The other day this writer was asking one of his ex-students, who is now a teacher at the Dhaka University, what the size of the Bangladesh economy is. He replied, after consulting the BBS (Bangladesh Bureau of Statistics) data, it is $160 billion. The BBS statistics was two-year old. By 2015, the size of the economy grew to $180 billion or more. But more pleasant thing now is to know that the size of the Bangladesh economy or the economy's GDP (gross domestic product), as per the recent media reports, stands at $ 200 billion. The size of the economy is even higher in terms of GNI (gross national income) which stands at $ 207.83 billion with a per capita income of $ 1,316 per annum.
The income statistics shows that the Bangladesh economy is moving fast ahead and all signs indicate that the surge will be faster in the coming days. Already the Minister of Finance indicated that the upcoming national budget would be more than Tk 3,000 billion with a separate outlay for the capital budget. The Finance Minister also indicated this year's GDP growth will be around 7.0 per cent but the next year's same growth will be more than 7.0 per cent.
The good thing in the budget-making is that for the first time in the economic history of independent Bangladesh, the Ministry of Finance is going to have a separate capital budgeting programme for financing the big projects in the economy. We also appreciate the attempt for the reason that this kind of divide in the budget will bring more transparency in the government's expenditure as well as bring financial discipline in the economy.
The problem is not more with the availability of resources for financing big capital expenditures, but with the mixed-up or messed-up resource allocation in the same budget without proper demarcation between revenue budget and that for capital. As the revenue budget is almost all engulfing in terms of resource guzzling, the capital budget has turned out to be residuary i.e. projects are funded if resource is available. Bangladesh now is in a better position to choose resources from different sources including those from the multilateral lending agencies like the World Bank and the ADB. In the near future, another big option as to the procurement of resources for financing mega projects, will be knocking on the door of Bangladesh, and that source is the newly- established China-led the AIIB (Asian Infrastructure Bank).
What we see is that resource will not be a problem for Bangladesh. What the country needs is the efficient use of the resources. As the domestic tax and non-tax collection is going up rapidly and as the resource availability becomes easier from the external sources, the Bangladesh budget can go bigger even by keeping government borrowing from the internal source at the present level.
But one thing our policymakers should think seriously is that the availability of resource is one thing and its efficient use is another. Too much of liberal use of resources also brings woes to the economy as we saw in some other developing economies. Use of cheap money or too much of injection of money in the economy in the name of project financing put extra burden on the financial discipline and promote extravagance in the economy. An economy of $ 200 billion is, in our context, not a small one. We hope with some additional leaps the economy will be of $ 250 billion in a few years' time. With a 40 per cent of the economy already linked up with the global economy, this will be meaning that our exports and imports will be crossing the present level fast and our trade partners will be taking note of that change seriously.
Once the Bangladesh economy attains the size of $ 250 billion in a few years in constant $ terms, the global investors will no more bypass this economy while they set their global portfolios of investment. Then, Bangladesh will no more need to urge foreign investors for investing in its economy. They will be coming on their own.
The dream of Bangladesh to become a middle-income country is quite attainable. The Bangladesh economy will be able to belong to the group of middle-income countries by 2021 provided the growth continues at an accelerated rate, attaining 7.5 per cent in the next two years, then 8.0 per cent or more in the following years up to a distant future.
The Bangladesh economy has already broken the logjam, and is now at only a few yards away from the point of take-off. The take-off periods are more difficult for any economy. Once those periods are behind, any economy gathers pace on its journey towards attaining the next higher level.
We dream of a day when we might be asking the Bangladesh economy for a soft landing. Once the economy grows at 8.0 per cent and beyond up to a foreseeable future, a soft landing will become necessary. But that stage is still far long for Bangladesh. In the way to an accelerated growth, the going may be cruel. Many people may not get the benefits of growth. They will rather lose more than what they get. The policymakers shall have to see the benefits of growth going to everyone equitably, if not equally. Already we see the sign of heavy concentration of wealth in a few hands. Concentration of wealth is good for an accelerated growth up to a level, but beyond that level, it brings back bear in the economy. In our investment-driven economy, for the time-being, the government will have to take the lead. It is hoped that the government's lead will be followed by the private sector.
For Bangladesh, Keynes' way of investment will be needed for some time. Keynes had opined when private sector does not come forward with investment for whatever reason, the public sector should come forward with the same, not solely to fill up the void, but to reactivate the private sector. The Bangladesh case is almost similar to a condition which warrants a lead from public sector investment in order to reactivate the private sector investment up to an expected level.
The writer is Professor of Economics, University of Dhaka.