We need to reform our critical economic domain

Bloomberg Intelligence has made some projections on how Bangladesh's economy will perform in coming years. Potential growth at a rate of 6.5% is one of them, which is okay in the sense that it is an annual average long-term growth projection, though the government's five-year plan expects 8.5% growth or above. In fact, Bangladesh needs to have an annual growth of 7% or above for the next 10 to 15 years.

The research firm seems to be not cautiously optimistic when it speaks of potentials only given the ground reality in our education and skill development. Bangladesh's allocation for education is less than 2% of GDP and for health, it is less than 1% of GDP – both among the lowest in the world. Our major Asian competitor Vietnam spends 4% of its GDP for education and more than 2% in health.

Demographic dividend will remain as a window of opportunity open for us for the next 15 years. But we will miss out on its benefits unless we invest more in education and health. The research has not dwelt much on these issues.

They are right to identify improved infrastructures and foreign direct investment as future growth drivers for Bangladesh as the country is expected to graduate from an LDC in 2026. To sustain the stiff post-LDC market competition, Bangladesh needs to diversify its economy and find new opportunities, where economic zones will definitely be of great help. But all these initiatives must be synchronised with adequate policy reforms and bureaucratic efficiency.

The research has rightly pointed out the danger of climate change, but what they have not highlighted is the need for critical reforms in many areas without which gains from infrastructural improvement will remain low.

Is our financial sector ready to take us to that level as projected or required? How long will we be able to move with the sorry state of tax-GDP ratio and overall banking sector?

We need to reform our critical economic domain and public finance management to overcome chronic problems of cost- and time-overruns in development projects.

There is no denying the fact that Bangladesh's economy holds immense potential. But the research firm has presented an incomplete picture of the country's economic future as it has not touched upon many of the downsides. Potential growth, as projected in the study, will not come automatically if social, financial and revenue sectors do not go through the much-needed reforms.

Dr Selim Raihan, Executive Director, Sanem