Economists yesterday expressed their concern over the widening gap between budgetary proposals on expenditures, revenue earnings and the realised figures with slow growth in manufacturing sector, export and deceleration in rate of investment. They said favourable macroeconomic conditions and increased growth of the country's economy in future will depend on recovery and growth of the manufacturing sector.

They reviewed developments in different sectors in the nineties at a seminar an "Bangladesh Economy 2000: Some Selected Issues" at the Bangladesh Institute of Development Studies (BIDS) here yesterday. The seminar was chaired by Director General of BIDS Abu Abdullah. Among others, for mer finance minister AMA Muhit, IMF Resident Representative Ronald P Hicks, Executive Director of Centre for Policy Dialogue (CPD) Debapriya Bhattacharya and economist Atiur Rahman spoke on the occasion while BIDS research fellows presented papers on key issues of the economy. Omar Haidar Chowdhury of BIDS said, the recent trend showed that revenue and development expenditures were more than budgeted estimates, with increasing short-fall in revenue collection. This puts the macro economic scenario in an adverse position, he observed. "However ... its severity will depend on the nature of public expenditure and the sources of funding the budget deficit."

Haidar said the share of directly unproductive sector (DUS) in the total revenue expenditure has gone up from less than 50 per cent in FY9l to more than 56 per cent by late nineties. At the same time infrastructure expenditure is also declining. "The budget for the current financial year envisages that the share of DUS will rise above the 60 per cent and that of defence to17 per cent from around 15 per cent in the previous FY." The share of social sector in the total public expenditure has declined to 24 per cent from 26 per cent, adversely affecting education and health sectors. However, he said, the expenditures in real terms in this sector have been increasing since early nineties. But these did not have any positive reflection on quantity and quality of services, he added. The share of debt servicing in the budget is rising and it not likely to decline in the near future since it becomes cumulative. Its growth can only be moderated if increased revenue collections can substitute government's borrowing from internal sources and the capital market can be sufficiently improved to provide better investment opportunities to private savers compared to government bonds.

Speaking on macroeconomic development in the 90s, Mustafa K Mujeri of BIDS said steady growth of the economy is being obstructed due to slow growth and continued failure of the manufacturing sector. He said growth of the sector sharply decelerated to 4.25 per cent in 1999-2000 from an average 8.2 per cent during the first half of1990s. Kazi Iqbal of BIDS said government's heavy borrowing since early 1998 to finance budgetary gap made banks' excess reserves fall by around 98 per cent by end of June 1998. The total reserve declined sharply and so did the reserve ratio, "Given this tightening monetary situation where excess liquidity with the scheduled banks is about to exhaust, further excessive borrowing from scheduled banks is most likely to cause crowding out, denying access for the private sector" he said. BIDS Research Director Qazi Shahabuddin and fellows Sajjad Zohir, Rushidan I Rahman, Abul Quasem and M Asaduzzaman also presented papers on agriculture and rural economy.