GDP.

Unfortunately, the fascination about GDP growth among our policymakers has led to yet another questionable number for the fiscal year 2019-20 (FY2020). Bangladesh Bureau of Statistics (BBS) has recently published the provisional data of the economy for FY2020. This shows the progress of various sectors and the GDP for the past fiscal year. The provisional GDP growth for FY2020 is estimated to be 5.24 percent. During a time when the whole world is facing the ravage of the ongoing Covid-19 and economies around the world have collapsed irrespective of their size and phases of development, Bangladesh's growth number is not only astonishing but also misleading.

Growth during first three quarters
In his budget speech for FY2021 the finance minister announced that the GDP growth would be 5.2 percent in FY2020. This was a reduction from the originally projected 8.2 percent in view of the outbreak of coronavirus in the country. It was also projected that all major indicators would observe significant decline in FY2020 because of the negative impact of the corona pandemic.

Two months later, on August 10 2020, BBS came up with a set of national estimates. Newspaper reports indicate that these were based on data from July 2019 to March 2020. Indeed, the numbers of the budget speech were also based on data of eight to nine months mostly. However, those have changed in BBS estimates now and some of those are even better than the previous FY2019. One of the key parameters of growth is investment as a share of GDP. In the budget speech of FY2021 in June this year, the growth of gross investment was revised downward to 20.8 percent from the originally projected 32.8 percent and private investment was revised to 12.7 percent from the originally projected 24.2 percent. BBS data indicate that investment as a share of GDP has increased from 31.57 percent in FY2019 to 31.75 percent in FY2020. Private investment as a share of GDP has also risen from 23.54 percent in FY2019 to 23.63 percent in FY2020. Indicators related to private investment do not support this number. For example, till April 2020, private sector credit growth was only 8.8 percent. Import growth was negative (-) 8.8 percent and import of capital machineries went down to (-) 33.5 percent in April 2020. So where has this increased investment come from?

One may recall, even before the outbreak of coronavirus in Bangladesh most economic indicators were not doing well. There was large shortfall in revenue mobilisation, the pace of public investment projects was slow, bank borrowing by the government was high to meet up with budget deficit, financial sector's performance was not encouraging, and both export and import growth was slowing down. This, no doubt would have implications for economic growth.

Impact of coronavirus pandemic ignored
Since the outbreak of coronavirus in March 2020, and because of the country-wide shutdown to contain the spread of the virus, the already stressed economic condition in Bangladesh has worsened. As domestic agricultural and industrial productions were interrupted, supply chains disrupted, businesses closed, and employment were lost, impoverishment among people has increased. Moreover, as Bangladesh is not detached from the global economy, it also faced the impact of coronavirus through reduced export, import and FDI. In the budget speech, both export and import were revised downward and projected to be (-) 10 percent in FY2020. Though recently export orders of the readymade garments have increased to some extent, total export declined by (-) 51.2 percent during April to June of FY2020. Import of capital machinery has declined drastically to (-) 33.8 percent as of June 2020.

The corona impact was not reflected also in the case of investment. While private investment has seen insignificant growth and has been hovering around 23 percent of GDP during the last few years, the increase of private investment during a pandemic period is somewhat puzzling. Entrepreneurs and bank officials have expressed concern about the decline in business and investments. As of June 2020, private sector credit growth was only 8.4 percent. Foreign direct investment (FDI) has declined by 42.5 percent in FY2020. Registration of investment projects with Bangladesh Investment Development Authority (BIDA) has declined by 55 percent during April-June 2020. Domestic resource mobilisation has declined by (-) 34.6 in April 2020.

However, the impact of coronavirus on the economy is not reflected in the provisional estimates of GDP. Without considering the performance of the last three months of FY2020, economic indicators and growth numbers are incomplete and don't match reality.

Hence Bangladesh's growth is way above many countries
The World Bank, in June 2020 had revised Bangladesh's growth downward to 1.6 percent for FY2020. On the other hand, in June 2020, the International Monetary Fund (IMF) projected Bangladesh's GDP growth to be 3.8 percent in 2020. The Centre for Policy Dialogue estimated Bangladesh's GDP growth to be 2.5 percent in FY2020.

However, the impact of coronavirus on the economy is not reflected in the provisional estimates of GDP. As opposed to this, global economy has been projected to observe (-) 4.9 percent growth in 2020 by the IMF as of June 2020. For all major economies, IMF's projection is pessimistic. For example, the USA will see (-) 8 percent growth, Japan will observe (-) 5.8 percent growth, India will have (-) 4.5 percent growth, and China will achieve a positive growth of one percent. The World Bank forecasted India's growth to be negative (-) 3.2 percent and China's only one percent in 2020.

Thus, compared to the global and other countries' growth forecasts, Bangladesh will do much better despite the negative impact of coronavirus. A number of reasons are attributable to this. First, Bangladesh has already had a high growth momentum during the last couple of years. Moreover, before and during the corona crisis, the Bangladesh economy has been supported by its strong domestic economy. Agricultural production has been good though its growth was slightly less in FY2020 compared to FY2019. Remittances saw strong increase in FY2020. The country could also make some savings due to low oil prices in the international market.

But work on improving the quality of life is inadequate
Bangladesh's national statistics on economic indicators are problematic on three counts. First, many a times, several indicators are inconsistent with each other. Thus, the authenticity of data is questioned. Second, statistics have become politicised and are used as a political tool. As a result, the independence of the offices entrusted with data collection and reporting has been curtailed over time. Third, too much importance on GDP growth by the policymakers has taken their attention away from the real and urgent issue. That is, it is not GDP growth, but the quality of growth which should be focused on. There is no need to waste our valuable time on a faulty estimate which does not capture the inequality and inclusivity of economic growth. Per capita income of Bangladesh has increased from USD 1,909 in FY2019 to USD 2,064 in FY2020. This does not mean anything for anyone—rich or poor. The rich do not care about any change in this number as their income is a thousand times more than this. The poor also do not care as their income is far below and the average per capita income will never change their lives. What matters is how much is distributed among those who are furthest behind.

So, we need reliable data and better measure of economic advancement. Unfortunately, our GDP growth will not be able to show the extent of negative impacts of the historic coronavirus pandemic on a large section of the population. As a result, policies will also not be adequate to address the sufferings of people and recover from the challenges arising from the ongoing crisis.

https://www.thedailystar.net/opinio...gdp-growth-number-does-not-hold-water-1946009

 

[bluesky]

‘CPD actually acts on assumption, BBS deals with data’
Finance minister says
Published: August 17, 2020 20:41:10

Dismissing recent statement of Centre for Policy Dialogue (CPD) on the country’s GDP growth, Finance Minister AHM Mustafa Kamal on Monday said the CPD acts on assumptions, whereas the Bangladesh Bureau of Statistics (BBS) deals with data and information.

“So, you can say to what extent their (CPD’s) words can be acceptable,” the minister said.

The finance minister came up with the reaction while briefing reporters virtually after holding a virtual meeting with the top income tax department officials of the National Board of Revenue (NBR), reports BSS.

NBR Chairman Abu Hena Md Rahmatul Muneem and other high officials joined the meeting.

On Sunday, the CPD expressed reservations about the government's provisional estimate of real GDP growth rate for the fiscal year (FY) 2019-20, arguing it does not provide a reliable assessment of the health of the economy.

The government is 'obsessed' with the GDP growth rate and it has now become more of a "political number" that is used to showcase the development in the country, it noted.

Asked about his reaction over the comments from CPD, the finance minister on Monday said that the CPD collects raw materials and then export those and this is their easy business.

He also noted that anyone can perceive the real scenario of Bangladesh through looking into the mills, factories, businesses, rural economy and infrastructures, road infrastructures, and also at the resources of rivers, canals and beels.

Kamal said that the FY 19 was a strong and sound year for the country on economic aspects with a revenue collection of around taka 2.23 trillion, but the revenue collection was reduced by around Taka 50.00 billion in the last fiscal year (FY20) due to the impact of COVID-19.

“If we had said that we’ve attained our targeted 8.2 per cent GDP growth in last fiscal (FY20), then they (CPD) could say something. But, we’ve downsized our GDP growth at 5.24 per cent in last fiscal,” Kamal said.

Mentioning that the COVID-19 has impacted the country’s economy like the other countries, the finance minister said that the NBR would not fail in revenue collection if the other economic parameters remain well.

“The whole of the world is being affected due to the COVID-19 pandemic and we’re also affected as well. We’re working to overcome the shock and maintain the revenue collection. We won’t fail in revenue collection if other economic parameters remain well,” he said.

Referring to the positive trend in export earnings in July and also in the first 15 days of August alongside a sound inward remittance flow, Kamal said if the various economic indicators continue to fare better, then the revenue collection will increase.

Noting that the government has taken all-out measures to increase the revenue collection, he informed that new tax officials would be recruited while their efficiency will be enhanced.

“We’re trying to motivate the eligible people so that they pay tax,” he said adding that there was 14 to 15 per cent growth in revenue collection on average over the last 10 years.

Reiterating his vow to launch income tax offices in every upazila, Kamal said he has already asked the NBR Chairman to frame a project in this regard.

The finance minister said if such offices are set up at the upazila level, then these offices would become profit making institutions while the common people would feel motivated to pay taxes.

“I think we’ll be able to attain the revenue collection target and we’ll bring all the eligible persons under the tax net,” he said adding that the number of taxpayers would increase in the coming days due to various reforms by the government like simplification of the tax return forms.

Answering to a question, Kamal said that the revenue collection is still not up to the expected level as a number of eligible persons do not pay tax. “But, we’re increasing our efficiency and putting emphasis on automation. If there is full automation, then none will be able to evade tax,” he added.

Replying to another question, he said according to the estimation of the various international agencies, around 40 million people in the country are now in the middle income bracket, but only 2.2 million people submit their tax returns in the country.

“We’ll have to identify the new taxpayers, motivate them and thus bring them under the income tax net. Otherwise, the revenue board will have to go tough in revenue collection,” he said.

NBR Chairman Abu Hena Md Rahmatul Muneem said that they are committed to show results as they are working on various reforms.

He also informed that the Electronic Fiscal Device (EFD) machines are likely to be launched formally on August 25 which is expected to boost the VAT collection.

 

[idune]

‘CPD actually acts on assumption, BBS deals with data’
Finance minister says

Awami league regime finance minister just parroting regime political propaganda again and again. After the budget announcement, Lota Kamal, the same fin minister was asked where will exorbitant fund for budget expense and development will come from? His answer was "I don't know". One can imagine how such minister will know value of "independent research". I suppose, regime will now hire some loyal "party professors" from university to parrot the same line.

 

[Destranator]

‘CPD actually acts on assumption, BBS deals with data’
Finance minister says
Published: August 17, 2020 20:41:10

Dismissing recent statement of Centre for Policy Dialogue (CPD) on the country’s GDP growth, Finance Minister AHM Mustafa Kamal on Monday said the CPD acts on assumptions, whereas the Bangladesh Bureau of Statistics (BBS) deals with data and information.

“So, you can say to what extent their (CPD’s) words can be acceptable,” the minister said.

The finance minister came up with the reaction while briefing reporters virtually after holding a virtual meeting with the top income tax department officials of the National Board of Revenue (NBR), reports BSS.

NBR Chairman Abu Hena Md Rahmatul Muneem and other high officials joined the meeting.

On Sunday, the CPD expressed reservations about the government's provisional estimate of real GDP growth rate for the fiscal year (FY) 2019-20, arguing it does not provide a reliable assessment of the health of the economy.

The government is 'obsessed' with the GDP growth rate and it has now become more of a "political number" that is used to showcase the development in the country, it noted.

Asked about his reaction over the comments from CPD, the finance minister on Monday said that the CPD collects raw materials and then export those and this is their easy business.

He also noted that anyone can perceive the real scenario of Bangladesh through looking into the mills, factories, businesses, rural economy and infrastructures, road infrastructures, and also at the resources of rivers, canals and beels.

Kamal said that the FY 19 was a strong and sound year for the country on economic aspects with a revenue collection of around taka 2.23 trillion, but the revenue collection was reduced by around Taka 50.00 billion in the last fiscal year (FY20) due to the impact of COVID-19.

“If we had said that we’ve attained our targeted 8.2 per cent GDP growth in last fiscal (FY20), then they (CPD) could say something. But, we’ve downsized our GDP growth at 5.24 per cent in last fiscal,” Kamal said.

Mentioning that the COVID-19 has impacted the country’s economy like the other countries, the finance minister said that the NBR would not fail in revenue collection if the other economic parameters remain well.

“The whole of the world is being affected due to the COVID-19 pandemic and we’re also affected as well. We’re working to overcome the shock and maintain the revenue collection. We won’t fail in revenue collection if other economic parameters remain well,” he said.

Referring to the positive trend in export earnings in July and also in the first 15 days of August alongside a sound inward remittance flow, Kamal said if the various economic indicators continue to fare better, then the revenue collection will increase.

Noting that the government has taken all-out measures to increase the revenue collection, he informed that new tax officials would be recruited while their efficiency will be enhanced.

“We’re trying to motivate the eligible people so that they pay tax,” he said adding that there was 14 to 15 per cent growth in revenue collection on average over the last 10 years.

Reiterating his vow to launch income tax offices in every upazila, Kamal said he has already asked the NBR Chairman to frame a project in this regard.

The finance minister said if such offices are set up at the upazila level, then these offices would become profit making institutions while the common people would feel motivated to pay taxes.

“I think we’ll be able to attain the revenue collection target and we’ll bring all the eligible persons under the tax net,” he said adding that the number of taxpayers would increase in the coming days due to various reforms by the government like simplification of the tax return forms.

Answering to a question, Kamal said that the revenue collection is still not up to the expected level as a number of eligible persons do not pay tax. “But, we’re increasing our efficiency and putting emphasis on automation. If there is full automation, then none will be able to evade tax,” he added.

Replying to another question, he said according to the estimation of the various international agencies, around 40 million people in the country are now in the middle income bracket, but only 2.2 million people submit their tax returns in the country.

“We’ll have to identify the new taxpayers, motivate them and thus bring them under the income tax net. Otherwise, the revenue board will have to go tough in revenue collection,” he said.

NBR Chairman Abu Hena Md Rahmatul Muneem said that they are committed to show results as they are working on various reforms.

He also informed that the Electronic Fiscal Device (EFD) machines are likely to be launched formally on August 25 which is expected to boost the VAT collection.

How about offering detailed breakdowns of indices to back up the extraordinary GDP stats instead of throwing tantrums?
Cannot believe a tax dodger is running the finance ministry:
https://www.thedailystar.net/news-detail-2852

 

[bluesky]

Cannot believe a tax dodger is running the finance ministry:
https://www.thedailystar.net/news-detail-2852

Why are you shaming Hasina and our @Billu Mia? Now, @Billu Mia will photo shop some pictures and upload here to prove Lotus Kamal is not a criminal.