7-pct growth challenging, but not impossible for Bangladesh: World Bank

The World Bank said on Monday that achieving a 7-percent economic growth target in 2015-16 fiscal year beginning next month will be challenging for Bangladesh, but not an impossible task.

World Bank officials told a press conference that Bangladesh requires stability and significantly increased investment rate from the current 29 percent to 33.5 percent of gross domestic product (GDP).

The Washington-based lender tabled its assessment about a week after the Bangladeshi government unveiled a record 3 trillion-taka (about 37.83 billion U.S. dollars) proposed national budget targeting an economic growth of 7 percent for the next 2015-16 fiscal year.

"Revenue mobilization will be the key challenge -- need to tread carefully to sure honest taxpayers are not overtaxed," said Zahid Hussain, lead economist at the Dhaka office of the World Bank, in his keynote presentation.

He stressed the need for ensuring availability of sufficient resources for maintaining existing and new infrastructure.

The economist said if the investment rate of 26 percent of the GDP can be raised by a further 2 to 2.5 percent and if political stability is sustained, then it's not impossible to achieve the GDP target.

In his budget speech, Bangladesh Finance Minister AMA Muhith said despite favorable macroeconomic situation and enhanced public investment, slow pace of private investment is largely responsible for hindering expected high growth.

"We have taken up a range of steps in power, energy and communication sectors along with development of ports and economic zones to overcome this obstacle. These initiatives will sustain the economic momentum by accelerating aggregate demand."

Muhith said that volatility in eurozone, however, foreshadows an ominous sign.

He expected recovery of the U.S. and euro economies and implementation of reform initiatives in the ready-made garment ( RMG) sector are likely to boost Bangladeshi exports in the near term.

"Based on these assumptions, GDP growth rate has been projected at 7.0 percent for fiscal 2015-16."

Bangladesh's Bureau of Statistics had earlier predicted that GDP growth in 2014-15 fiscal would be around 6.51 percent against the previous budget's projected 7.3 percent.

The World Bank's "Global Economic Prospects" published on Friday, however, says that Bangladesh's GDP growth would not be more than 6.3 percent.

Hossain said the proposed budget stipulates measures to prop up investment as well to steps to meet the power demand and setting up dozens of new economic zones that's why "we think achieving 7 percent GDP growth will be a challenge but not an impossible task.

Echoing almost a similar view with Muhith, Hossasin said European financial stability will boost Bangladesh's efforts in achieving desired growth target in the next fiscal year unless the South Asian country suffers a fresh blow from political unrest.

The Washington-based lender in an updated report in April revealed that the country has suffered a financial loss of around 2.2 billion U.S. dollars in the first three months of the year due to political turmoil.

"Bangladesh suffered a financial loss of some 2.2 billion U.S. dollars in January, February and March this year from the prolonged political unrest," Hossain had earlier said.

Political tension in Bangladesh heightened in January after ex- Prime Minister Khaleda Zia's opposition alliance geared up anti- government agitation programs, demanding fresh elections under a non-party caretaker government system.

Khaleda's BNP and its allies have observed nonstop blockade across the country since Jan. 5 demanding fresh elections under a non-party caretaker government system.

On top of its blockade campaign, BNP and its 19 allies including key Bangladesh Jamaat-e-Islami party have observed strike at regular intervals. The three months' violence left scores of people dead and hundreds injured. Endi