::1 year of AL-led government::

According to the government's Poverty Reduction Strategy Paper (PRSP), the number of underemployed will stand at 2.66 crore in 2009-11. Due to sluggish investment, providing employment opportunities to these jobless is a big challenge for the government.

Despite the global recession, the overall economy saw better stability in terms of inflation, foreign exchange reserve, remittance inflow and revenue earnings. However, both the public and private investments are still sluggish. The energy and power crises and infrastructure are the main drawbacks and no substantial advancements were seen in these sectors last year.

However, experts told The Daily Star that the government deserves credit for its performance amid an adverse external environment.

Amid the global financial meltdown, the foreign exchange reserve increased and crossed the $10 billion mark, while remittance inflow remained satisfactory. Remittance growth was recorded at 22 percent last fiscal year, and the rate was around 25 percent in the first five months of the current fiscal year.

Revenue collection was not bad either. Despite sluggish trend in trade and commerce, there was 15 percent growth in the first five months. Income tax collection grew 23 percent and VAT collection 20 percent.

However, dullness still prevails in exports. Even though growth was good last fiscal year, negative trends dominate this fiscal year.

The government has taken steps to overcome the situation and announced recession packages on two occasions, included new sectors for export subsidies and increased the amount of subsidy.

The government also provided export-oriented industries with an opportunity to reschedule their loans without down payments.

But the bearish trend in investment over the last few years still continues. Foreign direct investment has also fallen.

GDP growth dropped last fiscal year compared to the previous year and stood at 5.9 percent, even when the government pledged to take the growth rate to 8 percent by 2013. The finance ministry in its latest report projected a lower 5.7 percent growth for the current fiscal year.

The report blamed the slow pace of investment flow in the private sector and sluggish exports for the lower economic growth. According to the report, private sector investment against GDP has to be raised to 30-32.5 percent to achieve 8 percent growth by 2013. But private sector investment against GDP was 19.5 percent last fiscal year and it has been projected to be 19.1 percent this year.

The report said the supply of power and energy has to be ensured, ports have to be made efficient and initiatives need to be taken to quickly implement the mega projects in the communications sector to increase investment.

The government this fiscal year took a large annual development programme (ADP) of Tk 30,500 crore to increase investment in the infrastructure sector, including power and energy, but the rate of its implementation is not satisfactory.

In July-November, 23 percent of total allocation was implemented, which was 18 percent in the corresponding period of last fiscal year. But the expected breakthrough in implementation could not be achieved.

Power crisis is an impediment to increasing investment. To increase investment in the power sector, the government is holding road shows abroad. Although the government failed to spend the money lying with it, it arranged road shows abroad to attract investment. The government could implement only 18 percent of the ADP allocation in the power sector in the first five months of the current fiscal year.

Finance Minister AMA Muhith cited four causes for low investment, where power crisis was one of those. He told journalists on December 22 that the global financial meltdown and a lack of enthusiasm among the businesses created by the anti-corruption drive during the caretaker government regime resulted in sluggishness in investment.

He, however, said the government is taking steps to overcome the negative impacts. The minister also said they will float tenders to generate a minimum of 4,000MW power in 2010.

The government mentioned public-private partnership (PPP) to implement big projects to increase investment in the current fiscal year. But no advancements were made in the last six months.

In this year's budget, various programmes were mentioned to generate jobs, including a pilot basis implementation of the National Job Programme at some selected upazilas. But these measures are not sufficient for providing jobs to about three crore unemployed people.

World Bank Senior Economist in Bangladesh Zahid Hossain said: "Progress, however, has been slow in taking steps on a fast track to mitigate the energy and infrastructure deficits. This is a tough problem to fix up."

He said the governments struggled in the past but the 'Charter of Change' created expectations that this government will do a lot better.

Zahid also said: "The budget was designed to be expansionary, but not irresponsibly so it will be easy for the government to give in to populist pressure for stimulus packages irrespective of whether those seeking assistance under these packages are affected or not. The government wisely parked money in the budget for a stimulus package, but did not make any specific commitments. The package announced later was very much in line with what Bangladesh needed to boost its export sector."

"When the economy does badly, we blame the government regardless of whether or not its policies had anything to do with it. In all fairness, therefore, we must credit the government when the economy does well, particularly under an adverse external environment."

Bangladesh Bank Governor Dr Atiur Rahman told The Daily Star that the economy is now taking a turn for the better. Different indices, including capital machinery, raw materials have showed upward trend, he said. He hopes that in the days to come, the economic situation will improve further.