Foreign Policy Blogs

Finance Minister Defends GDP Numbers Before Submitting Budget

The Finance Minister of Bangladesh, AMA Muhith recently angrily thrashed out the Center for Policy Dialogue, a well-respected think tank, for questioning the official government sponsored GDP projected numbers for fiscal year 2011-2012.

GDP, the gross domestic product, is a measure of a country’s economic growth and as such is a bet of how politics and economics will shape up in any given year; any instability in the projected numbers, as is at issue here, over the course of the coming year will affect the government’s policy priorities.  Little wonder then that the Finance Minister flared up at the first sign that the government’s story of its economic health may not be entirely a neatly wrapped narrative, all tied up and elegantly bowed.

Claiming the think tank’s downgraded projection on the economy’s likely growth to 6.3%, was” rubbish, totally rubbish”, Mr. Muhith defended the Bangladesh Bureau of Statistics projection of 6.7%.  He questioned the motivations of the think tanks analytically determined downward GDP forecast, supposing that there lay political motivations behind the move. This seems inscrutably unlikely since the Center for Policy Dialogue is a well-respected organization that fields enquiries from major international organizations and, indeed, holds joint sessions with government officials and civil-society leaders.  These are the same leaders who serve as combatants and compatriots from time to time and so known to all the game goes,.  The Center can have no interest in fundamentally disrupting that exchange by drawing the ire of the government on a matter of such import. Surely, then, politics played no part in this projected downgrade.

But more importantly the Center’s downgraded projection was based not on political machinations; rather it based the downgrade on the pragmatic concern that over the course of the following year demand might increase in such a way that it might outstrip supply.  In order to reach the government’s projected growth numbers infrastructure investment and manufacturing growth needs to sharply increase in a way that seems infeasible over so short a time.  Global market concerns, now increasingly disappointing, will put downward pressure on economic growth.  Again these are projections based on assumptions.  However even a casual reader of business news will be familiar with the gloomy global economic outlook in most countries. (This, well apart from any political necessity that growth numbers look high enough to give governments on the left or the right the cover they need to pursue their political objectives.)

Even though the government has done a stellar job of keeping the ship of state afloat, there is no doubt there are many things that could go wrong.  Certainly any such assumption that nothing can ever go wrong, never on any one government’s watch should raise growth projection.  Pragmatism of the sort displayed by the Center for Policy Dialogue tends to take the wind out of the sails of that mighty ship of state.

Quite apart from the defending or denouncing numbers that are projections based on assumptions, pragmatic or otherwise, Mr. Muhiths rather’s vitriolic defense seemed outrightly politically motivated, indeed politically reactionary.  For, he will table the National Budget for fiscal year 2011-2012 on June 9th. Any change apart from the government sponsored projected growth numbers will impact the spending priorities that constitute the budget as a whole.  Any change to the way the growth numbers might shape up so close to the budget reveal can be nothing but a source of deep consternation.

Mr. Muhith’s outburst leaves little doubt that the manner in which sharp language cascaded down his tongue like boulders down a water fall was due in part to the strong likelihood that the BNP will marshal demagogic arguments against any slip of the government’s promise of growth.  Every policy proposal will have to be more sharply contested if the growth numbers budge downward.  This seems patently obvious. What seems less obvious are the reasons why Mr. Muhith chose to make his outburst the news– a rather untoward move– when in fact the news story is the feasibility of the ways in which the left Awami League government will run the country.

Any proposition that the government might not be able to govern as promised should be-should have been- met with rational argument not scathing derision.

 

Author

Faheem Haider

Faheem Haider is a political analyst, writer and artist. He holds advanced research degrees in political economy, political theory and the political economy of development from the London School of Economics and Political Science and New York University. He also studied political psychology at Columbia University. During long stints away from his beloved Washington Square Park, he studied peace and conflict resolution and French history and European politics at the American University in Washington DC and the University of Paris, respectively.

Faheem has research expertise in democratic theory and the political economy of democracy in South Asia. In whatever time he has to spare, Faheem paints, writes, and edits his own blog on the photographic image and its relationship to the political narrative of fascist, liberal and progressivist art.

That work and associated writing can be found at the following link: http://blackandwhiteandthings.wordpress.com

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