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Thursday, January 10, 2019

Five key challenges lie on new finance minister

Special Correspondent :
AHM Mustafa Kamal, the new finance minister, is about to face a number of challenges to keep growth momentum of the national economy intact, analysts say.
"Five key challenges lies on him and he must accomplish to those being a top policy maker of the government finances," economist Dr Debapriya Bhattacharya told The New Nation yesterday.
The challenges are sustaining a high GDP growth, boosting revenue earnings, restoring discipline in the banking sector, reviving the private investment cycle and timely implementation of mega projects.
Dr Debapriya Bhattacharya said the new finance minister is about to face an uphill task in sustaining the 'fairytale' of the country's high GDP growth given the current investment scenario and banking sector crisis.
"He would face a daunting task in reviving private investment cycle and restore discipline in the banking sector unless drastic reform measures put in place," he added.
Dr Debapriya Bhattacharya, a Distinguished Fellow at the Centre for Policy Dialogue (CPD), further said the national economy continue to attain over 7.0 per cent growth in the last couple of years, but the distribution of growth remains uneven in the lower tier of the population due to lack of necessary jobs for youth population.
"Slow job growth has become a big problem for the economy. The new finance minister must take necessary steps to improve the bleak job prospect. Otherwise, the growth will not be sustainable in the long run," he noted.         
Bangladesh has achieved a record 7.86 per cent GDP growth in the 2017-18 fiscal year.  "There are a lot of challenges that the new finance minister has to face. But he should foremost focus on reviving the private investment and clear the banking owes created due to piling stressed loans in banks," economist Dr Zahid Hussain told The New Nation yesterday.
He said accelerating private investment is necessary to sustain economic growth and job creation. So, the new finance minister must reassure investors of credible plans to boost private investment, which remains low in the last few years despite the country achieved a high GDP growth at that period," said Dr Zahid Hussain.
He said the minister should take bold reform measures to restore discipline in the banking sector, which is marred by the rising non-performing loans. Such steps can help clean up the banks' book of accounts as well as improve their financial health and confidence of the investors," said Dr Zahid Hussain
"He (the finance minister) should particularly fix the pile up bad loans at the state-owned banks and capital shortfall of the state lenders. He should uphold the autonomy and independence of the central bank, which is key to restore discipline in the country's banking sector.
Dr Zahid Hussain further said that the minister should be careful about unnecessary public spending and ensure timely disbursement of government funds for timely implementation of development projects. Necessary steps should be taken to boost revenue earnings to finance the ongoing development projects.
"He must therefore help with tough decisions about unaffordable vanity projects," said Dr Zahid Hussain.
At the same time, he will have to work closely with Industries Minister on the restructuring of state-owned enterprises. The precarious financial position of a number of state-owned enterprises is placing a heavy burden on taxpayers. Removing this burden will release resources that can be used to stimulate the domestic economy.
When asked, Dr Zahid Hussain said the new finance minister has a strong financial background and already served as a planning minister successfully.
"Both experiences should help equip him to meet the challenges," he added.