8th Five-Year Plan possibly to achieve economic target
January 11th, 2021 at 12:42 pm
8th Five-Year Plan possibly to achieve economic target

by Md Mazadul Hoque in Dhaka 

Bangladesh’s first Five-Year Plan (FYP) was launched in July 1973 and it was followed by a Two-Year Plan (1978-80) in the wake of global economic uncertainness. In 1980, the Five-Year Plan framework was reinstated. There was a shift from the five-year plan to process the shorter-term Poverty reduction Strategy Paper (PRSP) from 2002-2003 to 2009-2010.

Prime Minister Sheikh Hasina’s government switched back to the five-year plan in 2009. What should be noted here that Bangladesh, since 1973 has been achieving over 70 percent targets set in the Five-Year Plan program. In last 12 years, the FYP program was able to achieve more than 90 percent of the set target.

The 7th Five-Year Plan expired on last 30 June, 2020 that was broadly linked to Vision -2021, Sustainable Development Goals (SDGs), the Perspective Plan ( 2010-2021) and Bangladesh Delta Plan 2100.

The government recently disclosed the 8th FYP ( 2021-2025) that  requires a total of Tk 64.96 trillion worth of funds for achieving the 8th FYP targets.  According to the 8th FYP, it has target to expand Bangladesh’s GDP growth by 8.22 percent in FY 2022, 8.29 percent in FY 2023, 8.32 percent in FY 2024 and 8.51 percent in FY 2025.The 8th FYP has also vowed to cut poverty to 23 percent in FY 2021, 20 percent in FY 2022, 18.5 percent in FY 2023, 17 percent in FY 2024, and 15.6 percent in the terminal FY 2025.

The development plan has also set a target to pick up the gross investment to 36.99 percent of total GDP in the final FY 2025 of the 8th FYP. Some 11.33 million new jobs would be created during the 8th FYP implementation period between FY2021 and FY2025.

Bangladesh attained the status of a lower middle-income country in 2015 and is expected to climb the stair to become a developing country by 2024.

The per capita income in FY2019 has increased to US$1909 from US$1751 in FY2018. Bangladesh is now 34th in the ranking of World Economic Forum’s Inclusive Development Index, ahead of many developing countries (WEF 2018).

By 2030, Bangladesh aspires to be the 24th largest economy in the world. Since 1990, primary school enrollment increased 1.6 times from 11.9 million in 1990 to 19.07 million in 2015. In the Global Gender Gap index 2018, Bangladesh ranked 48 out of 149 countries ( WEF 2018) ahead of all South Asian countries.

Bangladesh has been able to reduce the poverty rate by 1.8 percent in the 2000-2005 period, by 1.7 percent in 2005 and 2010, and 1.2 percent in 2010 to 2016. Besides, Bangladesh has been successful in achieving significant reduction in poverty since 1990. National poverty headcount declined from 58.8 percent in 1991-92 to 31.5 percent in 2010, while extreme poverty rate declined from 41 to 17.6 percent over the same period.

In the last Household Income and Expenditure Survey (HIES) 2016 report, the headcount poverty rate under the upper poverty line has been registered at 24.3 percent and for lower poverty line the rate is 12.9 percent. The upper poverty line rate is 21.0 percent and for lower poverty line rate is 10.4 percent in FY2018.

It is a matter of great pride that Bangladesh economy despite COVID-19 pandemic performed better compared to any economies of the world. Bangladesh is ahead in terms of GDP growth in Asian countries in outgoing 2020. GDP growth in Bangladesh 3.8 percent, Myanmar 2 percent, china 1.9 percent, Vietnam 1.6 percent, India -10.3 percent, Thailand -7.1 percent, Singapore -6 percent, Sri Lanka -4.6 per cent, Kuwait -8.1 percent, Saudi Arabia -5.4 percent, Japan -5.3 percent, Pakistan -0.4 percent

Bangladesh’s GDP growth its forecast to drop to 3.8 percent in 2020 compared to 8.2 percent in the previous year. The government debt as percentage of GDP rose to 39.6 percent in 2020, considered low as the international standards. The government had a fiscal deficit of 6.8 percent in 2020. Bangladesh is set to post the third –highest growth in the world and the highest in Asia in 2020- IMF. In terms of growth  , Guyana and South Sudan are ahead of Bangladesh. India’s GDP would contract by 10.3 percent and Pakistan’s by 0.4 percent. Of the 190 IMF member countries, only 23 are forecast to post a positive growth in the outgoing year.

A UK-based think tank, Economics and Business Research (CEBR) in its recent study reveals  that Bangladesh is heading to become the world’s 25th largest economy in 2035. By 2025, it will be the 34th largest economy in the world and will continue with the 2nd place in South Asia. Between 2020 and 2035, the CEBR forecasts that Bangladesh position in the World economic League Table will improve considerably, with its ranking rising from 41st to 25th by 2035. Between 2021 and 2035, CEBR said that the annual GDP growth rate will accelerate to an average of 6.8 percent. Bangladesh had a purchasing power parity adjusted GDP per capita of $5,139 in 2020 indicating a lower middle-income country in the world. In 2025, the size of Bangladesh economy will be $488 billion at the current price.

 

 

Plan period

(FY)

Plans Avg Growth Target Actual Growth % Target
1973-78 1st  FYP 5.5 4.0 72.73
1978-80 Two year plan 5.6 3.5 62.50
1980-85 2nd  FYP 5.4 3.8 70.37
1985-90 3rd  FYP 5.4 3.8 70.37
1990-95 4th  FYP 5.0 4.2 84.00
1997-02 5th FYP 7.0 5.1 72.86
2003-05 Interim poverty Reduction Strategy Paper (IPRSP) 6.21
2005-08 Unlocking the potential : National Strategy for Accelerated  poverty Reduction ( NSAPR-1) 6.41
2009-11 Steps Towards Change : National Strategy for Accelerated Poverty Reduction( NSAPR-II) 6.33
2011-15 6th  FYP 7.3 6.3 86.30
2016-20 7th  FYP 7.44 7.60* 102.15*

*Average Growth Rate of 4 years. FYP- Five Year Plan

It is important to note that in 2011, the government prepared a perspective plan for the first time in the country’s history to articulate Vision -2021. The first ever  “Perspective Plan of Bangladesh (2010-2021): Making Vision 2021 a Reality” is a strategic articulation of the development vision, mission, and goals of the Government in achieving a prosperous Bangladesh grounded in political and economic freedom a reality in 2021. Specific strategies and the task of implementation had been articulated through the two five-year plans: 6th  Five Year Plan (2011-2015) and  7th  Five Year Plan (2016-2020). Accordingly, the Perspective Plan targets annual real GDP growth rate to rise to 8.0 per cent by 2015, and further to 10.0 per cent by 2021, significantly improving living standards of the population by drastically reducing unemployment and poverty, riding on substantially higher output and export growth, while maintaining macroeconomic stability. Per capita annual income is projected to rise to about USD 2,000 (at constant 2013 dollars) by 2021, thus crossing the middle income threshold.

It is heartening to note that first Perspective Plan of Bangladesh 2010-2021 covering 6th and 7th FYP did not achieve its target set in the beginning. The plan had a goal to reduce moderate poverty to 15 percent, achieving 10 percent economic growth, boosting gross national savings to 39.1 percent and investment to 38 percent of GDP. the government has given up its dream of achieving double-digit growth, and has set the economic growth targets at 9 percent by 2031 and 9.9 percent by 2041. the second perspective plan taken recently  for the next 20 years up to 2041 , aiming to bring down extreme poverty to below 3 percent by 2031 and moderate poverty to below 3 percent by 2041 as well. The domestic savings are only 28.41 percent to GDP, against a target of 39 percent. Besides, the government wanted to achieve 20 percent revenue target against GDP and increase the tax-GDP ratio to 17.5 percent by 2021. But, the current tax-GDP ratio is only 9.3 percent, and the new plan will target a ratio of 21.85 percent by 2041.

It needs to mention here that amid pandemic situation the national GDP growth was 5.24 percent in the last fiscal year and the expected growth in the current fiscal year is 7.4 percent. Several international organizations also forecast Bangladesh to top the list of South Asian countries with robust GDP growth. IMF placed the country among the top growing economies of 2020. Bangladesh is the 9th strongest economy in the list of 66 emerging economies- the economist’s report 2020 said. The economy certainly goes fast ahead with 2nd perspective plan 2021-2041, Bangladesh Delta Plan 2100 and 8th Five-Year Plan, no doubt.

To keep coronavirus hit economy afloat, the need for proper utilization of stimulus package worth Tk 1.21 trillion, which is equivalent to 4.3 percent of GDP, is a must. The goals set in the 8th Five-Year Plan would easily be achieved by 2025 in view of current economic state of Bangladesh compared to other nations.

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M Mazadul Hoque is an  economic affairs editor and Member-Secretary of Bangladesh Columnists’ Forum ( BCF)