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Bangladesh Defense Forum
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- Jan 24, 2024
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Inflation will go down
Salehuddin Ahmed, finance and planning adviser to the interim government, yesterday said inflation in Bangladesh will go down within a reasonable amount of time.
Inflation will go down
Salehuddin says
Salehuddin Ahmed, finance and planning adviser to the interim government, yesterday said inflation in Bangladesh will go down within a reasonable amount of time.
However, newly-appointed Bangladesh Bank Governor Ahsan H Mansur said the burden of spiralling prices may be brought to tolerable levels within the next five to six months.
"I will not tell you to go to the market tomorrow and see how prices have declined because that will not be the case," Ahmed said while speaking to reporters at the Secretariat following a meeting on prices, production and supply of essentials.
"However, it will also not be the case that decades are required to reduce inflation," he added.
Ahmed also said the government would emphasise improving supply and production to tame inflation.
Alongside taking various measures in this regard, it will also evaluate whether those are effective.
Moreover, the interim government will impose measures or policies that are easily digestible, he added.
The meeting was also attended by the central bank governor, secretaries of the finance, commerce, and food ministries as well as senior officials of other relevant ministries.
After the meeting, the new central bank governor said it would be possible to work on the domestic market from three angles, one of which is the supply side.
"This relates to how we can increase supply by increasing production and create a positive impact on the market," he added.
Second, issues like extortion that have come to the fore need to be addressed. The third will be addressing demand-side issues.
Bangladesh Bank is already working to this end and there will be a review to know whether more can be done, Mansur said.
He said another important challenge is the dearth of foreign currency, as a result of which Bangladesh is currently unable to import as per previous levels, impacting the overall market.
Mansur said keeping inflation at a tolerable level will be possible within five to six months if issues like foreign currency reserves, extortion and lower production are addressed adequately.
"We are hoping for that but we need time to work," he added.
He also said it is not possible to solve the foreign currency crunch overnight.
Apart from that, Mansur said the reserves cannot be reduced illogically and that a minimum level has to be maintained. This is because an illogical decline would lower investor confidence in the market.
So, the central bank needs to maintain the minimum reserve level in sectors where US dollars are used for imports, he said, adding that calculated steps should be taken in this regard.
He also informed that they would discuss the issue with development partners.
Salehuddin says
Salehuddin Ahmed, finance and planning adviser to the interim government, yesterday said inflation in Bangladesh will go down within a reasonable amount of time.
However, newly-appointed Bangladesh Bank Governor Ahsan H Mansur said the burden of spiralling prices may be brought to tolerable levels within the next five to six months.
"I will not tell you to go to the market tomorrow and see how prices have declined because that will not be the case," Ahmed said while speaking to reporters at the Secretariat following a meeting on prices, production and supply of essentials.
"However, it will also not be the case that decades are required to reduce inflation," he added.
Ahmed also said the government would emphasise improving supply and production to tame inflation.
Alongside taking various measures in this regard, it will also evaluate whether those are effective.
Moreover, the interim government will impose measures or policies that are easily digestible, he added.
The meeting was also attended by the central bank governor, secretaries of the finance, commerce, and food ministries as well as senior officials of other relevant ministries.
After the meeting, the new central bank governor said it would be possible to work on the domestic market from three angles, one of which is the supply side.
"This relates to how we can increase supply by increasing production and create a positive impact on the market," he added.
Second, issues like extortion that have come to the fore need to be addressed. The third will be addressing demand-side issues.
Bangladesh Bank is already working to this end and there will be a review to know whether more can be done, Mansur said.
He said another important challenge is the dearth of foreign currency, as a result of which Bangladesh is currently unable to import as per previous levels, impacting the overall market.
Mansur said keeping inflation at a tolerable level will be possible within five to six months if issues like foreign currency reserves, extortion and lower production are addressed adequately.
"We are hoping for that but we need time to work," he added.
He also said it is not possible to solve the foreign currency crunch overnight.
Apart from that, Mansur said the reserves cannot be reduced illogically and that a minimum level has to be maintained. This is because an illogical decline would lower investor confidence in the market.
So, the central bank needs to maintain the minimum reserve level in sectors where US dollars are used for imports, he said, adding that calculated steps should be taken in this regard.
He also informed that they would discuss the issue with development partners.
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Reserve crisis will not be resolved overnight: New BB governor
Bangladesh Bank's newly appointed governor Dr Ahsan H Mansur has acknowledged the country's foreign exchange reserve crisis, cautioning that the situation will not improve overnight. However, he assured that the central bank will not drastically cut down on dollar supply to the market. In a press
Reserve crisis will not be resolved overnight: New BB governor
He pledges cautious approach
FE ONLINE DESK
Published :
Aug 14, 2024 17:04
Updated :
Aug 14, 2024 17:48
Bangladesh Bank's newly appointed governor Dr Ahsan H Mansur has acknowledged the country's foreign exchange reserve crisis, cautioning that the situation will not improve overnight. However, he assured that the central bank will not drastically cut down on dollar supply to the market.
In a press briefing at the secretariat on Wednesday, following a meeting on inflation and food supply, Dr Mansur said, "The reserve crisis is a reality, and it won't be resolved overnight. We need to assess our position and determine the optimal level of supply to the market while maintaining adequate reserves."
The governor emphasised the importance of maintaining market confidence and avoiding an abrupt reduction in dollar supply. He highlighted the need to balance the demand for imports and payments with the available reserves.
Dr Mansur further revealed plans to engage with development partners to explore avenues for increasing the country's foreign exchange reserves. He expressed optimism about the situation, stating, "We will tread carefully but move forward. I hope we will start seeing results within a few months."
The governor's comments come amidst growing concerns over Bangladesh's dwindling foreign exchange reserves, which have been impacted by factors such as rising import costs, higher debt servicing and a global economic slowdown.
He pledges cautious approach
FE ONLINE DESK
Published :
Aug 14, 2024 17:04
Updated :
Aug 14, 2024 17:48
Bangladesh Bank's newly appointed governor Dr Ahsan H Mansur has acknowledged the country's foreign exchange reserve crisis, cautioning that the situation will not improve overnight. However, he assured that the central bank will not drastically cut down on dollar supply to the market.
In a press briefing at the secretariat on Wednesday, following a meeting on inflation and food supply, Dr Mansur said, "The reserve crisis is a reality, and it won't be resolved overnight. We need to assess our position and determine the optimal level of supply to the market while maintaining adequate reserves."
The governor emphasised the importance of maintaining market confidence and avoiding an abrupt reduction in dollar supply. He highlighted the need to balance the demand for imports and payments with the available reserves.
Dr Mansur further revealed plans to engage with development partners to explore avenues for increasing the country's foreign exchange reserves. He expressed optimism about the situation, stating, "We will tread carefully but move forward. I hope we will start seeing results within a few months."
The governor's comments come amidst growing concerns over Bangladesh's dwindling foreign exchange reserves, which have been impacted by factors such as rising import costs, higher debt servicing and a global economic slowdown.
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Bangladesh turmoil may slow financial reform, weaken banks: S&P
Moody’s Analytics said last week it has provisionally revised Bangladesh’s GDP growth forecast for this year to 5.1 per cent from 5.4 per cent previously
en.prothomalo.com
Bangladesh turmoil may slow financial reform, weaken banks: S&P
ReutersNew Delhi/Dhaka
Published: 15 Aug 2024, 10: 46
A vendor waits for customers at his fruits stall at a wholesale market in Dhaka on 14 August 2024, days after a student-led uprising that ended the 15-year rule of Sheikh Hasina AFP
Political turmoil in Bangladesh is likely to slow planned financial reforms and has already added to weakness in the banking sector, S&P Global Ratings said on Wednesday.
Prime Minister Sheikh Hasina quit and fled to India last week after student-led protests against her spiralled into some of the worst violence since Bangladesh’s 1971 independence from Pakistan, killing 300 people and injuring thousands.
An interim government, led by Nobel Prize winning economist Muhammad Yunus, has been appointed to plug a power vacuum and hold elections, but the protests have widened to target officials appointed during Hasina’s term, including the central bank chief and four deputy governors, who have resigned. A new central bank governor has been appointed.
“We see risk of policy inaction and a potential slowdown in financial reforms,” S&P Global Ratings credit analyst Shinoy Varghese said.
Weakness in the banking industry, including a lack of liquidity, thin capital buffers and ailing asset quality, has worsened while the departure of senior central bank officials could delay ongoing structural reforms, the rating agency said.
The anti-government protests emerged from a movement in July against quotas in government jobs, as the $450-billion economy - the world’s fastest-growing just years earlier - struggled with youth unemployment, inflation and shrinking reserves.
These conditions drove Hasina’s government to seek a $4.7 billion bailout from the International Monetary Fund, which was approved in January 2023.
Workers stand while waiting for vegetables to transport at a wholesale market in Dhaka on 14 August 2024, days after a student-led uprising that ended the 15-year rule of Sheikh Hasina AFP
Weeks of unrest have fanned inflation, which reached 11.66 per cent in July - when the government imposed a nationwide curfew, shutting down transport, offices and the mainstay garments industry for days - from 9.72 per cent the previous month, according to official data.
Moody’s Analytics said last week it has provisionally revised Bangladesh’s GDP growth forecast for this year to 5.1 per cent from 5.4 per cent previously.
“Bangladesh’s recovery from the currency crisis hinges on the ability of any replacement government to meet public concerns and reestablish social order,” it said in a note.
The Asian Development Bank, a key development partner for Bangladesh, said it would work with the interim government towards macroeconomic and fiscal sustainability.
“A second priority is the expansion of private sector development to enhance competitiveness and create new employment opportunities,” the ADB said in a statement.
“This includes working with the interim government to streamline government-to-business services to reduce the cost of doing business in Bangladesh.”
ReutersNew Delhi/Dhaka
Published: 15 Aug 2024, 10: 46
A vendor waits for customers at his fruits stall at a wholesale market in Dhaka on 14 August 2024, days after a student-led uprising that ended the 15-year rule of Sheikh Hasina AFP
Political turmoil in Bangladesh is likely to slow planned financial reforms and has already added to weakness in the banking sector, S&P Global Ratings said on Wednesday.
Prime Minister Sheikh Hasina quit and fled to India last week after student-led protests against her spiralled into some of the worst violence since Bangladesh’s 1971 independence from Pakistan, killing 300 people and injuring thousands.
An interim government, led by Nobel Prize winning economist Muhammad Yunus, has been appointed to plug a power vacuum and hold elections, but the protests have widened to target officials appointed during Hasina’s term, including the central bank chief and four deputy governors, who have resigned. A new central bank governor has been appointed.
“We see risk of policy inaction and a potential slowdown in financial reforms,” S&P Global Ratings credit analyst Shinoy Varghese said.
Weakness in the banking industry, including a lack of liquidity, thin capital buffers and ailing asset quality, has worsened while the departure of senior central bank officials could delay ongoing structural reforms, the rating agency said.
The anti-government protests emerged from a movement in July against quotas in government jobs, as the $450-billion economy - the world’s fastest-growing just years earlier - struggled with youth unemployment, inflation and shrinking reserves.
These conditions drove Hasina’s government to seek a $4.7 billion bailout from the International Monetary Fund, which was approved in January 2023.
Workers stand while waiting for vegetables to transport at a wholesale market in Dhaka on 14 August 2024, days after a student-led uprising that ended the 15-year rule of Sheikh Hasina AFP
Weeks of unrest have fanned inflation, which reached 11.66 per cent in July - when the government imposed a nationwide curfew, shutting down transport, offices and the mainstay garments industry for days - from 9.72 per cent the previous month, according to official data.
Moody’s Analytics said last week it has provisionally revised Bangladesh’s GDP growth forecast for this year to 5.1 per cent from 5.4 per cent previously.
“Bangladesh’s recovery from the currency crisis hinges on the ability of any replacement government to meet public concerns and reestablish social order,” it said in a note.
The Asian Development Bank, a key development partner for Bangladesh, said it would work with the interim government towards macroeconomic and fiscal sustainability.
“A second priority is the expansion of private sector development to enhance competitiveness and create new employment opportunities,” the ADB said in a statement.
“This includes working with the interim government to streamline government-to-business services to reduce the cost of doing business in Bangladesh.”
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Forthcoming $1.20b from four major financiers
A sum of some US$1.20 billion is expected to come from four major development partners willing to support Bangladesh's interim government in economic recovery, officials said, as the country's forex reserves have long been on depletion. The Ministry of Finance (MoF) has already started wor
Forthcoming $1.20b from four major financiers
FHM Humayan Kabir
Published :
Aug 16, 2024 00:33
Updated :
Aug 16, 2024 00:33
A sum of some US$1.20 billion is expected to come from four major development partners willing to support Bangladesh's interim government in economic recovery, officials said, as the country's forex reserves have long been on depletion.
The Ministry of Finance (MoF) has already started work to get the budget-support credit which will narrow down the income-expenditure gap in the current fiscal year's budget and improve foreign- exchange reserves, they said Thursday.
The World Bank (WB) is expected to provide $500 million worth of budget support to the government within this 2024-25 fiscal, a senior Economic Relations Division (ERD) official said.
Besides, the country's second-largest development partner-the Asian Development Bank (ADB)-is expected to extend $400 million in budgetary support by December this year, he added.
Additionally, the government is expecting at least $200 million worth of support from the Asian Infrastructure Investment Bank (AIIB) and another $100 million from Korea.
Bangladesh is struggling with economic crisis, especially with a crunch in foreign-exchange reserves, over nearly two years.
Bangladesh's reserves have fallen to only about $20 billion from about $46 billion three years back, resulting in tightfisted spending for imports with its domino effect on production and consumer market.
An ERD official says: "The expected budgetary support from the four major development partners will give a cushion to the economy by way of boosting the reserves."
In addition to the expected $1.20-billion support, the government is also expecting disbursement of IMF's ongoing support to Bangladesh.
The deposed government in June last announced a Tk 7.97-trillion budget with a total fiscal deficit worth Tk 2.516 trillion.
Of the total deficit, the government has set a target to fulfil 36 per cent from external assistance. The remaining 55 per cent of the budget deficit will be financed from domestic borrowings, 6.0 per cent from the national savings certificates and the remaining 3.0 per cent from other sources.
In the last FY2024, the government received a handsome amount of budget support from different lenders.
The IMF provided $1.15 billion in the 3rd tranche of its assured $4.7-billion loan in a package deal, the WB approved $500 million, the ADB $290 million, South Korea $100 million and France $107 million.
Besides, the AIIB confirmed $400 million loan for helping government for its development works.
In a meeting with newly appointed Finance and Planning Adviser Dr Salehuddin Ahmed on Tuesday in Dhaka, WB country director in Bangladesh Abdoulaye Seck affirmed their continuous support to the interim government.
FHM Humayan Kabir
Published :
Aug 16, 2024 00:33
Updated :
Aug 16, 2024 00:33
A sum of some US$1.20 billion is expected to come from four major development partners willing to support Bangladesh's interim government in economic recovery, officials said, as the country's forex reserves have long been on depletion.
The Ministry of Finance (MoF) has already started work to get the budget-support credit which will narrow down the income-expenditure gap in the current fiscal year's budget and improve foreign- exchange reserves, they said Thursday.
The World Bank (WB) is expected to provide $500 million worth of budget support to the government within this 2024-25 fiscal, a senior Economic Relations Division (ERD) official said.
Besides, the country's second-largest development partner-the Asian Development Bank (ADB)-is expected to extend $400 million in budgetary support by December this year, he added.
Additionally, the government is expecting at least $200 million worth of support from the Asian Infrastructure Investment Bank (AIIB) and another $100 million from Korea.
Bangladesh is struggling with economic crisis, especially with a crunch in foreign-exchange reserves, over nearly two years.
Bangladesh's reserves have fallen to only about $20 billion from about $46 billion three years back, resulting in tightfisted spending for imports with its domino effect on production and consumer market.
An ERD official says: "The expected budgetary support from the four major development partners will give a cushion to the economy by way of boosting the reserves."
In addition to the expected $1.20-billion support, the government is also expecting disbursement of IMF's ongoing support to Bangladesh.
The deposed government in June last announced a Tk 7.97-trillion budget with a total fiscal deficit worth Tk 2.516 trillion.
Of the total deficit, the government has set a target to fulfil 36 per cent from external assistance. The remaining 55 per cent of the budget deficit will be financed from domestic borrowings, 6.0 per cent from the national savings certificates and the remaining 3.0 per cent from other sources.
In the last FY2024, the government received a handsome amount of budget support from different lenders.
The IMF provided $1.15 billion in the 3rd tranche of its assured $4.7-billion loan in a package deal, the WB approved $500 million, the ADB $290 million, South Korea $100 million and France $107 million.
Besides, the AIIB confirmed $400 million loan for helping government for its development works.
In a meeting with newly appointed Finance and Planning Adviser Dr Salehuddin Ahmed on Tuesday in Dhaka, WB country director in Bangladesh Abdoulaye Seck affirmed their continuous support to the interim government.
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- #257
Circular economy for sustainable business with ecological harmony
The traditional linear business model, with its extractive philosophy, "take, make, dispose" prioritises short-term profits over sustainability. This leads to cheap, disposable products that generate excessive waste, depleting resources and harming the environment. Resource extraction, production,
Circular economy for sustainable business with ecological harmony
Md Abdul Latif
Published :
Aug 16, 2024 21:11
Updated :
Aug 16, 2024 21:11
The traditional linear business model, with its extractive philosophy, "take, make, dispose" prioritises short-term profits over sustainability. This leads to cheap, disposable products that generate excessive waste, depleting resources and harming the environment. Resource extraction, production, transportation, and disposal all contribute to pollution, greenhouse gas emissions, and habitat degradation. This model lacks recycling and reuse, perpetuating a culture of disposability and posing supply chain risks. In contrast, the circular economy offers a sustainable alternative, emphasising waste reduction, resource conservation, and closed-loop production. Its core principles-reduce, reuse, and recycle-promote innovation, sharing, and collaboration. Products and materials are kept in use by designing out waste and pollution, regenerating natural ecosystems, and fostering a sustainable future. Walter R. Stahel coined the term, highlighting its importance for planetary survival, while Kate Raworth emphasises its focus on a regenerative business approach. The circular economy presents a path towards sustainable business opportunities and ecological harmony.
The traditional business model carries significant environmental, economic, and social costs. Its impact is substantial from water scarcity and hazardous waste to health problems, community displacement, and cultural erosion. Waste mismanagement and insufficient recycling hinder economic growth and job creation, placing a burden on society. Unsustainable resource use jeopardises future development, exacerbates inequality, and harms human well-being. Bangladesh's textile and garment industry, crucial for its economy, faces environmental challenges. Despite contributing over 84 per cent of export earnings, the sector generates significant waste, including 20 to 47 per cent of yarns, scraps, and rejects. Dyeing processes pollute rivers with hazardous chemicals, and water consumption is high, averaging 250-300 liters per kilogram of cloth. The industry also contributes significantly to CO2 emissions, increasing at an annual rate of 8 per cent over the past two decades. Notably, the growing use of synthetic fabrics like polyester and viscose staple fibre doubles the carbon footprint compared to cotton.
Bangladesh's thriving electronics industry, fueled by the widespread use of microchips in everyday devices, produces a significant amount of hazardous e-waste. The country generates 1.2 kg of e-waste per capita annually, with projections indicating a rise from 0.13 million tons in 2010 to 4.62 million tons by 2035, showing a 20 per cent annual growth rate as reported by the Department of Environment (DoE).Currently, only 3 per cent of the total generated e-waste is recycled, a lower rate than in other developing countries. Improper disposal of 97 per cent non-recycled e-waste poses significant environmental risks due to toxic elements contaminating air, water, and soil. The shipbreaking industry worsens the issue by releasing harmful electronic components from scrapped vessels, turning Bangladesh into a hazardous waste site. Contamination of recyclable Lead (Pb) has surged due to the extensive use of leaded gasoline in vehicles.
Transitioning to a circular economy eliminates reliance on virgin material streams, offering a holistic solution for interconnected social, economic, and environmental issues. The circular economy minimises waste by recycling materials in a closed-loop system, reducing dependency on new resources and environmental impact. This approach extends product life-spans through refurbishment and upgrades, minimising hazardous waste. Closed-loop production also lowers costs associated with raw material extraction, processing, and waste management, while creating jobs in areas like product design, recycling, and refurbishment. This innovative system fosters innovation by shifting from product ownership to service provision, encouraging durable and sustainable designs. This model promotes resource efficiency through platforms like sharing services (bike-sharing, co-working spaces) and developing biodegradable materials to replace traditional plastics. Transitioning to a circular economy necessitates new consulting services, innovative recycling technologies for complex materials, and diverse job opportunities. These roles span circular economy consultancy, sustainable design, refurbishment, sharing platform management, closed-loop production, biodegradable materials engineering, and product life cycle management, indicating a burgeoning field with immense potential for growth and sustainability.
Numerous initiatives demonstrate the growing momentum of the circular economy. The Ellen MacArthur Foundation, for example, works with brands like H&M, Lee, and Mud Jeans to promote recyclable and durable denim, aiming to reduce waste in the fashion industry. They also advocate for reducing single-use plastics and increasing recycling. The Loop Circular Shopping Platform partners with major brands to offer refillable and reusable packaging, further reducing waste. Tesla's Battery Recycling Programme recovers materials from old electric vehicle batteries, minimising the environmental impact of battery production and disposal. IKEA's Circular Business Model includes furniture rental, buy-back programs, and exploration of new materials. Cities like Amsterdam, Copenhagen, and San Francisco are embracing circular economy principles to improve resource efficiency, minimise waste, and create sustainable urban areas. Other notable examples include Patagonia's Worn Wear Programme, Fair Phone's Modular Smartphone, Renault's Car-Sharing Platform, Michelin's Tire Recycling Programme, and HP's Printing and Recycling Programme. These successful initiatives showcase the circular economy's ability to reduce waste, promote sustainability, and drive innovation and growth.
Bangladesh's readymade garment (RMG) industry is actively pursuing a circular economy model to foster sustainable growth and remain competitive. As per the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data, the country leads the world in green garment factories, with 192 Leadership in Energy and Environmental Design (LEED) certified facilities, including 67 platinum-rated ones, and over 550 more in the certification process. Initiatives like the "Circular Fashion Partnership," involving the BGMEA, Global Fashion Agenda, Reverse Resources, and P4G, aim to establish a long-term, scalable circular fashion system. The overarching circular fashion system includes a specialised circular textile value chain that initiates a responsible production process to minimise Jhut waste (including cutting remnants, scraps, and fluffs), reduce resource consumption, and enhance sustainability in the RMG sector. Of the estimated 400,000 to 500,000 tonnes of Jhut waste, only 5 per cent is recycled, while 30-35 per cent is repurposed for domestic clothing, with much ending up in landfills, incinerated, or exported. The RMG sector holds significant potential to cut cotton imports and generate an additional $5 to $6 billion in garment exports through local recycling. In the e-waste sector, a robust informal network of retailers, repairers, collectors, and recyclers ensures that nearly 90 per cent of e-waste finds a second life through repurposing, repair, or recycling, highlighting the significant potential of informal networks in driving circularity within e-waste management.
To successfully compete in the global market and shift towards a circular economy, industries need to revamp production processes to value waste, enhance skills, and boost efficiency. However, the transition presents several challenges: inadequate recycling infrastructure, product design flaws for circularity, insufficient logistics and transportation systems, lack of supportive policies and regulations, inconsistent standards and certifications, improper taxation and incentives, consumer behaviour hindering circularity, supply chain complexity, insufficient investment in new technologies, limited data and metrics, and inadequate monitoring and evaluation. The barriers to a circular economy include legal, structural, operational, financial, technological, attitudinal, and human resource issues.
Overcoming these obstacles requires collaboration between governments, businesses, consumers, and civil society. Designing products with modular components, implementing closed-loop production systems with innovative waste reduction and management strategies, and offering products as a service, where ownership and responsibility are retained, are crucial steps. Adopting circularity is not just morally imperative but also a strategic business opportunity for long-term success, and a sustainable future.
Dr Md Abdul Latif (PhD in Development Policy), Additional Director, Bangladesh Institute of Governance and Management (BIGM).
Md Abdul Latif
Published :
Aug 16, 2024 21:11
Updated :
Aug 16, 2024 21:11
The traditional linear business model, with its extractive philosophy, "take, make, dispose" prioritises short-term profits over sustainability. This leads to cheap, disposable products that generate excessive waste, depleting resources and harming the environment. Resource extraction, production, transportation, and disposal all contribute to pollution, greenhouse gas emissions, and habitat degradation. This model lacks recycling and reuse, perpetuating a culture of disposability and posing supply chain risks. In contrast, the circular economy offers a sustainable alternative, emphasising waste reduction, resource conservation, and closed-loop production. Its core principles-reduce, reuse, and recycle-promote innovation, sharing, and collaboration. Products and materials are kept in use by designing out waste and pollution, regenerating natural ecosystems, and fostering a sustainable future. Walter R. Stahel coined the term, highlighting its importance for planetary survival, while Kate Raworth emphasises its focus on a regenerative business approach. The circular economy presents a path towards sustainable business opportunities and ecological harmony.
The traditional business model carries significant environmental, economic, and social costs. Its impact is substantial from water scarcity and hazardous waste to health problems, community displacement, and cultural erosion. Waste mismanagement and insufficient recycling hinder economic growth and job creation, placing a burden on society. Unsustainable resource use jeopardises future development, exacerbates inequality, and harms human well-being. Bangladesh's textile and garment industry, crucial for its economy, faces environmental challenges. Despite contributing over 84 per cent of export earnings, the sector generates significant waste, including 20 to 47 per cent of yarns, scraps, and rejects. Dyeing processes pollute rivers with hazardous chemicals, and water consumption is high, averaging 250-300 liters per kilogram of cloth. The industry also contributes significantly to CO2 emissions, increasing at an annual rate of 8 per cent over the past two decades. Notably, the growing use of synthetic fabrics like polyester and viscose staple fibre doubles the carbon footprint compared to cotton.
Bangladesh's thriving electronics industry, fueled by the widespread use of microchips in everyday devices, produces a significant amount of hazardous e-waste. The country generates 1.2 kg of e-waste per capita annually, with projections indicating a rise from 0.13 million tons in 2010 to 4.62 million tons by 2035, showing a 20 per cent annual growth rate as reported by the Department of Environment (DoE).Currently, only 3 per cent of the total generated e-waste is recycled, a lower rate than in other developing countries. Improper disposal of 97 per cent non-recycled e-waste poses significant environmental risks due to toxic elements contaminating air, water, and soil. The shipbreaking industry worsens the issue by releasing harmful electronic components from scrapped vessels, turning Bangladesh into a hazardous waste site. Contamination of recyclable Lead (Pb) has surged due to the extensive use of leaded gasoline in vehicles.
Transitioning to a circular economy eliminates reliance on virgin material streams, offering a holistic solution for interconnected social, economic, and environmental issues. The circular economy minimises waste by recycling materials in a closed-loop system, reducing dependency on new resources and environmental impact. This approach extends product life-spans through refurbishment and upgrades, minimising hazardous waste. Closed-loop production also lowers costs associated with raw material extraction, processing, and waste management, while creating jobs in areas like product design, recycling, and refurbishment. This innovative system fosters innovation by shifting from product ownership to service provision, encouraging durable and sustainable designs. This model promotes resource efficiency through platforms like sharing services (bike-sharing, co-working spaces) and developing biodegradable materials to replace traditional plastics. Transitioning to a circular economy necessitates new consulting services, innovative recycling technologies for complex materials, and diverse job opportunities. These roles span circular economy consultancy, sustainable design, refurbishment, sharing platform management, closed-loop production, biodegradable materials engineering, and product life cycle management, indicating a burgeoning field with immense potential for growth and sustainability.
Numerous initiatives demonstrate the growing momentum of the circular economy. The Ellen MacArthur Foundation, for example, works with brands like H&M, Lee, and Mud Jeans to promote recyclable and durable denim, aiming to reduce waste in the fashion industry. They also advocate for reducing single-use plastics and increasing recycling. The Loop Circular Shopping Platform partners with major brands to offer refillable and reusable packaging, further reducing waste. Tesla's Battery Recycling Programme recovers materials from old electric vehicle batteries, minimising the environmental impact of battery production and disposal. IKEA's Circular Business Model includes furniture rental, buy-back programs, and exploration of new materials. Cities like Amsterdam, Copenhagen, and San Francisco are embracing circular economy principles to improve resource efficiency, minimise waste, and create sustainable urban areas. Other notable examples include Patagonia's Worn Wear Programme, Fair Phone's Modular Smartphone, Renault's Car-Sharing Platform, Michelin's Tire Recycling Programme, and HP's Printing and Recycling Programme. These successful initiatives showcase the circular economy's ability to reduce waste, promote sustainability, and drive innovation and growth.
Bangladesh's readymade garment (RMG) industry is actively pursuing a circular economy model to foster sustainable growth and remain competitive. As per the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data, the country leads the world in green garment factories, with 192 Leadership in Energy and Environmental Design (LEED) certified facilities, including 67 platinum-rated ones, and over 550 more in the certification process. Initiatives like the "Circular Fashion Partnership," involving the BGMEA, Global Fashion Agenda, Reverse Resources, and P4G, aim to establish a long-term, scalable circular fashion system. The overarching circular fashion system includes a specialised circular textile value chain that initiates a responsible production process to minimise Jhut waste (including cutting remnants, scraps, and fluffs), reduce resource consumption, and enhance sustainability in the RMG sector. Of the estimated 400,000 to 500,000 tonnes of Jhut waste, only 5 per cent is recycled, while 30-35 per cent is repurposed for domestic clothing, with much ending up in landfills, incinerated, or exported. The RMG sector holds significant potential to cut cotton imports and generate an additional $5 to $6 billion in garment exports through local recycling. In the e-waste sector, a robust informal network of retailers, repairers, collectors, and recyclers ensures that nearly 90 per cent of e-waste finds a second life through repurposing, repair, or recycling, highlighting the significant potential of informal networks in driving circularity within e-waste management.
To successfully compete in the global market and shift towards a circular economy, industries need to revamp production processes to value waste, enhance skills, and boost efficiency. However, the transition presents several challenges: inadequate recycling infrastructure, product design flaws for circularity, insufficient logistics and transportation systems, lack of supportive policies and regulations, inconsistent standards and certifications, improper taxation and incentives, consumer behaviour hindering circularity, supply chain complexity, insufficient investment in new technologies, limited data and metrics, and inadequate monitoring and evaluation. The barriers to a circular economy include legal, structural, operational, financial, technological, attitudinal, and human resource issues.
Overcoming these obstacles requires collaboration between governments, businesses, consumers, and civil society. Designing products with modular components, implementing closed-loop production systems with innovative waste reduction and management strategies, and offering products as a service, where ownership and responsibility are retained, are crucial steps. Adopting circularity is not just morally imperative but also a strategic business opportunity for long-term success, and a sustainable future.
Dr Md Abdul Latif (PhD in Development Policy), Additional Director, Bangladesh Institute of Governance and Management (BIGM).
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- #258
Can the new leadership save the economy?
Never has this country seen such a scholarly leadership team for economic policymaking in its history
Can the new leadership save the economy?
Never has this country seen such a scholarly leadership team for economic policymaking in its history
VISUAL: REHNUMA PROSHOON
It is welcome news that Dr Ahsan H Mansur is going to lead Bangladesh Bank (BB). Former BB governor and current finance advisor to the interim government, Dr Salehuddin Ahmed, will serve as a knowledgeable advisor on finance and banking. The recent addition of a prominent economist like Dr Wahiduddin Mahmud as another new advisor has created a golden opportunity to correct the course of the economy, which is currently in disarray. It would be equally encouraging if the government appoints another expert to lead the Bangladesh Securities and Exchange Commission (BSEC), to represent the country's capital market.
Finally, Dr Muhammad Yunus, head of the interim government and a globally recognised pro-poor growth economist, has the potential to create a powerful leadership team that can not only rescue the economy from a possible downturn, but also guide us toward recovery. Their first task is to address the three groups of looters: bank defaulters, tax dodgers, and money launderers—who have formed a "devil's triangle" and have been coddled by politicians in power, nearly ruining the country's institutions.
Never has this country seen such a scholarly leadership team for economic policymaking in its history. At times, BB governors were duly qualified, but often the finance ministers or leaders in the capital market were not. On other occasions, both governors and finance ministers were inadequately qualified, placing the wrong people in key positions. This situation weakened the leadership triangle and undermined the effectiveness of the economy.
We know that the leadership team during this interim period is likely to be short-lived, as pressure for new elections is mounting. However, people expect to see a series of reforms in recruitment policies to ensure that only qualified individuals can become BB governor, BSEC chair, or finance ministers—not merely those who curry favour with big-ticket bank looters or who are sycophantic to the regime. People hope that future elected governments will choose scholarly leaders, especially for key financial institutions, whom the public can respect and rely on.
Controlling inflation in the short term and addressing massive youth unemployment in the medium term are their two main challenges. The previous two governors, who questionably held the leading position at the central bank, have made the task for the new governor significantly more difficult. The primary hurdle is to bring clarity and accuracy to the definition of defaulted loans, which were reported as much lower than their actual amount due to looter-friendly definitions. For example, a loan was considered "regular" if only 5 to 10 percent of it was repaid. This is a mockery, and the previous regime approved it easily, primarily so that these defaulters can participate in the one-sided election.
The parliament has largely become a club of corrupt businesspeople who occupy 61 percent of the seats, with the remainder filled by retired bureaucrats, elderly party stalwarts who still crave power, and a few promising youths. Politics has corrupted central-bank policymaking. The finance minister from 2019 to 2023 orchestrated this definitional perversion to favour delinquents, and the past two governors merely complied with the finance minister's wishes without assessing any merit or ethics. The new governor will face resistance from the beneficiary groups when attempting to implement best global practices in loan administration. However, since the finance advisor is not affiliated with any business mafia, the governor will receive wholehearted support from Salehuddin Ahmed whenever corrective measures are undertaken.
Full transparency of information and data should be maintained within the pentagon of leaders to break the "devil's triangle." Governor Mansur is right to emphasise that he will take necessary steps to ensure that financial hooligans who siphoned off millions of dollars from the country face serious consequences. Since the interim government is not concerned with political popularity, it is crucial for it to reveal true figures on inflation, unemployment, defaulted loans, written-off loans, money trafficking, and revenue gaps. This transparency will aid other agencies and researchers in working effectively. Hiding data has caused serious damage to the economy, though ministers adopted this tactic to remain politically expedient.
This is the time to abolish the Financial Institutions Division at the ministry. Its establishment after 2009 has caused more harm than good by weakening the central bank and empowering finance ministry officials who often served politically connected top-ranking oligarchs, including those who closely supported the former prime minister. Moral hazards have reached such a point that making a U-turn will be one of the toughest tasks for the interim government. It is also crucial to establish "Revenue" as an independent ministry, as it represents more than 10 percent of GDP. This is a significant weak point in Bangladesh's finance sector that has been long ignored. Leading such a crucial department with just non-expert bureaucrats has proven ineffective and will continue to do so.
In other countries, defaulted loans rise when the economy performs poorly. Bangladesh's growth continued to rise until 2019, reaching nearly 8 percent. Growth has become lacklustre after Covid-19, not due to global factors but because of increased wilful defaults and rampant corruption across all sectors. Still, growth has hovered around 5 to 6 percent, which does not justify requests for loan rescheduling or default. The nature of defaulted loans varies widely based on ownership structure, indicating that they are primarily institutional and political in nature, rather than being related to the real economy.
The share of defaulted loans out of total outstanding loans is as low as 3.38 percent in foreign banks, while it is as high as 22 percent in private banks. The corresponding figure for public banks is abnormally high at 38.56 percent, vindicating that the issue is primarily one of poor governance and political looting. The new governor is expected to address this problem. All boards of directors at both public and private banks must be reshuffled, and the directorship law should be revoked.
Professor Rehman Sobhan mentioned in a seminar on the banking sector on July 7 this year that Bangladesh Bank (BB) enjoyed a rich tradition of having scholars as governors, such as Dr Mohammed Farashuddin, Dr Fakruddin Ahmed, Dr Salehuddin Ahmed, and finally Dr Atiur Rahman. This tradition collapsed in 2016, leading to less favourable results in the banking industry. However, with the appointment of Ahsan H Mansur as governor, we hope that BB will regain its knowledge-based leadership and that subsequent regimes will uphold this standard, which is crucial for the economy to thrive.
Dr Birupaksha Paul is professor of economics at the State University of New York in Cortland, US.
Never has this country seen such a scholarly leadership team for economic policymaking in its history
VISUAL: REHNUMA PROSHOON
It is welcome news that Dr Ahsan H Mansur is going to lead Bangladesh Bank (BB). Former BB governor and current finance advisor to the interim government, Dr Salehuddin Ahmed, will serve as a knowledgeable advisor on finance and banking. The recent addition of a prominent economist like Dr Wahiduddin Mahmud as another new advisor has created a golden opportunity to correct the course of the economy, which is currently in disarray. It would be equally encouraging if the government appoints another expert to lead the Bangladesh Securities and Exchange Commission (BSEC), to represent the country's capital market.
Finally, Dr Muhammad Yunus, head of the interim government and a globally recognised pro-poor growth economist, has the potential to create a powerful leadership team that can not only rescue the economy from a possible downturn, but also guide us toward recovery. Their first task is to address the three groups of looters: bank defaulters, tax dodgers, and money launderers—who have formed a "devil's triangle" and have been coddled by politicians in power, nearly ruining the country's institutions.
Never has this country seen such a scholarly leadership team for economic policymaking in its history. At times, BB governors were duly qualified, but often the finance ministers or leaders in the capital market were not. On other occasions, both governors and finance ministers were inadequately qualified, placing the wrong people in key positions. This situation weakened the leadership triangle and undermined the effectiveness of the economy.
We know that the leadership team during this interim period is likely to be short-lived, as pressure for new elections is mounting. However, people expect to see a series of reforms in recruitment policies to ensure that only qualified individuals can become BB governor, BSEC chair, or finance ministers—not merely those who curry favour with big-ticket bank looters or who are sycophantic to the regime. People hope that future elected governments will choose scholarly leaders, especially for key financial institutions, whom the public can respect and rely on.
Controlling inflation in the short term and addressing massive youth unemployment in the medium term are their two main challenges. The previous two governors, who questionably held the leading position at the central bank, have made the task for the new governor significantly more difficult. The primary hurdle is to bring clarity and accuracy to the definition of defaulted loans, which were reported as much lower than their actual amount due to looter-friendly definitions. For example, a loan was considered "regular" if only 5 to 10 percent of it was repaid. This is a mockery, and the previous regime approved it easily, primarily so that these defaulters can participate in the one-sided election.
The parliament has largely become a club of corrupt businesspeople who occupy 61 percent of the seats, with the remainder filled by retired bureaucrats, elderly party stalwarts who still crave power, and a few promising youths. Politics has corrupted central-bank policymaking. The finance minister from 2019 to 2023 orchestrated this definitional perversion to favour delinquents, and the past two governors merely complied with the finance minister's wishes without assessing any merit or ethics. The new governor will face resistance from the beneficiary groups when attempting to implement best global practices in loan administration. However, since the finance advisor is not affiliated with any business mafia, the governor will receive wholehearted support from Salehuddin Ahmed whenever corrective measures are undertaken.
Full transparency of information and data should be maintained within the pentagon of leaders to break the "devil's triangle." Governor Mansur is right to emphasise that he will take necessary steps to ensure that financial hooligans who siphoned off millions of dollars from the country face serious consequences. Since the interim government is not concerned with political popularity, it is crucial for it to reveal true figures on inflation, unemployment, defaulted loans, written-off loans, money trafficking, and revenue gaps. This transparency will aid other agencies and researchers in working effectively. Hiding data has caused serious damage to the economy, though ministers adopted this tactic to remain politically expedient.
This is the time to abolish the Financial Institutions Division at the ministry. Its establishment after 2009 has caused more harm than good by weakening the central bank and empowering finance ministry officials who often served politically connected top-ranking oligarchs, including those who closely supported the former prime minister. Moral hazards have reached such a point that making a U-turn will be one of the toughest tasks for the interim government. It is also crucial to establish "Revenue" as an independent ministry, as it represents more than 10 percent of GDP. This is a significant weak point in Bangladesh's finance sector that has been long ignored. Leading such a crucial department with just non-expert bureaucrats has proven ineffective and will continue to do so.
In other countries, defaulted loans rise when the economy performs poorly. Bangladesh's growth continued to rise until 2019, reaching nearly 8 percent. Growth has become lacklustre after Covid-19, not due to global factors but because of increased wilful defaults and rampant corruption across all sectors. Still, growth has hovered around 5 to 6 percent, which does not justify requests for loan rescheduling or default. The nature of defaulted loans varies widely based on ownership structure, indicating that they are primarily institutional and political in nature, rather than being related to the real economy.
The share of defaulted loans out of total outstanding loans is as low as 3.38 percent in foreign banks, while it is as high as 22 percent in private banks. The corresponding figure for public banks is abnormally high at 38.56 percent, vindicating that the issue is primarily one of poor governance and political looting. The new governor is expected to address this problem. All boards of directors at both public and private banks must be reshuffled, and the directorship law should be revoked.
Professor Rehman Sobhan mentioned in a seminar on the banking sector on July 7 this year that Bangladesh Bank (BB) enjoyed a rich tradition of having scholars as governors, such as Dr Mohammed Farashuddin, Dr Fakruddin Ahmed, Dr Salehuddin Ahmed, and finally Dr Atiur Rahman. This tradition collapsed in 2016, leading to less favourable results in the banking industry. However, with the appointment of Ahsan H Mansur as governor, we hope that BB will regain its knowledge-based leadership and that subsequent regimes will uphold this standard, which is crucial for the economy to thrive.
Dr Birupaksha Paul is professor of economics at the State University of New York in Cortland, US.
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- #259
- Jan 24, 2024
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Economic adviser of Bangladesh Dr. Salahuddin Ahmed met with donor organizations including World Bank at the Planning Commission facilities today and discussed loan servicing payments among other things. He expressed his confidence in the state of Country's current economy and said that the economy is not in any great danger and although slowed, pace of economic development is expected to pick back up in rather short order.
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- #260
Economy seeing renewed optimism
Bangladesh’s economy is experiencing a surge in optimism as institutional reforms and positive investor sentiment take hold, according to LightCastle Partners, an international management consulting firm.
Economy seeing renewed optimism
Light Castle Partners says on Bangladesh
Bangladesh's economy is experiencing a surge in optimism as institutional reforms and positive investor sentiment take hold, according to LightCastle Partners, an international management consulting firm.
LightCastle highlighted these developments in its recent Bangladesh Update publication for August 2024, emphasising the country's emerging market potential.
"The Dhaka Stock Exchange has experienced a significant upswing, with the DSEX benchmark index rising by 786 points over a four-session period, marking a 12 percent increase, and market capitalisation surging by $5.8 billion as of August 11," LightCastle.
The positive momentum came about after Sheikh Hasina resigned from her post as prime minister and fled the country on August 5 in the face of a student-led mass uprising.
"The rally has been primarily driven by fundamentally strong businesses, which have seen steady stock price increases, indicating early signs of an efficient market. This suggests that investors are optimistic in light of the ongoing institutional reforms," it added.
Institutional reforms, aimed at improving governance and restoring business confidence, include the appointment of a new Supreme Court chief justice. The resignation of the Bangladesh Bank governor and the Bangladesh Securities and Exchange Commission chairman present further paths towards reform.
These departures, all political appointees, signal a broader shift towards depoliticising key institutions.
"These changes are expected to lead to further improvements in governance and are seen as crucial steps in addressing long-standing issues within the country's institutions, which have been marred by political influence and inefficiency," LightCastle said.
Despite the positive developments, the manufacturing sector, particularly the garments industry, continues to face challenges.
LightCastle pointed out that security concerns have kept factories from operating at full capacity.
At the same time, Chittagong port, a critical hub for the country's trade, is currently experiencing severe congestion, with container volumes exceeding capacity by 50 percent, as per data till August 14.
Additionally, the daily number of vehicles transporting goods from the port has plummeted, further exacerbating supply chain disruptions.
Expressing that the banking sector is still under pressure, the firm said that high levels of non-performing loans (around 10 percent) and capital flight have been masked by the previous regime.
"The sector has also been hit by inflation, declining foreign exchange reserves, and slowing economic growth, further straining financial stability," LightCastle said.
LightCastle also flagged other challenges, including the energy sector's rising payables, bureaucratic inefficiencies, and the need for constitutional reforms.
These issues, if left unaddressed, could hinder the country's economic progress, it added.
However, the ongoing institutional changes and renewed political consciousness among the youth, spurred by recent student movements, offer hope for long-term structural changes, the firm noted.
LightCastle observed that businesses are increasingly optimistic about the potential for fairer market practices and sustainable growth despite the current challenges.
Light Castle Partners says on Bangladesh
Bangladesh's economy is experiencing a surge in optimism as institutional reforms and positive investor sentiment take hold, according to LightCastle Partners, an international management consulting firm.
LightCastle highlighted these developments in its recent Bangladesh Update publication for August 2024, emphasising the country's emerging market potential.
"The Dhaka Stock Exchange has experienced a significant upswing, with the DSEX benchmark index rising by 786 points over a four-session period, marking a 12 percent increase, and market capitalisation surging by $5.8 billion as of August 11," LightCastle.
The positive momentum came about after Sheikh Hasina resigned from her post as prime minister and fled the country on August 5 in the face of a student-led mass uprising.
"The rally has been primarily driven by fundamentally strong businesses, which have seen steady stock price increases, indicating early signs of an efficient market. This suggests that investors are optimistic in light of the ongoing institutional reforms," it added.
Institutional reforms, aimed at improving governance and restoring business confidence, include the appointment of a new Supreme Court chief justice. The resignation of the Bangladesh Bank governor and the Bangladesh Securities and Exchange Commission chairman present further paths towards reform.
These departures, all political appointees, signal a broader shift towards depoliticising key institutions.
"These changes are expected to lead to further improvements in governance and are seen as crucial steps in addressing long-standing issues within the country's institutions, which have been marred by political influence and inefficiency," LightCastle said.
Despite the positive developments, the manufacturing sector, particularly the garments industry, continues to face challenges.
LightCastle pointed out that security concerns have kept factories from operating at full capacity.
At the same time, Chittagong port, a critical hub for the country's trade, is currently experiencing severe congestion, with container volumes exceeding capacity by 50 percent, as per data till August 14.
Additionally, the daily number of vehicles transporting goods from the port has plummeted, further exacerbating supply chain disruptions.
Expressing that the banking sector is still under pressure, the firm said that high levels of non-performing loans (around 10 percent) and capital flight have been masked by the previous regime.
"The sector has also been hit by inflation, declining foreign exchange reserves, and slowing economic growth, further straining financial stability," LightCastle said.
LightCastle also flagged other challenges, including the energy sector's rising payables, bureaucratic inefficiencies, and the need for constitutional reforms.
These issues, if left unaddressed, could hinder the country's economic progress, it added.
However, the ongoing institutional changes and renewed political consciousness among the youth, spurred by recent student movements, offer hope for long-term structural changes, the firm noted.
LightCastle observed that businesses are increasingly optimistic about the potential for fairer market practices and sustainable growth despite the current challenges.
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- #261
More effective steps needed to widen tax net
With 53 years having passed since Bangladesh gained independence, it is now considered as one of the next emerging economies in Asia and has the prospect of being ranked among middle-income countries.
More effective steps needed to widen tax net
With 53 years having passed since Bangladesh gained independence, it is now considered as one of the next emerging economies in Asia and has the prospect of being ranked among middle-income countries.
However, there is nothing to be complacent about considering these feats alone as there is still huge potential for growth.
In a country with a population of around 180 million and subsequently large consumer market, the per capita income in terms of US dollars currently stands at $2,784, according to the Bangladesh Bureau of Statistics.
And although the National Board of Revenue has spent many years trying to increase the tax-to-GDP ratio, it remains surprisingly low at less than 8 percent compared to the regional average of above 15 percent.
Of the roughly 10 million TIN holders eligible for taxation in various categories, only 3.4 million individuals and 34,000 corporates regularly file tax returns. A major reason for this disparity is the lack of close monitoring by the tax regulator, indicating that its steps so far are not enough to widen the tax net.
For example, corporate and individual tax rates have been gradually rationalised over the years but it has not been reflected positively in increasing tax collection.
This makes it evident that tax evaders, particularly a section of businesses and individuals, have not been adequately motivated to start complying with the rules.
Furthermore, the scope to whiten black money by paying 15 percent tax on undisclosed income is doing more harm than good by discouraging genuine taxpayers.
This is because those who regularly pay taxes are often harassed by tax officials due to arbitrary issues in their assessment while certain businesses and individuals are constantly evading taxes.
The Institute of Chartered Accountants of Bangladesh had introduced a document verification system in 2020 to prevent the submission falsified financial statements and ensure transparency. Still, tax evasion continues with the help of corrupt officials.
It is also surprising that many businesses conduct much of their transactions in cash and neglect to report them when filing their official financial statements.
So, these issues warrant proper investigations by experts and other experienced personal.
Besides, identifying new tax payers is not very complicated or challenging but the inspectors responsible in this regard have been largely unsuccessful due to corruption and lack of proper monitoring.
As such, tax enforcement should be made more effective and rational without causing more undue harassment for genuine taxpayers. This entails strictly monitoring TIN holders, identifying new taxpayers with external support if needed, and redefining the role of inspectors.
Also, digitalisation is a prerequisite for ensuring transparent financial reporting.
Faceless assessments should be introduced, as is the case in neighbouring countries, and the taxation system should be simplified to reduce the scope for harassment.
Big businesses should be more closely scrutinised as well, with everything from their start-up capital to current investments being brought under the scanner to ensure financial transparency.
Additionally, close monitoring of tax officials must be ensured so that they cannot exercise their powers for personal gain at the cost of taxpayers.
Ultimately, there is no alternative to overdue reforms in tax administration to address these issues.
The author is a senior partner of Hoda Vasi Chowdhury & Co and former ICAB president
With 53 years having passed since Bangladesh gained independence, it is now considered as one of the next emerging economies in Asia and has the prospect of being ranked among middle-income countries.
However, there is nothing to be complacent about considering these feats alone as there is still huge potential for growth.
In a country with a population of around 180 million and subsequently large consumer market, the per capita income in terms of US dollars currently stands at $2,784, according to the Bangladesh Bureau of Statistics.
And although the National Board of Revenue has spent many years trying to increase the tax-to-GDP ratio, it remains surprisingly low at less than 8 percent compared to the regional average of above 15 percent.
Of the roughly 10 million TIN holders eligible for taxation in various categories, only 3.4 million individuals and 34,000 corporates regularly file tax returns. A major reason for this disparity is the lack of close monitoring by the tax regulator, indicating that its steps so far are not enough to widen the tax net.
For example, corporate and individual tax rates have been gradually rationalised over the years but it has not been reflected positively in increasing tax collection.
This makes it evident that tax evaders, particularly a section of businesses and individuals, have not been adequately motivated to start complying with the rules.
Furthermore, the scope to whiten black money by paying 15 percent tax on undisclosed income is doing more harm than good by discouraging genuine taxpayers.
This is because those who regularly pay taxes are often harassed by tax officials due to arbitrary issues in their assessment while certain businesses and individuals are constantly evading taxes.
The Institute of Chartered Accountants of Bangladesh had introduced a document verification system in 2020 to prevent the submission falsified financial statements and ensure transparency. Still, tax evasion continues with the help of corrupt officials.
It is also surprising that many businesses conduct much of their transactions in cash and neglect to report them when filing their official financial statements.
So, these issues warrant proper investigations by experts and other experienced personal.
Besides, identifying new tax payers is not very complicated or challenging but the inspectors responsible in this regard have been largely unsuccessful due to corruption and lack of proper monitoring.
As such, tax enforcement should be made more effective and rational without causing more undue harassment for genuine taxpayers. This entails strictly monitoring TIN holders, identifying new taxpayers with external support if needed, and redefining the role of inspectors.
Also, digitalisation is a prerequisite for ensuring transparent financial reporting.
Faceless assessments should be introduced, as is the case in neighbouring countries, and the taxation system should be simplified to reduce the scope for harassment.
Big businesses should be more closely scrutinised as well, with everything from their start-up capital to current investments being brought under the scanner to ensure financial transparency.
Additionally, close monitoring of tax officials must be ensured so that they cannot exercise their powers for personal gain at the cost of taxpayers.
Ultimately, there is no alternative to overdue reforms in tax administration to address these issues.
The author is a senior partner of Hoda Vasi Chowdhury & Co and former ICAB president
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- #262
BB in talks with IMF for extra $3 billion loan
Bangladesh is in talks with the International Monetary Fund for an additional $3 billion loan, according to BBC and Bloomberg reports.
BB in talks with IMF for extra $3 billion loan
Bangladesh is in talks with the International Monetary Fund for an additional $3 billion loan, according to BBC and Bloomberg reports.
In an interview with Bloomberg, Bangladesh's new central bank Governor Ahsan H Mansur said the loan is needed to recover from the recent political turmoil that the country went through. The bank is also buying dollars from local banks to meet unpaid debt.
Bangladesh secured $4.7 billion in funding from the IMF last year. Mansur said he was in a conversation with the Washington-based financial body to "augment" and "front load" this amount by an additional $3b, reports BBC.
He said Bangladesh was also seeking an additional $1.5b from the World Bank and $1b each from the Asian Development Bank and the Japan International Cooperation Agency.
The country is only just emerging from weeks of upheaval following deadly protests that forced the ouster of prime minister Sheikh Hasina earlier this month.
The violence that accompanied the anti-government protest has disrupted the garment exports, the country's main foreign exchange earner.
Reserves were already under pressure before the current crisis, and stood at $20.5 billion as of July 31, just enough to cover about three months of imports, reports Bloomberg.
Mansur, a veteran economist who spent three decades at the IMF, was named governor of Bangladesh Bank last week by the interim government headed by Nobel laureate Professor Muhammad Yunus.
The former Governor Abdur Rouf Talukder and two other deputy governors resigned as part of a string of bureaucratic departures following the fall of the previous government.
The central bank bought more than $200 million in three days from the interbank market since Mansur was appointed governor at Bangladesh Bank on Aug 13, reports Bloomberg.
Dr Mansur said the central bank aims to buy as much as $1 billion every month from local banks.
In the BBC interview, he emphasised that cleaning up the country's banking sector was his top priority when speaking to the BBC at the central bank's headquarters in the commercial heart of Dhaka.
There has been a "designed robbery of the financial system" which has caused significant damage to banks and has serious implications for the stock market and the broader economy, he suggested.
Bangladesh's banks have seen a flight of deposits and an alarming rise in non-performing assets following defaults by groups allegedly linked with the ousted Awami League government.
The non-performing assets were "just robbery of the banks. They took the money and put it in Singapore, Dubai, London and elsewhere. So the first effort would be to try to take people to task and get the money back," Dr Mansur told the BBC.
Bangladesh is in talks with the International Monetary Fund for an additional $3 billion loan, according to BBC and Bloomberg reports.
In an interview with Bloomberg, Bangladesh's new central bank Governor Ahsan H Mansur said the loan is needed to recover from the recent political turmoil that the country went through. The bank is also buying dollars from local banks to meet unpaid debt.
Bangladesh secured $4.7 billion in funding from the IMF last year. Mansur said he was in a conversation with the Washington-based financial body to "augment" and "front load" this amount by an additional $3b, reports BBC.
He said Bangladesh was also seeking an additional $1.5b from the World Bank and $1b each from the Asian Development Bank and the Japan International Cooperation Agency.
The country is only just emerging from weeks of upheaval following deadly protests that forced the ouster of prime minister Sheikh Hasina earlier this month.
The violence that accompanied the anti-government protest has disrupted the garment exports, the country's main foreign exchange earner.
Reserves were already under pressure before the current crisis, and stood at $20.5 billion as of July 31, just enough to cover about three months of imports, reports Bloomberg.
Mansur, a veteran economist who spent three decades at the IMF, was named governor of Bangladesh Bank last week by the interim government headed by Nobel laureate Professor Muhammad Yunus.
The former Governor Abdur Rouf Talukder and two other deputy governors resigned as part of a string of bureaucratic departures following the fall of the previous government.
The central bank bought more than $200 million in three days from the interbank market since Mansur was appointed governor at Bangladesh Bank on Aug 13, reports Bloomberg.
Dr Mansur said the central bank aims to buy as much as $1 billion every month from local banks.
In the BBC interview, he emphasised that cleaning up the country's banking sector was his top priority when speaking to the BBC at the central bank's headquarters in the commercial heart of Dhaka.
There has been a "designed robbery of the financial system" which has caused significant damage to banks and has serious implications for the stock market and the broader economy, he suggested.
Bangladesh's banks have seen a flight of deposits and an alarming rise in non-performing assets following defaults by groups allegedly linked with the ousted Awami League government.
The non-performing assets were "just robbery of the banks. They took the money and put it in Singapore, Dubai, London and elsewhere. So the first effort would be to try to take people to task and get the money back," Dr Mansur told the BBC.
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- #263
Resetting economy an uphill task
After the fall of Sheikh Hasina's brutal autocratic regime on August 5, thanks to student-people's mass upspring and scarifies of hundreds of lives, the country has entered an unchartered territory. The details of the economic damage done by the ousted regime through bad governance have now s
Resetting economy an uphill task
Asjadul Kibria
Published :
Aug 24, 2024 22:11
Updated :
Aug 24, 2024 22:11
After the fall of Sheikh Hasina's brutal autocratic regime on August 5, thanks to student-people's mass upspring and scarifies of hundreds of lives, the country has entered an unchartered territory. The details of the economic damage done by the ousted regime through bad governance have now started to surface on a big canvas. Though some were not unknown, such as the plundering of money from the banks by manipulating the rules and allowing irregularities, the severity now becomes clearer. The interim government, headed by Nobel laureate Dr Muhammad Yunus, thus is facing a monumental challenge to fix the economy and restore normalcy. At this moment, at least three immediate key challenges are there, and they require urgent and tough measures to overcome within a short period of time. These are containing inflation, resetting the financial sector, and balancing foreign credit.
The annual average inflation rate reached 9.90 per cent in July last, when monthly food inflation stood at 14.10 per cent, the highest in the previous 13 years and four months. The persistent surge in inflation for the last two years has seriously eroded the real income of most people, and their cost of living has increased significantly. The Hasina government's unchecked corruption was a prime driver of inflation, and the situation deteriorated further due to reckless borrowing from the banking system last year. The government borrowed some Tk 940 billion in the last fiscal year (FY24) from the banking system, of which around three-fourths was direct borrowing from Bangladesh Bank, which indicates that money was printed. Printing money means the injection of fresh banknotes in circulation, and that leads to a rise in the money supply. As according to the central bank, the money multiplier was 5.47 in May last. It simply means if the central bank raises the monetary base by TK 100 only, the money supply rises by Tk 547.00 or more than five times. It ultimately increases inflation.
Again, illegal toll collection by various groups at various stages of the supply chain increases the prices of products by five to six times at the retail market, causing consumers to pay higher prices. It also fuels inflation. Moreover, over the years, there was a practice of distorting and manipulating data of production, supply and demand, leading to a significant mismatch between supply and demand. The mismatch ultimately sparked inflation. So, the big question now is how the interim government will be able to cool down the inflation by the end of the year. There is no magic wand, as the interim government took charge less than three weeks ago. One has to wait for a couple of months to see the outcome of the measures taken by the current government, which is working hard to devise some effective tools to curb inflation.
The sudden flash flood, unleashed by heavy rains and an onrush of water from upstream in India, tore through the country's eastern, southeastern, and northeastern districts, making the economic recovery even more challenging. Already, around 4.5 million people are seriously affected by the flood, and thousands of fish farms, poultry farms, aman seedbeds, and vegetable fields have been damaged in these districts.
The banking sector has become vulnerable due to gross irregularities over the last 15 years. The amount of default loans in the total banking system stood at Tk 1.82 trillion at the end of March this year, which was around 11 per cent of the total loans distributed during the period under review. And around Tk 920 billion was plundered from the sector during 2008-2023 through two dozen bank scams, according to an estimate revealed by the Centre for Policy Dialogue (CPD). The amount was equivalent to 2 per cent of the country's GDP and 12 per cent of FY24 national budget.
Over the years, some oligarchs have emerged in the country backed by the government's political and legal protection and took control of the banking sector. Oligarchs are the individuals who 'through private acquisition of state assets amassed great wealth that is stored especially in foreign accounts and properties and who typically maintain close links to the highest government circles.' The interim government is trying to clamp down on some of the oligarchs by freezing their bank assets and removing them and their proxies from the different banks' boards. It is, however, a very challenging task as they own some big conglomerates of the country and control many businesses and trading. Recovering the default loans and retaining some plundered money is hard.
The interim government has also decided to form a banking commission, which will provide recommendations to reform the banks and fix the problems in the coming days. This proactive step demonstrates the government's commitment to addressing the economic challenges and restoring stability.
A large amount of foreign and domestic debt becomes a big liability for the country. Shortly, the pressure to repay primarily foreign debts, will increase. Currently, the amount of outstanding foreign debt is US$ 70 billion, which has to be repaid in the coming days in various instalments. For instance, the repayment of US$12 billion borrowed from Russia to construct the Rooppur Nuclear Power Plant is scheduled to start in 2027. An effort is, however, there to delay the payment by rescheduling, which requires hectic negotiations.
As foreign debt has to be repaid in the US dollar, it creates pressure on foreign exchange reserves. The reserve has also been depleted for the last two years due to higher import bills and regular repayments of foreign debts. Over the years, the forex reserve was shown by inflating the figure. There was also a manipulation to inflate the statistics of export earnings. As the gross manipulation of two key indicators of the external sector has been detected recently, and the actual figures are less than the manipulated figures, the national economic statistics also come under question. The policy measures, adopted based on manipulated data, ultimately provided a distorted picture. So, the problems in the economy compounded, and the list is long.
The interim government has thus started a 'mission tougher' if not 'mission impossible' to address the country's economic problems. However, one needs to keep in mind here that there is no quick fix.
Asjadul Kibria
Published :
Aug 24, 2024 22:11
Updated :
Aug 24, 2024 22:11
After the fall of Sheikh Hasina's brutal autocratic regime on August 5, thanks to student-people's mass upspring and scarifies of hundreds of lives, the country has entered an unchartered territory. The details of the economic damage done by the ousted regime through bad governance have now started to surface on a big canvas. Though some were not unknown, such as the plundering of money from the banks by manipulating the rules and allowing irregularities, the severity now becomes clearer. The interim government, headed by Nobel laureate Dr Muhammad Yunus, thus is facing a monumental challenge to fix the economy and restore normalcy. At this moment, at least three immediate key challenges are there, and they require urgent and tough measures to overcome within a short period of time. These are containing inflation, resetting the financial sector, and balancing foreign credit.
The annual average inflation rate reached 9.90 per cent in July last, when monthly food inflation stood at 14.10 per cent, the highest in the previous 13 years and four months. The persistent surge in inflation for the last two years has seriously eroded the real income of most people, and their cost of living has increased significantly. The Hasina government's unchecked corruption was a prime driver of inflation, and the situation deteriorated further due to reckless borrowing from the banking system last year. The government borrowed some Tk 940 billion in the last fiscal year (FY24) from the banking system, of which around three-fourths was direct borrowing from Bangladesh Bank, which indicates that money was printed. Printing money means the injection of fresh banknotes in circulation, and that leads to a rise in the money supply. As according to the central bank, the money multiplier was 5.47 in May last. It simply means if the central bank raises the monetary base by TK 100 only, the money supply rises by Tk 547.00 or more than five times. It ultimately increases inflation.
Again, illegal toll collection by various groups at various stages of the supply chain increases the prices of products by five to six times at the retail market, causing consumers to pay higher prices. It also fuels inflation. Moreover, over the years, there was a practice of distorting and manipulating data of production, supply and demand, leading to a significant mismatch between supply and demand. The mismatch ultimately sparked inflation. So, the big question now is how the interim government will be able to cool down the inflation by the end of the year. There is no magic wand, as the interim government took charge less than three weeks ago. One has to wait for a couple of months to see the outcome of the measures taken by the current government, which is working hard to devise some effective tools to curb inflation.
The sudden flash flood, unleashed by heavy rains and an onrush of water from upstream in India, tore through the country's eastern, southeastern, and northeastern districts, making the economic recovery even more challenging. Already, around 4.5 million people are seriously affected by the flood, and thousands of fish farms, poultry farms, aman seedbeds, and vegetable fields have been damaged in these districts.
The banking sector has become vulnerable due to gross irregularities over the last 15 years. The amount of default loans in the total banking system stood at Tk 1.82 trillion at the end of March this year, which was around 11 per cent of the total loans distributed during the period under review. And around Tk 920 billion was plundered from the sector during 2008-2023 through two dozen bank scams, according to an estimate revealed by the Centre for Policy Dialogue (CPD). The amount was equivalent to 2 per cent of the country's GDP and 12 per cent of FY24 national budget.
Over the years, some oligarchs have emerged in the country backed by the government's political and legal protection and took control of the banking sector. Oligarchs are the individuals who 'through private acquisition of state assets amassed great wealth that is stored especially in foreign accounts and properties and who typically maintain close links to the highest government circles.' The interim government is trying to clamp down on some of the oligarchs by freezing their bank assets and removing them and their proxies from the different banks' boards. It is, however, a very challenging task as they own some big conglomerates of the country and control many businesses and trading. Recovering the default loans and retaining some plundered money is hard.
The interim government has also decided to form a banking commission, which will provide recommendations to reform the banks and fix the problems in the coming days. This proactive step demonstrates the government's commitment to addressing the economic challenges and restoring stability.
A large amount of foreign and domestic debt becomes a big liability for the country. Shortly, the pressure to repay primarily foreign debts, will increase. Currently, the amount of outstanding foreign debt is US$ 70 billion, which has to be repaid in the coming days in various instalments. For instance, the repayment of US$12 billion borrowed from Russia to construct the Rooppur Nuclear Power Plant is scheduled to start in 2027. An effort is, however, there to delay the payment by rescheduling, which requires hectic negotiations.
As foreign debt has to be repaid in the US dollar, it creates pressure on foreign exchange reserves. The reserve has also been depleted for the last two years due to higher import bills and regular repayments of foreign debts. Over the years, the forex reserve was shown by inflating the figure. There was also a manipulation to inflate the statistics of export earnings. As the gross manipulation of two key indicators of the external sector has been detected recently, and the actual figures are less than the manipulated figures, the national economic statistics also come under question. The policy measures, adopted based on manipulated data, ultimately provided a distorted picture. So, the problems in the economy compounded, and the list is long.
The interim government has thus started a 'mission tougher' if not 'mission impossible' to address the country's economic problems. However, one needs to keep in mind here that there is no quick fix.
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Ordinance likely to block black money whitening
Scrapping the impugned black money-whitening facility is likely by proclaiming an ordinance in the interim period as parliament has been dissolved following the fall of the past government in an uprising, taxmen indicate. Revenue officials in a meeting Tuesday with the finance adviser mooted the p
Ordinance likely to block black money whitening
Option to be placed with advisory council of interim govt
FE REPORT
Published :
Aug 28, 2024 00:34
Updated :
Aug 28, 2024 00:34
Scrapping the impugned black money-whitening facility is likely by proclaiming an ordinance in the interim period as parliament has been dissolved following the fall of the past government in an uprising, taxmen indicate.
Revenue officials in a meeting Tuesday with the finance adviser mooted the proposal, amid discussions on a wide range of affairs like taxation reforms, hassle-free rapid trade clearance, government revenue boost.
Official sources said Finance and Commerce Adviser Dr Salehuddin Ahmed responded positively and assured of placing the matter before the council of advisers of the interim government.
Following newly appointed National Board of Revenue (NBR) chairman Abdur Rahman's instructions, the taxmen verbally showed wiliness to withdraw the much-contended special fiscal benefit offered for legalizing undeclared money.
The budget for the current 2024-25 financial year, adopted by the immediate-past government, provides for whitening 'black money' on payment of 15-percent tax. Regular taxpayers have to pay taxes up to 20 per cent on their incomes.
"Scrapping the scheme would need passing an ordinance as it is in the Finance Act 2024 passed in the budget," said one official.
However, Dr Salehuddin Ahmed, after the meeting with the NBR, declined to talk on this fiscal amnesty at this moment.
Talking to the newsmen, Dr Salehuddin Ahmed instructed the revenue board not to create any obstacles to release of goods from the customs ports in order to facilitate private-sector investment, much sought after for gearing up economic activity, job creation, and growth.
The measures to develop industrial sector have to be taken care of through taking proper steps on tax collection.
"The bill of lading and bill of entry have to be released in due time. In case of any lacking in documentation, the revenue officials would ask for it," he said while talking to the press after his consultation with the National Board of Revenue high-ups.
The process has to be expedited without causing any hindrance from government's part, he added.
Mr Ahmed urges them to resolve the roadblocks in export-import cargo clearance.
"Forcing the existing taxpayers while sparing the tax-evaders would not happen now," the finance and commerce adviser, a former governor of the Bangladesh Bank, categorically said.
Dr Ahmed, however, declined to talk on the existing black money-whitening facility and also the US treasury department's proposal on tax-base-extension support.
On the US treasury proposal he said, "We are taking care of but cannot make comment instantly."
He hastened to add: "Also, the British Ambassador pointed out on foreign- exchange-market reform due to having their expertise to tackle recession in 2007-08, which affected UK and USA most."
Mervyn King was the Governor of the Bank of England who successfully tackled the great recession of 2007-08, Dr Salehuddin mentioned, citing his visit to London that time when he was BB governor.
King was appointed governor of the Bank of England in 2003, succeeding Edward George. Most notably, he oversaw the bank during the financial crisis of 2007-2008 and the Great Recession.
"I told it BB's issue which it can take care of," he said.
He, however, preferred to look into the local expertise capacity before taking help of foreign expertise.
"We have to increase our tax-GDP ratio. It is still low. The NBR will have to maximize tax collection," he said, adding that the government cannot run depending constantly on loan.
Responding to newsmen's query, NBR chairman Abdur Rahman Khan said service delivery would be expedited in bringing businessmen's confidence.
"We will work with all-out efforts to meet the revenue-collection target and plug the scope of revenue leakage," he said.
The NBR is the most important entity of the government having a major role in facilitating industrialization, he notes.
Option to be placed with advisory council of interim govt
FE REPORT
Published :
Aug 28, 2024 00:34
Updated :
Aug 28, 2024 00:34
Scrapping the impugned black money-whitening facility is likely by proclaiming an ordinance in the interim period as parliament has been dissolved following the fall of the past government in an uprising, taxmen indicate.
Revenue officials in a meeting Tuesday with the finance adviser mooted the proposal, amid discussions on a wide range of affairs like taxation reforms, hassle-free rapid trade clearance, government revenue boost.
Official sources said Finance and Commerce Adviser Dr Salehuddin Ahmed responded positively and assured of placing the matter before the council of advisers of the interim government.
Following newly appointed National Board of Revenue (NBR) chairman Abdur Rahman's instructions, the taxmen verbally showed wiliness to withdraw the much-contended special fiscal benefit offered for legalizing undeclared money.
The budget for the current 2024-25 financial year, adopted by the immediate-past government, provides for whitening 'black money' on payment of 15-percent tax. Regular taxpayers have to pay taxes up to 20 per cent on their incomes.
"Scrapping the scheme would need passing an ordinance as it is in the Finance Act 2024 passed in the budget," said one official.
However, Dr Salehuddin Ahmed, after the meeting with the NBR, declined to talk on this fiscal amnesty at this moment.
Talking to the newsmen, Dr Salehuddin Ahmed instructed the revenue board not to create any obstacles to release of goods from the customs ports in order to facilitate private-sector investment, much sought after for gearing up economic activity, job creation, and growth.
The measures to develop industrial sector have to be taken care of through taking proper steps on tax collection.
"The bill of lading and bill of entry have to be released in due time. In case of any lacking in documentation, the revenue officials would ask for it," he said while talking to the press after his consultation with the National Board of Revenue high-ups.
The process has to be expedited without causing any hindrance from government's part, he added.
Mr Ahmed urges them to resolve the roadblocks in export-import cargo clearance.
"Forcing the existing taxpayers while sparing the tax-evaders would not happen now," the finance and commerce adviser, a former governor of the Bangladesh Bank, categorically said.
Dr Ahmed, however, declined to talk on the existing black money-whitening facility and also the US treasury department's proposal on tax-base-extension support.
On the US treasury proposal he said, "We are taking care of but cannot make comment instantly."
He hastened to add: "Also, the British Ambassador pointed out on foreign- exchange-market reform due to having their expertise to tackle recession in 2007-08, which affected UK and USA most."
Mervyn King was the Governor of the Bank of England who successfully tackled the great recession of 2007-08, Dr Salehuddin mentioned, citing his visit to London that time when he was BB governor.
King was appointed governor of the Bank of England in 2003, succeeding Edward George. Most notably, he oversaw the bank during the financial crisis of 2007-2008 and the Great Recession.
"I told it BB's issue which it can take care of," he said.
He, however, preferred to look into the local expertise capacity before taking help of foreign expertise.
"We have to increase our tax-GDP ratio. It is still low. The NBR will have to maximize tax collection," he said, adding that the government cannot run depending constantly on loan.
Responding to newsmen's query, NBR chairman Abdur Rahman Khan said service delivery would be expedited in bringing businessmen's confidence.
"We will work with all-out efforts to meet the revenue-collection target and plug the scope of revenue leakage," he said.
The NBR is the most important entity of the government having a major role in facilitating industrialization, he notes.
- Copy to clipboard
- Thread starter
- #265
Inclusive development for an equitable country
Through the war of independence, the people of Bangladesh sought to establish a country free from exploitation and deprivation, where every citizen would enjoy fair treatment and access to basic rights and benefits. It is deeply regrettable that even after more than half a century of independence a
Inclusive development for an equitable country
Md Tauhidul Alam
Published :
Aug 26, 2024 22:44
Updated :
Aug 27, 2024 21:15
Through the war of independence, the people of Bangladesh sought to establish a country free from exploitation and deprivation, where every citizen would enjoy fair treatment and access to basic rights and benefits. It is deeply regrettable that even after more than half a century of independence and significant economic growth, approximately 35 million people of the country, representing 18.7 per cent of the population, still live below the poverty line. While there has been notable progress in reducing poverty, income inequality remains distressingly high, particularly among rural communities, women, and other vulnerable groups who still struggle to secure basic necessities such as food, shelter, healthcare, and education. This persistent disparity is largely driven by unequal distribution of the benefits of economic growth, which has disproportionately favoured the privileged segments of the society.
In this context, fostering inclusive development is crucial to ensure that all segments of the society, especially those who are marginalised, can share the nation's economic progress. With the fall of Sheikh Hasina's autocratic regime and the emergence of an interim government, a significant opportunity has arisen to build an equitable and just society-an opportunity the nation must seize to achieve true inclusion.
INCLUSIVE DEVELOPMENT: Inclusive growth and inclusive development both refer to an economic growth process that is broad-based, sustainable, and equitable, ensuring that all segments of the society, especially the marginalised and disadvantaged, benefit from economic progress. These concepts emphasise the importance of creating opportunities for everyone, reducing income inequality, and addressing social and economic disparities. Inclusive growth and development aim not only to increase overall economic output but also to distribute the gains from growth more evenly across the society, fostering social cohesion and improving the quality of life for all individuals. The core principle is the "inclusion of the excluded," focusing on dismantling barriers and promoting the participation of marginalised groups to create a more equitable society where no one is left behind.
EDUCATION AND SKILL DEVELOPMENT: Education is the cornerstone of inclusive development, and while Bangladesh has made significant progress in improving access to education, challenges remain in terms of quality and equity. To address these challenges, particularly for the marginalised communities such as rural and indigenous populations, targeted programmes are essential. Additionally, enhancing vocational and technical training can equip the youth with skills that match the demands of the evolving job market, thereby reducing unemployment and underemployment. However, to establish an education system that is both people-centred and supportive of the poor, a comprehensive reform programme is urgently needed. Immediate actions, including reconstituting the governing bodies and managing committees of nearly all educational institutions with qualified, honest, and skilled individuals are crucial. Furthermore, recruiting qualified teachers and providing rigorous training for existing educators are critical steps in improving the overall standard of education.
HEALTHCARE ACCESS AND QUALITY: Bangladesh has made notable progress in healthcare, particularly in reducing child mortality and increasing life expectancy, but significant disparities in access to quality healthcare remain, especially among rural and low-income populations. The healthcare system is plagued with challenges such as inadequate facilities, underfunding, and a shortage of skilled professionals, particularly in rural areas. High out-of-pocket expenses further hinder access for those with limited financial resources, forcing many to rely on informal and unregulated providers, resulting in incorrect treatments and worsened health outcomes. Overcrowded and under-resourced public hospitals, coupled with systemic issues like favouritism and influence of corrupt syndicates, exacerbate these challenges by creating unequal access to care, draining public resources, and diminishing the quality of healthcare. These factors erode public trust and perpetuate cycles of poverty and poor health outcomes. To address these issues, it is crucial to implement stronger regulations, increase transparency, and ensure equitable access to healthcare for all citizens by strengthening rural healthcare infrastructure and adopting universal health coverage, thereby promoting inclusive development and improving overall health outcomes in the country.
SOCIAL PROTECTION AND SAFETY NETS: Social protection programmes are crucial for safeguarding the most vulnerable populations against economic shocks and natural disasters. While Bangladesh has several social safety net programmes, their coverage and effectiveness require significant enhancement. One of the key challenges is the political bias that often influences these programmes, leading to the exclusion of a large number of people who should be beneficiaries. Additionally, the high rate of corruption in the distribution process is a major concern, as benefits are frequently siphoned off by influential individuals involved in the distribution. To achieve inclusive development, it is essential to expand these programmes to cover all vulnerable groups, including the elderly, disabled, and extreme poor.
ECONOMIC POLICY AND JOB CREATION: Economic policies should be designed to promote job creation and entrepreneurship, particularly in sectors with the potential to absorb large numbers of workers, such as agriculture, manufacturing, and services. However, several challenges hinder entrepreneurship development, including limited access to capital, inadequate infrastructure, lack of technical skills, and burdensome regulatory hurdles. These barriers must be addressed promptly, as failing to do so will leave job creation as an unfulfilled promise.
Special attention should be given to empowering women and youth, who are often marginalised in the formal economy. Financial inclusion initiatives, such as mobile banking, microfinance, and tailored financial literacy programmes, can play a pivotal role in ensuring that all citizens have access to the financial resources needed to engage in economic activities. Moreover, creating a supportive ecosystem that includes mentorship, access to markets, and streamlined business registration processes is essential for nurturing entrepreneurship and driving sustainable economic growth.
INFRASTRUCTURE DEVELOPMENT: Infrastructure is crucial in bridging marginalised
communities with markets, services, and opportunities. To truly make a difference, investments in transportation, energy, and digital infrastructure must focus on underserved regions, especially rural and remote areas. This approach not only drives economic growth but also fosters greater social inclusion.
However, infrastructure development in Bangladesh has been marred by several challenges. Poor quality, corruption, and frequent delays are common, leading to cost overruns and poor project outcomes. Environmental degradation, community displacement, and a lack of inclusive planning further compound these issues. Additionally, political interference often distorts project priorities, while a heavy reliance on foreign loans raises concerns about debt sustainability. Critics argue that these problems underscore the urgent need for more transparent, efficient, and sustainable infrastructure development practices in Bangladesh.
ENVIRONMENTAL SUSTAINABILITY: For development to be truly inclusive, environmental sustainability must be prioritised, as climate change disproportionately impacts the poor and marginalised. Integrating climate resilience into development planning is essential, with key strategies including sustainable agriculture, renewable energy investments, and robust environmental policies. However, Bangladesh faces significant challenges, such as inadequate implementation of environmental regulations, leading to severe pollution from industries like textiles and leather. Rapid urbanisation is encroaching on wetlands, while reliance on fossil fuels and poor waste management exacerbate environmental degradation. Current efforts often overlook marginalised communities, who bear the brunt of these issues, underscoring the need for more equitable and inclusive sustainability approaches. Comprehensive solutions are vital for achieving development that benefits all and preserves the environment.
CHALLENGES AND THE WAY FORWARD:
To overcome the challenges, a multi-stakeholder approach is necessary. The government, private sector, civil society, and international partners should work together to create policies and programmes that are inclusive by design. This includes fostering public-private partnerships, enhancing governance and accountability, and ensuring that marginalised groups have a voice in decision-making processes.
Md. Tauhidul Alam, CICC, is a Senior Faculty and Head of the earning Facilitation Wing, MTB Training Institute (MTBTI)
Md Tauhidul Alam
Published :
Aug 26, 2024 22:44
Updated :
Aug 27, 2024 21:15
Through the war of independence, the people of Bangladesh sought to establish a country free from exploitation and deprivation, where every citizen would enjoy fair treatment and access to basic rights and benefits. It is deeply regrettable that even after more than half a century of independence and significant economic growth, approximately 35 million people of the country, representing 18.7 per cent of the population, still live below the poverty line. While there has been notable progress in reducing poverty, income inequality remains distressingly high, particularly among rural communities, women, and other vulnerable groups who still struggle to secure basic necessities such as food, shelter, healthcare, and education. This persistent disparity is largely driven by unequal distribution of the benefits of economic growth, which has disproportionately favoured the privileged segments of the society.
In this context, fostering inclusive development is crucial to ensure that all segments of the society, especially those who are marginalised, can share the nation's economic progress. With the fall of Sheikh Hasina's autocratic regime and the emergence of an interim government, a significant opportunity has arisen to build an equitable and just society-an opportunity the nation must seize to achieve true inclusion.
INCLUSIVE DEVELOPMENT: Inclusive growth and inclusive development both refer to an economic growth process that is broad-based, sustainable, and equitable, ensuring that all segments of the society, especially the marginalised and disadvantaged, benefit from economic progress. These concepts emphasise the importance of creating opportunities for everyone, reducing income inequality, and addressing social and economic disparities. Inclusive growth and development aim not only to increase overall economic output but also to distribute the gains from growth more evenly across the society, fostering social cohesion and improving the quality of life for all individuals. The core principle is the "inclusion of the excluded," focusing on dismantling barriers and promoting the participation of marginalised groups to create a more equitable society where no one is left behind.
EDUCATION AND SKILL DEVELOPMENT: Education is the cornerstone of inclusive development, and while Bangladesh has made significant progress in improving access to education, challenges remain in terms of quality and equity. To address these challenges, particularly for the marginalised communities such as rural and indigenous populations, targeted programmes are essential. Additionally, enhancing vocational and technical training can equip the youth with skills that match the demands of the evolving job market, thereby reducing unemployment and underemployment. However, to establish an education system that is both people-centred and supportive of the poor, a comprehensive reform programme is urgently needed. Immediate actions, including reconstituting the governing bodies and managing committees of nearly all educational institutions with qualified, honest, and skilled individuals are crucial. Furthermore, recruiting qualified teachers and providing rigorous training for existing educators are critical steps in improving the overall standard of education.
HEALTHCARE ACCESS AND QUALITY: Bangladesh has made notable progress in healthcare, particularly in reducing child mortality and increasing life expectancy, but significant disparities in access to quality healthcare remain, especially among rural and low-income populations. The healthcare system is plagued with challenges such as inadequate facilities, underfunding, and a shortage of skilled professionals, particularly in rural areas. High out-of-pocket expenses further hinder access for those with limited financial resources, forcing many to rely on informal and unregulated providers, resulting in incorrect treatments and worsened health outcomes. Overcrowded and under-resourced public hospitals, coupled with systemic issues like favouritism and influence of corrupt syndicates, exacerbate these challenges by creating unequal access to care, draining public resources, and diminishing the quality of healthcare. These factors erode public trust and perpetuate cycles of poverty and poor health outcomes. To address these issues, it is crucial to implement stronger regulations, increase transparency, and ensure equitable access to healthcare for all citizens by strengthening rural healthcare infrastructure and adopting universal health coverage, thereby promoting inclusive development and improving overall health outcomes in the country.
SOCIAL PROTECTION AND SAFETY NETS: Social protection programmes are crucial for safeguarding the most vulnerable populations against economic shocks and natural disasters. While Bangladesh has several social safety net programmes, their coverage and effectiveness require significant enhancement. One of the key challenges is the political bias that often influences these programmes, leading to the exclusion of a large number of people who should be beneficiaries. Additionally, the high rate of corruption in the distribution process is a major concern, as benefits are frequently siphoned off by influential individuals involved in the distribution. To achieve inclusive development, it is essential to expand these programmes to cover all vulnerable groups, including the elderly, disabled, and extreme poor.
ECONOMIC POLICY AND JOB CREATION: Economic policies should be designed to promote job creation and entrepreneurship, particularly in sectors with the potential to absorb large numbers of workers, such as agriculture, manufacturing, and services. However, several challenges hinder entrepreneurship development, including limited access to capital, inadequate infrastructure, lack of technical skills, and burdensome regulatory hurdles. These barriers must be addressed promptly, as failing to do so will leave job creation as an unfulfilled promise.
Special attention should be given to empowering women and youth, who are often marginalised in the formal economy. Financial inclusion initiatives, such as mobile banking, microfinance, and tailored financial literacy programmes, can play a pivotal role in ensuring that all citizens have access to the financial resources needed to engage in economic activities. Moreover, creating a supportive ecosystem that includes mentorship, access to markets, and streamlined business registration processes is essential for nurturing entrepreneurship and driving sustainable economic growth.
INFRASTRUCTURE DEVELOPMENT: Infrastructure is crucial in bridging marginalised
communities with markets, services, and opportunities. To truly make a difference, investments in transportation, energy, and digital infrastructure must focus on underserved regions, especially rural and remote areas. This approach not only drives economic growth but also fosters greater social inclusion.
However, infrastructure development in Bangladesh has been marred by several challenges. Poor quality, corruption, and frequent delays are common, leading to cost overruns and poor project outcomes. Environmental degradation, community displacement, and a lack of inclusive planning further compound these issues. Additionally, political interference often distorts project priorities, while a heavy reliance on foreign loans raises concerns about debt sustainability. Critics argue that these problems underscore the urgent need for more transparent, efficient, and sustainable infrastructure development practices in Bangladesh.
ENVIRONMENTAL SUSTAINABILITY: For development to be truly inclusive, environmental sustainability must be prioritised, as climate change disproportionately impacts the poor and marginalised. Integrating climate resilience into development planning is essential, with key strategies including sustainable agriculture, renewable energy investments, and robust environmental policies. However, Bangladesh faces significant challenges, such as inadequate implementation of environmental regulations, leading to severe pollution from industries like textiles and leather. Rapid urbanisation is encroaching on wetlands, while reliance on fossil fuels and poor waste management exacerbate environmental degradation. Current efforts often overlook marginalised communities, who bear the brunt of these issues, underscoring the need for more equitable and inclusive sustainability approaches. Comprehensive solutions are vital for achieving development that benefits all and preserves the environment.
CHALLENGES AND THE WAY FORWARD:
To overcome the challenges, a multi-stakeholder approach is necessary. The government, private sector, civil society, and international partners should work together to create policies and programmes that are inclusive by design. This includes fostering public-private partnerships, enhancing governance and accountability, and ensuring that marginalised groups have a voice in decision-making processes.
Md. Tauhidul Alam, CICC, is a Senior Faculty and Head of the earning Facilitation Wing, MTB Training Institute (MTBTI)
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Budget support: Govt hunts for $8b from IMF, other lenders
The government is seeking as much as $8 billion in budget support by December from the development partners, including the International Monetary Fund (IMF), to pay back foreign liabilities and boost foreign exchange reserves.
Budget support: Govt hunts for $8b from IMF, other lenders
Bangladesh seeks to shore up reserves, repay liabilities
The government is seeking as much as $8 billion in budget support by December from the development partners, including the International Monetary Fund (IMF), to pay back foreign liabilities and boost foreign exchange reserves.
It is also working to get immediate funds from the Asian Development Bank (ADB) and the World Bank for rehabilitation programmes in areas recently devastated by floods.
Based on a primary assumption of loss and damage, the government has already sent a letter to the ADB, requesting $300 million for flood rehabilitation. It will seek a bigger amount from the World Bank, but a formal request has not been made yet.
Of the budget support, $3 billion is expected to come from the IMF on top of the global lender's existing $4.7 billion loan programme.
The government will seek as much as $5 billion from other development partners like the World Bank, ADB, Japan International Cooperation Agency (JICA) and the Asian Infrastructure Investment Bank (AIIB), said officials of the finance ministry and the Bangladesh Bank.
Recently, Bangladesh Bank Governor Ahsan H Mansur told foreign media that they would seek $3 billion from the IMF. A finance ministry official said they have already started talks with the IMF for the funds.
The official said an IMF staff mission is likely to visit Bangladesh to discuss the loan towards the end of next month. After the visit, Bangladesh will formally send a letter to the IMF, seeking the additional loan.
IMF officials informed the finance ministry and the central bank that it was assessing how much it could lend Bangladesh, going beyond the existing quota for the country.
The officials said a meeting on the loan arrangement could be held on the sidelines of the World Bank-IMF Annual Meetings in Washington in October. Finance Adviser Salehuddin Ahmed and the central bank governor are likely to take part in the meeting.
The IMF has so far released $2.3 billion under the $4.7 billion loan programme since its approval in January last year.
After the interim government took charge, the World Bank and the ADB held separate meetings with the finance adviser, the energy adviser and the central bank governor. Bangladesh sought more budget support from them during the meetings but did not specify any amount.
The energy adviser during meetings with the World Bank and the ADB sought $1 billion as immediate budget support, according to officials familiar with the development.
Officials at the Economic Relations Division said they could get funds from the World Bank under three arrangements -- a policy-based loan, diverted regional funds or from slow-moving projects.
Besides, Bangladesh could quickly get $1 billion to $1.5 billion from the ADB under two arrangements -- a policy-based loan or countercyclical support. Both JICA and AIIB could join the ADB arrangement, according to officials.
The interim government took charge amid pressure of high inflation and bleeding of foreign currency reserves which have been prevalent for almost two years.
The reserves stood at $20.5 billion on August 21 in line with the IMF's BPM-6 after the new government headed by Nobel laureate Professor Muhammad Yunus had taken charge earlier this month following the downfall of former prime minister Sheikh Hasina's government through a student-led mass uprising.
Inflation remained high last month, with the consumer price index rising by 1.94 basis points to 11.66 percent from the previous month. Food inflation crossed 14 percent in July for the first time in 13 years.
When Hasina fled the country, the Awami League government left $156 billion in local and foreign loans for the country to carry. These included $88 billion from domestic sources and the remaining $68.33 billion was external debt.
The country is also struggling to deal with a fragile banking sector hit by scams and defaults caused by people with direct or indirect links to the previous government.
The interim government has taken some quick and drastic measures to tackle the situation surrounding finances while bringing reforms to all the sectors as promised by Yunus.
Policy rates against both local and foreign currencies have been increased, while strict measures have been taken for the banking sector which are longtime suggestions from the development partners for providing budget support.
Finance ministry officials said because of the reform measures taken by the interim government, development patterners are ready to provide more support.
Bangladesh seeks to shore up reserves, repay liabilities
The government is seeking as much as $8 billion in budget support by December from the development partners, including the International Monetary Fund (IMF), to pay back foreign liabilities and boost foreign exchange reserves.
It is also working to get immediate funds from the Asian Development Bank (ADB) and the World Bank for rehabilitation programmes in areas recently devastated by floods.
Based on a primary assumption of loss and damage, the government has already sent a letter to the ADB, requesting $300 million for flood rehabilitation. It will seek a bigger amount from the World Bank, but a formal request has not been made yet.
Of the budget support, $3 billion is expected to come from the IMF on top of the global lender's existing $4.7 billion loan programme.
The government will seek as much as $5 billion from other development partners like the World Bank, ADB, Japan International Cooperation Agency (JICA) and the Asian Infrastructure Investment Bank (AIIB), said officials of the finance ministry and the Bangladesh Bank.
Recently, Bangladesh Bank Governor Ahsan H Mansur told foreign media that they would seek $3 billion from the IMF. A finance ministry official said they have already started talks with the IMF for the funds.
The official said an IMF staff mission is likely to visit Bangladesh to discuss the loan towards the end of next month. After the visit, Bangladesh will formally send a letter to the IMF, seeking the additional loan.
IMF officials informed the finance ministry and the central bank that it was assessing how much it could lend Bangladesh, going beyond the existing quota for the country.
The officials said a meeting on the loan arrangement could be held on the sidelines of the World Bank-IMF Annual Meetings in Washington in October. Finance Adviser Salehuddin Ahmed and the central bank governor are likely to take part in the meeting.
The IMF has so far released $2.3 billion under the $4.7 billion loan programme since its approval in January last year.
After the interim government took charge, the World Bank and the ADB held separate meetings with the finance adviser, the energy adviser and the central bank governor. Bangladesh sought more budget support from them during the meetings but did not specify any amount.
The energy adviser during meetings with the World Bank and the ADB sought $1 billion as immediate budget support, according to officials familiar with the development.
Officials at the Economic Relations Division said they could get funds from the World Bank under three arrangements -- a policy-based loan, diverted regional funds or from slow-moving projects.
Besides, Bangladesh could quickly get $1 billion to $1.5 billion from the ADB under two arrangements -- a policy-based loan or countercyclical support. Both JICA and AIIB could join the ADB arrangement, according to officials.
The interim government took charge amid pressure of high inflation and bleeding of foreign currency reserves which have been prevalent for almost two years.
The reserves stood at $20.5 billion on August 21 in line with the IMF's BPM-6 after the new government headed by Nobel laureate Professor Muhammad Yunus had taken charge earlier this month following the downfall of former prime minister Sheikh Hasina's government through a student-led mass uprising.
Inflation remained high last month, with the consumer price index rising by 1.94 basis points to 11.66 percent from the previous month. Food inflation crossed 14 percent in July for the first time in 13 years.
When Hasina fled the country, the Awami League government left $156 billion in local and foreign loans for the country to carry. These included $88 billion from domestic sources and the remaining $68.33 billion was external debt.
The country is also struggling to deal with a fragile banking sector hit by scams and defaults caused by people with direct or indirect links to the previous government.
The interim government has taken some quick and drastic measures to tackle the situation surrounding finances while bringing reforms to all the sectors as promised by Yunus.
Policy rates against both local and foreign currencies have been increased, while strict measures have been taken for the banking sector which are longtime suggestions from the development partners for providing budget support.
Finance ministry officials said because of the reform measures taken by the interim government, development patterners are ready to provide more support.
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- #267
White paper on economy: 12-member committee formed
The Debapriya Bhattacharya-led committee will hold its first meeting tomorrow
White paper on economy: 12-member committee formed
The Debapriya Bhattacharya-led committee will hold its first meeting tomorrow
Debapriya Bhattacharya. File photo
The government today formed a 12-member committee led by Dr Debapriya Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue (CPD), to prepare a white paper on the state of Bangladesh's economy.
The panel will hold its first meeting at the Planning Commission in Dhaka tomorrow.
The committee members include Professor AK Enamul Haque, dean of Faculty of Business and Economics of East West University; Ferdaus Ara Begum, CEO of Business Initiative Leading Development (BUILD); Imran Matin, executive director of BRAC Institute of Governance and Development at BRAC University; Dr Kazi Iqbal, senior research fellow at Bangladesh Institute of Development Studies (BIDS); and Dr M Tamim, professor of Bangladesh University of Engineering and Technology (BUET).
The others are Dr Mohammad Abu Eusuf, professor of Dhaka University's Department of Development Studies; Professor Mustafizur Rahman, distinguished fellow of CPD; Dr Selim Raihan, professor of Department of Economics, University of Dhaka; Dr Sharmind Neelormi, professor of Department of Economics of Jahangirnagar University; Dr Tasneem Arefa Siddiqui, founding chair of Refugee and Migratory Movements Research Unit (RMMRU); and Dr Zahid Hussain, former lead economist of the World Bank.
The interim government last week announced its decision to prepare the white paper so that strategic steps can be taken to stabilise the economy, reach the Sustainable Development Goals, and mitigate the challenges after Bangladesh graduates from the LDC grouping.
Debapriya, who is also the convener of the Citizen's Platform for SDGs, Bangladesh, said after a meeting with Finance Adviser Salehuddin Ahmed at the Secretariat on August 25 that the panel would consider incorporating issues beyond its mandate, depending on the situation.
The Debapriya Bhattacharya-led committee will hold its first meeting tomorrow
Debapriya Bhattacharya. File photo
The government today formed a 12-member committee led by Dr Debapriya Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue (CPD), to prepare a white paper on the state of Bangladesh's economy.
The panel will hold its first meeting at the Planning Commission in Dhaka tomorrow.
The committee members include Professor AK Enamul Haque, dean of Faculty of Business and Economics of East West University; Ferdaus Ara Begum, CEO of Business Initiative Leading Development (BUILD); Imran Matin, executive director of BRAC Institute of Governance and Development at BRAC University; Dr Kazi Iqbal, senior research fellow at Bangladesh Institute of Development Studies (BIDS); and Dr M Tamim, professor of Bangladesh University of Engineering and Technology (BUET).
The others are Dr Mohammad Abu Eusuf, professor of Dhaka University's Department of Development Studies; Professor Mustafizur Rahman, distinguished fellow of CPD; Dr Selim Raihan, professor of Department of Economics, University of Dhaka; Dr Sharmind Neelormi, professor of Department of Economics of Jahangirnagar University; Dr Tasneem Arefa Siddiqui, founding chair of Refugee and Migratory Movements Research Unit (RMMRU); and Dr Zahid Hussain, former lead economist of the World Bank.
The interim government last week announced its decision to prepare the white paper so that strategic steps can be taken to stabilise the economy, reach the Sustainable Development Goals, and mitigate the challenges after Bangladesh graduates from the LDC grouping.
Debapriya, who is also the convener of the Citizen's Platform for SDGs, Bangladesh, said after a meeting with Finance Adviser Salehuddin Ahmed at the Secretariat on August 25 that the panel would consider incorporating issues beyond its mandate, depending on the situation.
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- #268
White paper to assess extent of corruption
The committee tasked with formulating a white paper on Bangladesh’s economy will assess the extent of corruption in the country and identify the reasons behind it, according to Debapriya Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue (CPD).
White paper to assess extent of corruption
Says Debapriya Bhattacharya
The committee tasked with formulating a white paper on Bangladesh's economy will assess the extent of corruption in the country and identify the reasons behind it, according to Debapriya Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue (CPD).
However, he said that it would not identify any individuals involved.
"Many people think it is a committee to catch corrupt people, but that is not its purpose. Instead, it will explain why corruption occurred and to what extent," he said. "The government has its own agencies for finding those responsible."
Bhattacharya, team leader of the 12-member committee tasked with preparing a white paper on the state of the economy, was speaking at a press briefing after the committee's first meeting at the Planning Commission in Agargaon yesterday.
Asked whether the committee would publish the names of corrupt individuals, he said it was out of the question.
Regarding the main tasks of the committee, he said they will highlight the challenges in managing the economy and present its true state with data. The report will not detail why these challenges arose, but some indications will be provided.
"At the same time, we will offer some hints on how to overcome these challenges," Bhattacharya said.
It will also mention measures that can safeguard the country from plunging into such a crisis in the future.
It will not evaluate the activities of the previous government, but will make recommendations to the current government to avoid repeating past mistakes.
He also informed that the newly formed committee would only discuss the country's mega projects instead of all development projects.
"We are not going to discuss all development projects. We will review the mega projects. If it is necessary to examine any specific project in detail, we will do so," he said.
"We will review the necessity of undertaking these mega projects and the government's ability to repay associated loans ."
Regarding the banking sector, Bhattacharya said there will be a separate commission to evaluate it.
The committee will prepare the white paper following a critical evaluation of government data, existing reports and research papers from local think tanks and global institutions. Members will also meet with stakeholders both within and outside Dhaka.
The committee will share interim reports periodically over a three-month period.
"Mega projects and their liabilities will be a major focus of the discussions," the central bank governor said.
"We will try to identify where the interim government stands now. This will help them prioritise the reform tasks ahead," he added.
The government formed the panel on Wednesday to prepare a white paper so that strategic steps can be taken to stabilise the economy, reach the country's Sustainable Development Goals, and mitigate challenges after Bangladesh graduates from the group of least developed countries.
The 11 other committee members include Professor AK Enamul Haque, dean of the business and economics faculty at East West University, Ferdaus Ara Begum, CEO of Business Initiative Leading Development, Imran Matin, executive director of the BRAC Institute of Governance and Development, Dr Kazi Iqbal, senior research fellow at the Bangladesh Institute of Development Studies, and Dr M Tamim, a professor at the Bangladesh University of Engineering and Technology.
The other members are: Dr Mohammad Abu Eusuf, a professor of development studies at the University of Dhaka, Professor Mustafizur Rahman, distinguished fellow of the CPD, Dr Selim Raihan, a professor of economics at the University of Dhaka, Dr Sharmind Neelormi, professor of economics at Jahangirnagar University, Dr Tasneem Arefa Siddiqui, founding chair of the Refugee and Migratory Movements Research Unit, and Dr Zahid Hussain, former lead economist of the World Bank.
Says Debapriya Bhattacharya
The committee tasked with formulating a white paper on Bangladesh's economy will assess the extent of corruption in the country and identify the reasons behind it, according to Debapriya Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue (CPD).
However, he said that it would not identify any individuals involved.
"Many people think it is a committee to catch corrupt people, but that is not its purpose. Instead, it will explain why corruption occurred and to what extent," he said. "The government has its own agencies for finding those responsible."
Bhattacharya, team leader of the 12-member committee tasked with preparing a white paper on the state of the economy, was speaking at a press briefing after the committee's first meeting at the Planning Commission in Agargaon yesterday.
Asked whether the committee would publish the names of corrupt individuals, he said it was out of the question.
Regarding the main tasks of the committee, he said they will highlight the challenges in managing the economy and present its true state with data. The report will not detail why these challenges arose, but some indications will be provided.
"At the same time, we will offer some hints on how to overcome these challenges," Bhattacharya said.
It will also mention measures that can safeguard the country from plunging into such a crisis in the future.
It will not evaluate the activities of the previous government, but will make recommendations to the current government to avoid repeating past mistakes.
He also informed that the newly formed committee would only discuss the country's mega projects instead of all development projects.
"We are not going to discuss all development projects. We will review the mega projects. If it is necessary to examine any specific project in detail, we will do so," he said.
"We will review the necessity of undertaking these mega projects and the government's ability to repay associated loans ."
Regarding the banking sector, Bhattacharya said there will be a separate commission to evaluate it.
The committee will prepare the white paper following a critical evaluation of government data, existing reports and research papers from local think tanks and global institutions. Members will also meet with stakeholders both within and outside Dhaka.
The committee will share interim reports periodically over a three-month period.
"Mega projects and their liabilities will be a major focus of the discussions," the central bank governor said.
"We will try to identify where the interim government stands now. This will help them prioritise the reform tasks ahead," he added.
The government formed the panel on Wednesday to prepare a white paper so that strategic steps can be taken to stabilise the economy, reach the country's Sustainable Development Goals, and mitigate challenges after Bangladesh graduates from the group of least developed countries.
The 11 other committee members include Professor AK Enamul Haque, dean of the business and economics faculty at East West University, Ferdaus Ara Begum, CEO of Business Initiative Leading Development, Imran Matin, executive director of the BRAC Institute of Governance and Development, Dr Kazi Iqbal, senior research fellow at the Bangladesh Institute of Development Studies, and Dr M Tamim, a professor at the Bangladesh University of Engineering and Technology.
The other members are: Dr Mohammad Abu Eusuf, a professor of development studies at the University of Dhaka, Professor Mustafizur Rahman, distinguished fellow of the CPD, Dr Selim Raihan, a professor of economics at the University of Dhaka, Dr Sharmind Neelormi, professor of economics at Jahangirnagar University, Dr Tasneem Arefa Siddiqui, founding chair of the Refugee and Migratory Movements Research Unit, and Dr Zahid Hussain, former lead economist of the World Bank.
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- #269
Upward trend in remittance: Bangladesh receives over $2 billion in Aug
Bangladesh is showing an upward trend again in remittance sent by expatriates and exceeded US$ 2 billion in 28 days of August. According to Bangladesh Bank’s updated report on remittance as of August 28, expatriate Bangladeshis sent $2.07 billion to the country through the formal channel. In
Upward trend in remittance: Bangladesh receives over $2 billion in Aug
FE Online Desk
Published :
Aug 29, 2024 21:45
Updated :
Aug 29, 2024 23:35
Bangladesh is showing an upward trend again in remittance sent by expatriates and exceeded US$ 2 billion in 28 days of August.
According to Bangladesh Bank’s updated report on remittance as of August 28, expatriate Bangladeshis sent $2.07 billion to the country through the formal channel. In the same period of August 2023, remittance inflow was $1.43 billion, reports UNB.
Bangladesh witnessed the lowest remittance in the last 10 months in July 2024 amid the student movement. In July, the country’s remittance was about $1.91 billion.
It is to be noted, banks were closed from July 19 to 23 due to the situation caused by the students’ movement against discrimination, public and general holidays. Apart from this, broadband internet was off for 5 consecutive days and mobile internet was off for 10 days. Because of this, foreign transactions with the country’s banks were almost stopped.
Bangladesh Bank has taken different steps to increase remittance to overcome the foreign exchange crisis and increase reserves. In the last few months, these measures have had a positive impact on expatriate income or remittance coming into the country.
FE Online Desk
Published :
Aug 29, 2024 21:45
Updated :
Aug 29, 2024 23:35
Bangladesh is showing an upward trend again in remittance sent by expatriates and exceeded US$ 2 billion in 28 days of August.
According to Bangladesh Bank’s updated report on remittance as of August 28, expatriate Bangladeshis sent $2.07 billion to the country through the formal channel. In the same period of August 2023, remittance inflow was $1.43 billion, reports UNB.
Bangladesh witnessed the lowest remittance in the last 10 months in July 2024 amid the student movement. In July, the country’s remittance was about $1.91 billion.
It is to be noted, banks were closed from July 19 to 23 due to the situation caused by the students’ movement against discrimination, public and general holidays. Apart from this, broadband internet was off for 5 consecutive days and mobile internet was off for 10 days. Because of this, foreign transactions with the country’s banks were almost stopped.
Bangladesh Bank has taken different steps to increase remittance to overcome the foreign exchange crisis and increase reserves. In the last few months, these measures have had a positive impact on expatriate income or remittance coming into the country.
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- #270
Is govt action enough to curb inflation?
Persistent inflationary pressure, particularly in terms of food inflation, has been taking a toll on low- and fixed-income people in Bangladesh, forcing them to spend most of their income on nutrition.
Is govt action enough to curb inflation?
Persistent inflationary pressure, particularly in terms of food inflation, has been taking a toll on low- and fixed-income people in Bangladesh, forcing them to spend most of their income on nutrition.
The recently ousted Awami League government had taken steps to cushion this blow, especially by introducing food distribution programmes.
And though such measures remain in place, the question is whether these alone are enough to tackle inflation.
A record 32.61 lakh tonnes of food grains were sold at subsidised rates through public distribution systems like the Open Market Sale (OMS) and Vulnerable Group Development programmes in FY24.
The OMS alone distributed about 32 percent of the total grains, mostly rice and wheat, to increase market supply and maintain a price equilibrium.
Essential commodities, including oil and sugar, are also being sold at subsidised rates to around one crore family cardholders under a Trading Corporation of Bangladesh (TCB) programme.
Professor Bazlul Haque Khondker, chairman of the South Asian Network on Economic Modeling (Sanem), welcomed these moves but urged authorities to monitor distribution properly.
"We often receive allegations of corruption in the distribution process. At times, the support does not reach the intended beneficiaries," he said.
Towfiqul Islam Khan, a senior research fellow at the Centre for Policy Dialogue (CPD), said it is critical to plug these leaks in public food distribution programmes, including the TCB's family card initiative.
"The list of beneficiaries should be revisited to stop both inclusion and exclusion errors," he added.
Khan also emphasised the need to increase budgetary allocations for public food distribution initiatives.
"The last budget did not include adequate support to reduce the production cost of essential commodities. Even energy and fuel prices were kept high."
He suggested the interim government facilitate the import and distribution of essential commodities so that more players can enter the market.
Sanem's Bazlul Haque Khondker said the focus should now shift to framing non-monetary policies to control inflation.
He added that proper market management by removing the scope for extortion should be prioritised.
"The country may witness significant change in the next six months if the interim government can play a remarkable role with a tight monetary policy," he added.
The CPD's Towfiqul Islam Khan said recent changes in the monetary policy, including policy rate hikes and allowing banks more flexibility to fix interest rates, were taken with a view to addressing demand-pull issues.
However, conventional economic theories and past global experiences suggest that these measures need time to have an effect.
"The government policies have not adequately addressed the issue of cost-push inflation areas. The pressure on the exchange rate will be there for some time in the foreseeable future," Khan said.
He also mentioned that the official data does not adequately reflect ground realities and somewhat underestimates the inflation rate.
"The policies are taken with low-quality data year after year. It is high time we took immediate steps to improve this situation."
Persistent inflationary pressure, particularly in terms of food inflation, has been taking a toll on low- and fixed-income people in Bangladesh, forcing them to spend most of their income on nutrition.
The recently ousted Awami League government had taken steps to cushion this blow, especially by introducing food distribution programmes.
And though such measures remain in place, the question is whether these alone are enough to tackle inflation.
A record 32.61 lakh tonnes of food grains were sold at subsidised rates through public distribution systems like the Open Market Sale (OMS) and Vulnerable Group Development programmes in FY24.
The OMS alone distributed about 32 percent of the total grains, mostly rice and wheat, to increase market supply and maintain a price equilibrium.
Essential commodities, including oil and sugar, are also being sold at subsidised rates to around one crore family cardholders under a Trading Corporation of Bangladesh (TCB) programme.
Professor Bazlul Haque Khondker, chairman of the South Asian Network on Economic Modeling (Sanem), welcomed these moves but urged authorities to monitor distribution properly.
"We often receive allegations of corruption in the distribution process. At times, the support does not reach the intended beneficiaries," he said.
Towfiqul Islam Khan, a senior research fellow at the Centre for Policy Dialogue (CPD), said it is critical to plug these leaks in public food distribution programmes, including the TCB's family card initiative.
"The list of beneficiaries should be revisited to stop both inclusion and exclusion errors," he added.
Khan also emphasised the need to increase budgetary allocations for public food distribution initiatives.
"The last budget did not include adequate support to reduce the production cost of essential commodities. Even energy and fuel prices were kept high."
He suggested the interim government facilitate the import and distribution of essential commodities so that more players can enter the market.
Sanem's Bazlul Haque Khondker said the focus should now shift to framing non-monetary policies to control inflation.
He added that proper market management by removing the scope for extortion should be prioritised.
"The country may witness significant change in the next six months if the interim government can play a remarkable role with a tight monetary policy," he added.
The CPD's Towfiqul Islam Khan said recent changes in the monetary policy, including policy rate hikes and allowing banks more flexibility to fix interest rates, were taken with a view to addressing demand-pull issues.
However, conventional economic theories and past global experiences suggest that these measures need time to have an effect.
"The government policies have not adequately addressed the issue of cost-push inflation areas. The pressure on the exchange rate will be there for some time in the foreseeable future," Khan said.
He also mentioned that the official data does not adequately reflect ground realities and somewhat underestimates the inflation rate.
"The policies are taken with low-quality data year after year. It is high time we took immediate steps to improve this situation."
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- #271
Business activities yet to come back on track
Flash floods across parts of the country, the lingering effects of recent nationwide political upheaval, and persistent inflationary pressure have prevented business activities from getting back on track, according to businesspeople.
Business activities yet to come back on track
Although the unrest stemming from nationwide protests is fading and shopping centres have opened their doors, customer footfall has not picked up. Recent floods, alongside persistently high inflation, have also impacted consumer behaviour. As such, shopping centres and malls remain relatively desolate. The photos were taken in Farmgate yesterday. Photo: Prabir Das
Flash floods across parts of the country, the lingering effects of recent nationwide political upheaval, and persistent inflationary pressure have prevented business activities from getting back on track, according to businesspeople.
As uncertainty and fear are still clouding people's minds, they are not interested in shopping, businesspeople said.
However, they believed business activities would gradually return to normalcy, saying that there was no alternative but to wait for better days.
"The months-long political unrest stemming from the student movement, coupled with recent floods, caused sales and demand to drop to inadequate levels. So, businesses are enduring a difficult time," said Tapan Sengupta, deputy managing director of BSRM, a leading steel manufacturer.
He said that sales of construction materials usually decline in the rainy season, with demand for steel significantly reduced during the monsoon months.
"However, various elements have emerged and hampered business in nearly all sectors."
Since demand from clients and dealers has declined substantially, BSRM has only been partially running its production units in order to avoid a stockpile of goods, he informed.
Sales will not improve until consumer confidence is restored, and development projects are resumed, he opined.
Rupali Chowdhury, managing director of Berger Paints Bangladesh, said domestic consumption of fast-moving consumer goods and construction materials has declined significantly since last year.
"The recent unrest added to this, which is unfavourable for business growth," she said.
Consumers are uninterested in spending money on non-essential products in the current situation, she noted.
Chowdhury, also a former president of the Foreign Investors' Chamber of Commerce and Industry (FICCI), said all multinational companies were facing the same situation.
"The economy is not in a positive state due to the political changeover and recent flash floods while people are yet to mentally recover from recent turmoil," Chowdhury said.
"So, businesses are passing a transitional period. As a result, business activities have been hindered."
Arfanul Hoque, director (retail) at the Bata Shoe Company (Bangladesh) Ltd, said footfall at their outlets slowed since the start of this year.
He said high inflationary pressure is a fundamental reason for the decline in sales.
Inflation hit 11.66 percent in July this year, the highest in at least 13 years, while food inflation soared to at least a 10-year high of 14.1 percent, according to the Bangladesh Bureau of Statistics.
"Later, unrest and flash floods exacerbated the situation," he said.
However, Hoque believes the situation will gradually improve as the political situation becomes more stable.
Mohammed Amirul Haque, managing director of Premier Cement Mills PLC, said the business situation had been beyond anyone's control since mid-July.
"Demand declined significantly due to the monsoon season and also because customers are yet to regain confidence. In this situation, we are running the manufacturing units partially," he said.
"Despite having no control over the situation, we are trying to do our best to handle the challenges," Haque added.
He also stressed the need for policy support from the interim government.
MA Jabbar, managing director of DBL Group, said factories in Mymensingh's Bhaluka area and Gazipur's Kashimpur locality are contending with an acute gas and power supply crisis.
"In this situation, we are running the factories with diesel to ensure power, which increases the cost of production," he said.
Although demand is slow at the moment, manufacturers may be unable to ensure adequate supply as production is being hampered due to the gas crisis, he added.
Jabbar said such issues had become a new headache for investors, adding that they would think several times before expanding their businesses or making fresh investments.
Khourshed Alam, director of sales and marketing at Akij Ceramics Ltd, said the business situation is yet to come back on track as the overall condition is not suitable for customers.
"There were no sales between July 15 and August 15 due to the student movement. Recently, flash floods also impacted businesses," he added.
Alam hopes that business activities will come back on track within one-and-a-half months.
Although the unrest stemming from nationwide protests is fading and shopping centres have opened their doors, customer footfall has not picked up. Recent floods, alongside persistently high inflation, have also impacted consumer behaviour. As such, shopping centres and malls remain relatively desolate. The photos were taken in Farmgate yesterday. Photo: Prabir Das
Flash floods across parts of the country, the lingering effects of recent nationwide political upheaval, and persistent inflationary pressure have prevented business activities from getting back on track, according to businesspeople.
As uncertainty and fear are still clouding people's minds, they are not interested in shopping, businesspeople said.
However, they believed business activities would gradually return to normalcy, saying that there was no alternative but to wait for better days.
"The months-long political unrest stemming from the student movement, coupled with recent floods, caused sales and demand to drop to inadequate levels. So, businesses are enduring a difficult time," said Tapan Sengupta, deputy managing director of BSRM, a leading steel manufacturer.
He said that sales of construction materials usually decline in the rainy season, with demand for steel significantly reduced during the monsoon months.
"However, various elements have emerged and hampered business in nearly all sectors."
Since demand from clients and dealers has declined substantially, BSRM has only been partially running its production units in order to avoid a stockpile of goods, he informed.
Sales will not improve until consumer confidence is restored, and development projects are resumed, he opined.
Rupali Chowdhury, managing director of Berger Paints Bangladesh, said domestic consumption of fast-moving consumer goods and construction materials has declined significantly since last year.
"The recent unrest added to this, which is unfavourable for business growth," she said.
Consumers are uninterested in spending money on non-essential products in the current situation, she noted.
Chowdhury, also a former president of the Foreign Investors' Chamber of Commerce and Industry (FICCI), said all multinational companies were facing the same situation.
"The economy is not in a positive state due to the political changeover and recent flash floods while people are yet to mentally recover from recent turmoil," Chowdhury said.
"So, businesses are passing a transitional period. As a result, business activities have been hindered."
Arfanul Hoque, director (retail) at the Bata Shoe Company (Bangladesh) Ltd, said footfall at their outlets slowed since the start of this year.
He said high inflationary pressure is a fundamental reason for the decline in sales.
Inflation hit 11.66 percent in July this year, the highest in at least 13 years, while food inflation soared to at least a 10-year high of 14.1 percent, according to the Bangladesh Bureau of Statistics.
"Later, unrest and flash floods exacerbated the situation," he said.
However, Hoque believes the situation will gradually improve as the political situation becomes more stable.
Mohammed Amirul Haque, managing director of Premier Cement Mills PLC, said the business situation had been beyond anyone's control since mid-July.
"Demand declined significantly due to the monsoon season and also because customers are yet to regain confidence. In this situation, we are running the manufacturing units partially," he said.
"Despite having no control over the situation, we are trying to do our best to handle the challenges," Haque added.
He also stressed the need for policy support from the interim government.
MA Jabbar, managing director of DBL Group, said factories in Mymensingh's Bhaluka area and Gazipur's Kashimpur locality are contending with an acute gas and power supply crisis.
"In this situation, we are running the factories with diesel to ensure power, which increases the cost of production," he said.
Although demand is slow at the moment, manufacturers may be unable to ensure adequate supply as production is being hampered due to the gas crisis, he added.
Jabbar said such issues had become a new headache for investors, adding that they would think several times before expanding their businesses or making fresh investments.
Khourshed Alam, director of sales and marketing at Akij Ceramics Ltd, said the business situation is yet to come back on track as the overall condition is not suitable for customers.
"There were no sales between July 15 and August 15 due to the student movement. Recently, flash floods also impacted businesses," he added.
Alam hopes that business activities will come back on track within one-and-a-half months.
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Fall of a titan: Looking for the economic tinderbox
Despite the youth-driven upheaval, the key drivers of the economy remain very much intact and ready to take the economy to new heights.
Fall of a titan: Looking for the economic tinderbox
Inflation must be tamed in the shortest possible time, or else it will remain a keg in the economic tinderbox. FILE PHOTO: AMRAN HOSSAIN
Just when the Hasina regime was imbued with an aura of invincibility, the ground finally shifted on August 5, 2024, and the 15-year-old regime collapsed like a house of cards. This regime change, and the process that led to it, will be recorded in blood-letters, once again, in the annals of Bangladesh history. To the nation's advantage and to restore stability, we had someone of the stature of Nobel laureate Dr Muhammad Yunus, widely respected nationally and internationally, who was unanimously offered the high task of leading the nation onwards.
Bangladesh is no stranger to national student movements and violent transitions. A peaceful transfer of state power has eluded this country for much of its 53-year existence. But it was for the first time that a student movement toppled an apparently powerful government. Political analysts around the world will now have to sift through their books to ascertain the theoretical underpinnings that best fit the latest transformative developments. Suffice it to say that the end of a long-running progressively authoritarian regime was inevitable, albeit unpredictable. The nagging question was when… and how?
Since early July, Bangladesh has gone through what can aptly be called a youth-driven mass uprising that toppled a regime that had lost touch with the people. But, for such a movement to change a regime that appeared fully ensconced in the saddle of government, there has to be some lethal and explosive spark that removes the ground from underneath the holders of state power. I am no political scientist, but I would like to argue that in a situation where one political party and its cronies share much of the wealth creation that has indeed happened over the past decade and a half, then it is the exclusion of the vast swath of the population (an overwhelming majority), not connected with the ruling elites or their henchmen, that presents a classic case for a political explosion to unravel.
It is true that, as a consequence of the Covid pandemic and subsequent Russo-Ukraine war, the economy was treading a rough terrain, putting a damper on the notion of a fairytale economy of Bangladesh. To make matters worse, there was an inexcusable mishandling of the internal and external challenges afflicting the economy that triggered something of an "economic tinderbox," a concoction of Lutfey Siddiqi, a talented professor of Bangladeshi origin at London School of Economics (LSE). Was there an "economic tinderbox?" The answer, in my view, is yes and no. To be objective, one needs to take a closer look.
Most certainly, inflation, a rise in the general price level, remains a ticking time bomb. Ordinary citizens are suffering from serious diminution of their purchasing power from double-digit inflation that has stubbornly persisted for over 18 months. If not handled deftly and fast, it could be the cause of another implosion in the future. It is therefore reassuring to see the appointment of a highly competent professional economist like Dr Ahsan Mansur (former IMF Division Chief and Executive Director, PRI) at the helm of Bangladesh Bank. His immediate task is to bring inflation under control and restore sanity in the financial sector. But the challenges should not be underestimated.
Orthodox monetary management, which is now in full swing and seems to be intensified (by raising interest rates a few notches) may take too long for the patience of ordinary citizens to last. This inflation is not just an excess demand phenomenon which can be quashed by restraining demand through monetary tightening. There is a significant cost-push element arising from exchange rate depreciation (raising import prices) and hike in domestic energy tariffs that triggered the first inflationary spike in domestic prices in 2022. Then, there is the need to give a deflationary shock to prices, particularly to essential food items such as sugar, edible oils, onions, wheat, spices, etc. Import prices of intermediate and capital goods also need a reprieve in order to reduce production costs that have risen as a consequence of the 36 percent exchange rate depreciation that occurred over the past 18 months or more. What are the options?
Bangladesh presents a unique case of possible inflation control via long-pending tariff rationalisation in a high tariff economy. This presents an opportunity to kill two birds with one stone. What is not known to most experts in the country is that the 36 percent exchange rate depreciation has raised already high tariffs by exactly 36 percent, across-the-board. It is high time to shave off at least half of that, an action that will provide the dis-inflationary trigger to domestic prices.
Another point to note is that even if inflation were to decline to 6-7 percent due to monetary contraction, from the current level of more than 11 percent, over the next 6-9 months, that will not bring down market prices from current levels. This is the reality. You can't reduce prices by imposing pricing caps either. So, it is critical to come up with every possible ammunition in the economic policy package to reduce market prices to tolerable levels. The tariff handle is one such instrument. Tariff rationalisation has been a long-pending agenda. Its time has come. The National Tariff Policy 2023 has all the right policies waiting to be implemented. Budget and balance of payments support from IMF-WB could assuage any adverse impacts on revenue or balance of payments.
Bottom line: inflation must be tamed in the shortest possible time, or else it will remain a keg in the economic tinderbox.
Next off, it is the massive misgovernance in the banking and financial sector that needs immediate attention and redress. Needless to give details, all of which are now in the open. Some of the big guns involved in mega-theft (no better word to describe what has happened) of banks are in custody or on the run. The malaise runs deep and is a signature outcome of crass cronyism of the worse kind. What a mockery of the banking supervision rules. Setting up a banking commission and publishing a white paper on the state of the financial sector is a high priority and acknowledged by the interim government. Governance reforms in this sector simply cannot wait. Given the depth of the malaise, it is a tall order but one that deserves not words but action. Or else, here is one more keg in the tinderbox that could lead to a meltdown of the overall economy, simultaneously bringing both political and economic distress.
Since the outbreak of the Russo-Ukraine war the economy has been reeling under a balance of payments shock out of which it is yet to recover fully. Mismanagement of foreign exchange reserves and mishandling of exchange rate policy led to sharp depletion of forex reserves that were in highly comfortable range until 2022. After inexplicable delays, the exchange rate was substantially depreciated. A flexible exchange rate policy has been adopted—a crawling peg system—which has had the intended impact of stabilising forex reserves while minimising the divergence between the bank rate and the kerb market rate, thus incentivising and redirecting remittances through official channels.
Now comes the hard part. Restoring forex reserves to comfortable levels exceeding 5-6 months of import cover will need robust export performance for which a competitive exchange rate will play its part. This is where the interim government needs to exude signals of stability to the world community with laser-focus on reforms that bring dynamism to our export-oriented economy. That will then attract rising amounts of export-seeking foreign direct investment (FDI) bringing capital and technology and creating jobs with upskilling of workers aimed at markets of the future.
Thankfully, the nation can reap enormous dividends from the leadership that Nobel laureate economist Dr Muhammad Yunus brings to the table. Having received messages of continuing support from the multilateral institutions like the UN, World Bank, and IMF, there is increasing prospect of receiving higher balance of payments and budget support to backstop much needed reforms in financial, trade, and tax systems. Though not perfect, Bangladesh presents a notable example of effective aid utilisation where official development assistance has been a catalyst for its rapid progress.
To conclude, despite the youth-driven upheaval, the key drivers of the economy remain very much intact and ready to take the economy to new heights. First, the readymade garment industry has by and large remained unscathed with export prospects unaltered and perhaps better in the coming year as China+1 geoeconomics, a global strategy of diversifying supply chains, takes deeper root. Second, remittances are already showing signs of resurgence to be commensurate with the fact that departure of migrant workers has doubled in recent years. Third, agriculture, a sector that has taken the country towards food self-sufficiency, is also transforming itself into a mechanised and viable commercial enterprise of the future. Fourth, NGO-GO partnership for health, education, and human services for which Bangladesh is recognised the world over, gets a new boost with an NGO pioneer at the helm of affairs. These key drivers present challenges, with occasional hiccups, but no tinderbox-like phenomenon.
No doubt, there was a pent-up demand in the country for regime change. The youth have delivered where politicians failed. If this event can be called a "second independence", the nation indeed gets another chance to firmly establish itself as a "success story of development" that Oxford University professor and leading development economist, Stefan Dercon, thinks it is.
Dr Zaidi Sattar is chairman of Policy Research Institute of Bangladesh (PRI).
Inflation must be tamed in the shortest possible time, or else it will remain a keg in the economic tinderbox. FILE PHOTO: AMRAN HOSSAIN
Just when the Hasina regime was imbued with an aura of invincibility, the ground finally shifted on August 5, 2024, and the 15-year-old regime collapsed like a house of cards. This regime change, and the process that led to it, will be recorded in blood-letters, once again, in the annals of Bangladesh history. To the nation's advantage and to restore stability, we had someone of the stature of Nobel laureate Dr Muhammad Yunus, widely respected nationally and internationally, who was unanimously offered the high task of leading the nation onwards.
Bangladesh is no stranger to national student movements and violent transitions. A peaceful transfer of state power has eluded this country for much of its 53-year existence. But it was for the first time that a student movement toppled an apparently powerful government. Political analysts around the world will now have to sift through their books to ascertain the theoretical underpinnings that best fit the latest transformative developments. Suffice it to say that the end of a long-running progressively authoritarian regime was inevitable, albeit unpredictable. The nagging question was when… and how?
Since early July, Bangladesh has gone through what can aptly be called a youth-driven mass uprising that toppled a regime that had lost touch with the people. But, for such a movement to change a regime that appeared fully ensconced in the saddle of government, there has to be some lethal and explosive spark that removes the ground from underneath the holders of state power. I am no political scientist, but I would like to argue that in a situation where one political party and its cronies share much of the wealth creation that has indeed happened over the past decade and a half, then it is the exclusion of the vast swath of the population (an overwhelming majority), not connected with the ruling elites or their henchmen, that presents a classic case for a political explosion to unravel.
It is true that, as a consequence of the Covid pandemic and subsequent Russo-Ukraine war, the economy was treading a rough terrain, putting a damper on the notion of a fairytale economy of Bangladesh. To make matters worse, there was an inexcusable mishandling of the internal and external challenges afflicting the economy that triggered something of an "economic tinderbox," a concoction of Lutfey Siddiqi, a talented professor of Bangladeshi origin at London School of Economics (LSE). Was there an "economic tinderbox?" The answer, in my view, is yes and no. To be objective, one needs to take a closer look.
Most certainly, inflation, a rise in the general price level, remains a ticking time bomb. Ordinary citizens are suffering from serious diminution of their purchasing power from double-digit inflation that has stubbornly persisted for over 18 months. If not handled deftly and fast, it could be the cause of another implosion in the future. It is therefore reassuring to see the appointment of a highly competent professional economist like Dr Ahsan Mansur (former IMF Division Chief and Executive Director, PRI) at the helm of Bangladesh Bank. His immediate task is to bring inflation under control and restore sanity in the financial sector. But the challenges should not be underestimated.
Orthodox monetary management, which is now in full swing and seems to be intensified (by raising interest rates a few notches) may take too long for the patience of ordinary citizens to last. This inflation is not just an excess demand phenomenon which can be quashed by restraining demand through monetary tightening. There is a significant cost-push element arising from exchange rate depreciation (raising import prices) and hike in domestic energy tariffs that triggered the first inflationary spike in domestic prices in 2022. Then, there is the need to give a deflationary shock to prices, particularly to essential food items such as sugar, edible oils, onions, wheat, spices, etc. Import prices of intermediate and capital goods also need a reprieve in order to reduce production costs that have risen as a consequence of the 36 percent exchange rate depreciation that occurred over the past 18 months or more. What are the options?
Bangladesh presents a unique case of possible inflation control via long-pending tariff rationalisation in a high tariff economy. This presents an opportunity to kill two birds with one stone. What is not known to most experts in the country is that the 36 percent exchange rate depreciation has raised already high tariffs by exactly 36 percent, across-the-board. It is high time to shave off at least half of that, an action that will provide the dis-inflationary trigger to domestic prices.
Another point to note is that even if inflation were to decline to 6-7 percent due to monetary contraction, from the current level of more than 11 percent, over the next 6-9 months, that will not bring down market prices from current levels. This is the reality. You can't reduce prices by imposing pricing caps either. So, it is critical to come up with every possible ammunition in the economic policy package to reduce market prices to tolerable levels. The tariff handle is one such instrument. Tariff rationalisation has been a long-pending agenda. Its time has come. The National Tariff Policy 2023 has all the right policies waiting to be implemented. Budget and balance of payments support from IMF-WB could assuage any adverse impacts on revenue or balance of payments.
Bottom line: inflation must be tamed in the shortest possible time, or else it will remain a keg in the economic tinderbox.
Next off, it is the massive misgovernance in the banking and financial sector that needs immediate attention and redress. Needless to give details, all of which are now in the open. Some of the big guns involved in mega-theft (no better word to describe what has happened) of banks are in custody or on the run. The malaise runs deep and is a signature outcome of crass cronyism of the worse kind. What a mockery of the banking supervision rules. Setting up a banking commission and publishing a white paper on the state of the financial sector is a high priority and acknowledged by the interim government. Governance reforms in this sector simply cannot wait. Given the depth of the malaise, it is a tall order but one that deserves not words but action. Or else, here is one more keg in the tinderbox that could lead to a meltdown of the overall economy, simultaneously bringing both political and economic distress.
Since the outbreak of the Russo-Ukraine war the economy has been reeling under a balance of payments shock out of which it is yet to recover fully. Mismanagement of foreign exchange reserves and mishandling of exchange rate policy led to sharp depletion of forex reserves that were in highly comfortable range until 2022. After inexplicable delays, the exchange rate was substantially depreciated. A flexible exchange rate policy has been adopted—a crawling peg system—which has had the intended impact of stabilising forex reserves while minimising the divergence between the bank rate and the kerb market rate, thus incentivising and redirecting remittances through official channels.
Now comes the hard part. Restoring forex reserves to comfortable levels exceeding 5-6 months of import cover will need robust export performance for which a competitive exchange rate will play its part. This is where the interim government needs to exude signals of stability to the world community with laser-focus on reforms that bring dynamism to our export-oriented economy. That will then attract rising amounts of export-seeking foreign direct investment (FDI) bringing capital and technology and creating jobs with upskilling of workers aimed at markets of the future.
Thankfully, the nation can reap enormous dividends from the leadership that Nobel laureate economist Dr Muhammad Yunus brings to the table. Having received messages of continuing support from the multilateral institutions like the UN, World Bank, and IMF, there is increasing prospect of receiving higher balance of payments and budget support to backstop much needed reforms in financial, trade, and tax systems. Though not perfect, Bangladesh presents a notable example of effective aid utilisation where official development assistance has been a catalyst for its rapid progress.
To conclude, despite the youth-driven upheaval, the key drivers of the economy remain very much intact and ready to take the economy to new heights. First, the readymade garment industry has by and large remained unscathed with export prospects unaltered and perhaps better in the coming year as China+1 geoeconomics, a global strategy of diversifying supply chains, takes deeper root. Second, remittances are already showing signs of resurgence to be commensurate with the fact that departure of migrant workers has doubled in recent years. Third, agriculture, a sector that has taken the country towards food self-sufficiency, is also transforming itself into a mechanised and viable commercial enterprise of the future. Fourth, NGO-GO partnership for health, education, and human services for which Bangladesh is recognised the world over, gets a new boost with an NGO pioneer at the helm of affairs. These key drivers present challenges, with occasional hiccups, but no tinderbox-like phenomenon.
No doubt, there was a pent-up demand in the country for regime change. The youth have delivered where politicians failed. If this event can be called a "second independence", the nation indeed gets another chance to firmly establish itself as a "success story of development" that Oxford University professor and leading development economist, Stefan Dercon, thinks it is.
Dr Zaidi Sattar is chairman of Policy Research Institute of Bangladesh (PRI).
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- #273
IMF positive about lending additional $3b
The International Monetary Fund (IMF) is positive about lending an additional $3 billion to Bangladesh but the multilateral lender wants to know what reforms the interim government is planning to take.
IMF positive about lending additional $3b
The International Monetary Fund (IMF) is positive about lending an additional $3 billion to Bangladesh but the multilateral lender wants to know what reforms the interim government is planning to take.
The topic came up during Finance Adviser Salehuddin Ahmed's maiden meeting with the Washington-based lender on Thursday.
Chris Papageorgiou, chief of the IMF staff mission that is overseeing the $4.7 billion loan programme for Bangladesh, led the IMF team at the virtual meeting, which was also attended by Finance Secretary Khairuzzaman Mozumder.
Speaking with journalists at the Secretariat yesterday, Salehuddin said the IMF wanted to know about reform plans and whether the tax-to-GDP ratio would increase.
"I told them 'definitely'," he added.
He said the Bangladesh Bank has already moved for the $3 billion loan proposal, adding that details would be discussed when an IMF mission visits Bangladesh later this month.
Following his appointment as Bangladesh Bank governor last month, Ahsan H Mansur initiated talks over an additional loan from the IMF to repay foreign liabilities and boost foreign exchange reserves.
IMF officials informed the finance ministry and central bank officials that they are assessing how much it can lend to Bangladesh without exceeding the quota for the country.
According to finance ministry calculations, Bangladesh can take another $3 billion without exceeding the quota.
A meeting on the loan arrangement could be held on the sidelines of the World Bank-IMF annual meeting in Washington in October, an event Bangladesh's finance adviser and central bank governor are likely to be a part of.
The IMF has so far released $2.3 billion under the $4.7 billion loan programme since it was approved in January last year.
The interim government took charge amid high inflation and depleting foreign currency reserves, issues that have been prevalent for almost two years.
Inflation remained high in July, with the consumer price index rising by 1.94 basis points to 11.66 percent while food inflation crossed 14 percent in July for the first time in 13 years.
Meanwhile, Bangladesh's foreign exchange reserves, which stood at more than $40 billion in July 2022, almost halved to $20.5 billion on August 21, according to the IMF's BPM6.
The interim government has taken some measures to tackle the situation, such as hiking the policy rate and implementing some strict measures for the banking sector.
Earlier, the IMF mission suggested various reform measures.
Considering Bangladesh's low tax-to-GDP ratio, the multilateral lender said it is imperative to prioritise sustainable revenue generation to bolster investments in social welfare and development initiatives.
To this end, tangible tax policy and administrative measures should be incorporated in the FY25 budget to augment tax revenues by 0.5 percent of the GDP, it added.
At the same time, a medium-and-long-term revenue strategy, with an accompanying implementation framework, should guide future reforms.
The IMF also recommended that reducing subsidies, improving expenditure efficiency, and managing fiscal risks will allow for additional spending on social safety nets and growth-enhancing investment.
"Reducing banking sector vulnerabilities remains a priority. Efforts to implement the non-performing loan reduction strategy should help support the growing financing needs of the economy," it said.
At the same time, the Bangladesh Bank should continue the transition to risk-based supervision to enhance financial sector resilience while continuing legal reforms to improve corporate governance and regulatory frameworks, it added.
Looking ahead, domestic capital market development will be instrumental in mobilising long-term financing to support growth, it further said.
ROOPPUR PLANT REPAYMENT PERIOD MAY BE EXTENDED
Finance Adviser Salehuddin also shared yesterday that Russia is positive about extending the loan repayment period for the Rooppur Nuclear Power Plant project.
However, they will only make a decision after the plant begins operations, he said.
Following a recent reshuffle to the advisory council of the interim government, Salehuddin was additionally charged with the Ministry of Science and Technology.
He started holding meetings with ministry officials yesterday.
Last week, Russian Ambassador to Dhaka Alexander A Nikolae paid a courtesy call to Salehuddin.
Responding to a query from journalists on the loan repayment schedule for the Rooppur plant, Salehuddin said: "We told them about the issue, and they told us to start operations [of the plant]."
Asked whether any cost-cutting initiatives would be taken, he said they are yet to assess it. He added that the plant would be operational soon.
The total loan for the project is $12.65 billion, according to an agreement signed with Russia in 2016.
At present, Bangladesh is paying $110 million yearly in two instalments with interest.
The 10-year grace period for the loan will end in March 2027. After that, Bangladesh must pay $390 million in two instalments every six months against the principal amount.
Recently, Bangladesh proposed to start making repayments against the principal amount in 2029 instead of 2027.
The International Monetary Fund (IMF) is positive about lending an additional $3 billion to Bangladesh but the multilateral lender wants to know what reforms the interim government is planning to take.
The topic came up during Finance Adviser Salehuddin Ahmed's maiden meeting with the Washington-based lender on Thursday.
Chris Papageorgiou, chief of the IMF staff mission that is overseeing the $4.7 billion loan programme for Bangladesh, led the IMF team at the virtual meeting, which was also attended by Finance Secretary Khairuzzaman Mozumder.
Speaking with journalists at the Secretariat yesterday, Salehuddin said the IMF wanted to know about reform plans and whether the tax-to-GDP ratio would increase.
"I told them 'definitely'," he added.
He said the Bangladesh Bank has already moved for the $3 billion loan proposal, adding that details would be discussed when an IMF mission visits Bangladesh later this month.
Following his appointment as Bangladesh Bank governor last month, Ahsan H Mansur initiated talks over an additional loan from the IMF to repay foreign liabilities and boost foreign exchange reserves.
IMF officials informed the finance ministry and central bank officials that they are assessing how much it can lend to Bangladesh without exceeding the quota for the country.
According to finance ministry calculations, Bangladesh can take another $3 billion without exceeding the quota.
A meeting on the loan arrangement could be held on the sidelines of the World Bank-IMF annual meeting in Washington in October, an event Bangladesh's finance adviser and central bank governor are likely to be a part of.
The IMF has so far released $2.3 billion under the $4.7 billion loan programme since it was approved in January last year.
The interim government took charge amid high inflation and depleting foreign currency reserves, issues that have been prevalent for almost two years.
Inflation remained high in July, with the consumer price index rising by 1.94 basis points to 11.66 percent while food inflation crossed 14 percent in July for the first time in 13 years.
Meanwhile, Bangladesh's foreign exchange reserves, which stood at more than $40 billion in July 2022, almost halved to $20.5 billion on August 21, according to the IMF's BPM6.
The interim government has taken some measures to tackle the situation, such as hiking the policy rate and implementing some strict measures for the banking sector.
Earlier, the IMF mission suggested various reform measures.
Considering Bangladesh's low tax-to-GDP ratio, the multilateral lender said it is imperative to prioritise sustainable revenue generation to bolster investments in social welfare and development initiatives.
To this end, tangible tax policy and administrative measures should be incorporated in the FY25 budget to augment tax revenues by 0.5 percent of the GDP, it added.
At the same time, a medium-and-long-term revenue strategy, with an accompanying implementation framework, should guide future reforms.
The IMF also recommended that reducing subsidies, improving expenditure efficiency, and managing fiscal risks will allow for additional spending on social safety nets and growth-enhancing investment.
"Reducing banking sector vulnerabilities remains a priority. Efforts to implement the non-performing loan reduction strategy should help support the growing financing needs of the economy," it said.
At the same time, the Bangladesh Bank should continue the transition to risk-based supervision to enhance financial sector resilience while continuing legal reforms to improve corporate governance and regulatory frameworks, it added.
Looking ahead, domestic capital market development will be instrumental in mobilising long-term financing to support growth, it further said.
ROOPPUR PLANT REPAYMENT PERIOD MAY BE EXTENDED
Finance Adviser Salehuddin also shared yesterday that Russia is positive about extending the loan repayment period for the Rooppur Nuclear Power Plant project.
However, they will only make a decision after the plant begins operations, he said.
Following a recent reshuffle to the advisory council of the interim government, Salehuddin was additionally charged with the Ministry of Science and Technology.
He started holding meetings with ministry officials yesterday.
Last week, Russian Ambassador to Dhaka Alexander A Nikolae paid a courtesy call to Salehuddin.
Responding to a query from journalists on the loan repayment schedule for the Rooppur plant, Salehuddin said: "We told them about the issue, and they told us to start operations [of the plant]."
Asked whether any cost-cutting initiatives would be taken, he said they are yet to assess it. He added that the plant would be operational soon.
The total loan for the project is $12.65 billion, according to an agreement signed with Russia in 2016.
At present, Bangladesh is paying $110 million yearly in two instalments with interest.
The 10-year grace period for the loan will end in March 2027. After that, Bangladesh must pay $390 million in two instalments every six months against the principal amount.
Recently, Bangladesh proposed to start making repayments against the principal amount in 2029 instead of 2027.
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Earning remittance senders' trust
Remittance, the second biggest source of Bangladesh's foreign currency earning after exports, the expatriate workers send home may vary in amounts from time to time. The variation depends on multiple factors. Last month, for instance, the homebound remittance recorded a 39 per cent rise in comparis
Earning remittance senders' trust
Published :
Sep 03, 2024 23:03
Updated :
Sep 03, 2024 23:03
Remittance, the second biggest source of Bangladesh's foreign currency earning after exports, the expatriate workers send home may vary in amounts from time to time. The variation depends on multiple factors. Last month, for instance, the homebound remittance recorded a 39 per cent rise in comparison to what it was in August 2023 at US$2.22 billion. An immediate explanation for this surge in remittance receipt may be the change in government following the ouster of thes former government. Notably, in July last, when the deposed Hasina government was still in power and, in a bid to suppress the student movement, shut down broadband internet service for five consecutive days, the homebound remittance flow took a jolt as it recorded a receipt of 10 months' low at US$1.90 billion. Also, the mobile internet service was shut off for 10 days in a row.
To make matters worse, the banks also remained closed between July 19 and July 23. No doubt, disruption of the internet service and bank closure played a part in reduced receipt of remittance from overseas migrant workers. But there were also reports that the expatriate workers as a show of solidarity with the agitating students stopped sending remittance. Whatever the case may be, the surge in remittance inflow is indeed a good augury for the incumbent interim government of Dr Yunus. With the remittance flow looking up, this may be considered a sign of the expatriate workers' confidence in the new interim government.
Political changes apart, there are also other issues that might have factored in this welcome boost to the homeward remittance flow. The measure that the Bangladesh Bank (BB), adopted shortly after the interim government's taking office did also contribute to increased remittance flow. This included the BB's raising the price of USD by 2.5 per cent with the result that the greenback's value increased by Tk 3.0 to Tk120. Obviously, this higher exchange rate did encourage remitters to send more money through the official channel instead of hundi. It is worth noting here that on May 8 last, the BB withdrew the then-prevailing fixed exchange rate regime and introduced the so-called crawling peg system for buying and selling US dollars on the spot market in Bangladesh Taka (BDT) and set the mid-rate at Tk117 for every USD. However, under the changed political circumstances last month, commercial banks, both state-owned and private, received their shares of remittance dollars in varied amounts that in some cases reflected the remitters' outlook towards the recipient banks in question. Six private banks owned by the notorious S. Alam group, for instance, reportedly, recorded 85 per cent drop in the receipt of remittance money. Most state-owned banks, on the other hand, reported an impressive growth in remittance receipts last month.
Overall, these developments have definitely come as a relief for the economy, particularly at a time when the country's foreign exchange reserve has been under strain. Now the latest BB data released on Sunday last show that the country's forex reserves recorded a rise by US$110 million from US$20.49 billion to US$20.60 billion within a span of four weeks between July 31 August 28. Admittedly, this is a significant development given that in May last the forex reserves fell to US$18.72 billion. However, remittance inflow is prone to fluctuations, so it would be prudent to observe the trend for some time to reach a firm conclusion. Meanwhile, the interim government would do well to improve service for the expatriate workers at the embassies in host countries and the airports at home. That would help build their trust in the present government.
Published :
Sep 03, 2024 23:03
Updated :
Sep 03, 2024 23:03
Remittance, the second biggest source of Bangladesh's foreign currency earning after exports, the expatriate workers send home may vary in amounts from time to time. The variation depends on multiple factors. Last month, for instance, the homebound remittance recorded a 39 per cent rise in comparison to what it was in August 2023 at US$2.22 billion. An immediate explanation for this surge in remittance receipt may be the change in government following the ouster of thes former government. Notably, in July last, when the deposed Hasina government was still in power and, in a bid to suppress the student movement, shut down broadband internet service for five consecutive days, the homebound remittance flow took a jolt as it recorded a receipt of 10 months' low at US$1.90 billion. Also, the mobile internet service was shut off for 10 days in a row.
To make matters worse, the banks also remained closed between July 19 and July 23. No doubt, disruption of the internet service and bank closure played a part in reduced receipt of remittance from overseas migrant workers. But there were also reports that the expatriate workers as a show of solidarity with the agitating students stopped sending remittance. Whatever the case may be, the surge in remittance inflow is indeed a good augury for the incumbent interim government of Dr Yunus. With the remittance flow looking up, this may be considered a sign of the expatriate workers' confidence in the new interim government.
Political changes apart, there are also other issues that might have factored in this welcome boost to the homeward remittance flow. The measure that the Bangladesh Bank (BB), adopted shortly after the interim government's taking office did also contribute to increased remittance flow. This included the BB's raising the price of USD by 2.5 per cent with the result that the greenback's value increased by Tk 3.0 to Tk120. Obviously, this higher exchange rate did encourage remitters to send more money through the official channel instead of hundi. It is worth noting here that on May 8 last, the BB withdrew the then-prevailing fixed exchange rate regime and introduced the so-called crawling peg system for buying and selling US dollars on the spot market in Bangladesh Taka (BDT) and set the mid-rate at Tk117 for every USD. However, under the changed political circumstances last month, commercial banks, both state-owned and private, received their shares of remittance dollars in varied amounts that in some cases reflected the remitters' outlook towards the recipient banks in question. Six private banks owned by the notorious S. Alam group, for instance, reportedly, recorded 85 per cent drop in the receipt of remittance money. Most state-owned banks, on the other hand, reported an impressive growth in remittance receipts last month.
Overall, these developments have definitely come as a relief for the economy, particularly at a time when the country's foreign exchange reserve has been under strain. Now the latest BB data released on Sunday last show that the country's forex reserves recorded a rise by US$110 million from US$20.49 billion to US$20.60 billion within a span of four weeks between July 31 August 28. Admittedly, this is a significant development given that in May last the forex reserves fell to US$18.72 billion. However, remittance inflow is prone to fluctuations, so it would be prudent to observe the trend for some time to reach a firm conclusion. Meanwhile, the interim government would do well to improve service for the expatriate workers at the embassies in host countries and the airports at home. That would help build their trust in the present government.
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No action plan yet to explore blue economy
Quite a few years have passed since the settlement of maritime disputes with neighbours in the designated international court. Still, there is nothing in view to suggest any mentionable work programme to explore the vast resources of the ocean- blue economy as it is fondly dubbed. Clearly, wh
No action plan yet to explore blue economy
Wasi Ahmed
Published :
Sep 03, 2024 22:58
Updated :
Sep 03, 2024 22:58
Quite a few years have passed since the settlement of maritime disputes with neighbours in the designated international court. Still, there is nothing in view to suggest any mentionable work programme to explore the vast resources of the ocean- blue economy as it is fondly dubbed. Clearly, what the international court's verdict implied was a horizon waiting to be explored and exploited with well planned policies and actions.
This has not happened. Up until now, there has not been any move forward except for a small 'cell' set up under the Energy Division of the government. The cell -- Blue Economy Cell (BEC) -- was set up on a temporary basis under the Energy Division. The BEC remains a small organ headed by a director general with only a few officials and employees appointed on temporary basis.
Terming it a frustrating situation, energy experts have said that this is because of the lack of interest in exploring resources including oil, gas and fisheries in the bay. They stressed the need for multi-client seismic survey in offshore areas. Without acquiring seismic data, according to them, it is impossible to make any headway in the assessment of our share in the resources in the Bay of Bengal.
It may be recalled that Bangladesh got 19,467 square kilometres out of the 25,602 sq km disputed area from Indian claimed area in the Bay of Bengal. In addition, the country sustained a claim to 200 nautical miles for exclusive economic zone and territorial rights in the Bay against Myanmar's claim. But things have not moved farther in terms of preparations, and needless to say, the subject demanding high level of expertise should have been left to experts to suggest how to go about it. The former government reportedly formed a 25-member 'Coordination Committee on Sea Resources Exploration and Fair Management' headed by Principal Secretary to the Prime Minister's Office years ago for taking up strategic planning in this regard. The committee, comprising top government officials and representatives from relevant organisations, was supposed to sit every three months, but it is not known whether it framed any framework for strategies. On the other hand, the BEC, too, could not make any worthwhile move.
There are talks of setting up a blue economy authority to deal with the massive development activities required in this regard in a planned way. Experts opine that moving ahead methodically and meaningfully could generate businesses worth $40 billion in the coming days from untapped sea resources. Globally, according to experts, blue economy has resources worth $24 trillion, but so far only around $3.0 trillion worth of resources has been utilised.
Ocean economy is an integral part of today's development paradigm, emphasising greener and more sustainable and inclusive economic development paths consistent with the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs), especially Goal 14 (conservation and sustainable use of oceans, seas and marine resources for sustainable development).
The need for a well-empowered authority for methodical exploration of the sea resources cannot be overemphasised. Experts strongly support the idea because besides putting in place a general framework of activities including implementation and monitoring, a high level body such as the blue economy authority could be the appropriate agency to specifically outline proper business modules for investors in a planned way. Many sectors of the economy can immensely benefit from the marine resources. These include -- fisheries, mineral resources, pharmaceuticals, transportation, energy, foods, health and tourism etc. According to experts, the country's expanded sea area is almost 81 per cent of the entire mainland. The country has a total of 660 km-long sea boundary, but the fishing vessels cannot catch fish beyond 70 km. It means we have no access to almost 600 km. That's why fishing vessels from India and Myanmar often come to catch fishes from our territory. Not only that, our fishing net cannot go below 200 feet of water, whereas the high-valued fishes like Tuna and Swordfish are available in the deep water.
In this connection, it may not be out of place to mention that the UNCTAD has come up with some proactive moves to facilitate countries in need of financial and technical resources to seek assistance under what is called OETS (ocean economy and trade strategy) project. The OETS project aims to support developing countries in realising economic benefits from the sustainable use of marine resources. It will assist coastal and developing countries in promoting sustainable trade of products and services in ocean-based economic sectors by analysing, elaborating and adopting evidence-based and policy-coherent ocean economy and trade strategies and contribute to building national capacities to implement them. Some countries have already expressed interest to be part of the project. Bangladesh may also like to examine the scope for reaping benefits from the UNCTAD project.
Wasi Ahmed
Published :
Sep 03, 2024 22:58
Updated :
Sep 03, 2024 22:58
Quite a few years have passed since the settlement of maritime disputes with neighbours in the designated international court. Still, there is nothing in view to suggest any mentionable work programme to explore the vast resources of the ocean- blue economy as it is fondly dubbed. Clearly, what the international court's verdict implied was a horizon waiting to be explored and exploited with well planned policies and actions.
This has not happened. Up until now, there has not been any move forward except for a small 'cell' set up under the Energy Division of the government. The cell -- Blue Economy Cell (BEC) -- was set up on a temporary basis under the Energy Division. The BEC remains a small organ headed by a director general with only a few officials and employees appointed on temporary basis.
Terming it a frustrating situation, energy experts have said that this is because of the lack of interest in exploring resources including oil, gas and fisheries in the bay. They stressed the need for multi-client seismic survey in offshore areas. Without acquiring seismic data, according to them, it is impossible to make any headway in the assessment of our share in the resources in the Bay of Bengal.
It may be recalled that Bangladesh got 19,467 square kilometres out of the 25,602 sq km disputed area from Indian claimed area in the Bay of Bengal. In addition, the country sustained a claim to 200 nautical miles for exclusive economic zone and territorial rights in the Bay against Myanmar's claim. But things have not moved farther in terms of preparations, and needless to say, the subject demanding high level of expertise should have been left to experts to suggest how to go about it. The former government reportedly formed a 25-member 'Coordination Committee on Sea Resources Exploration and Fair Management' headed by Principal Secretary to the Prime Minister's Office years ago for taking up strategic planning in this regard. The committee, comprising top government officials and representatives from relevant organisations, was supposed to sit every three months, but it is not known whether it framed any framework for strategies. On the other hand, the BEC, too, could not make any worthwhile move.
There are talks of setting up a blue economy authority to deal with the massive development activities required in this regard in a planned way. Experts opine that moving ahead methodically and meaningfully could generate businesses worth $40 billion in the coming days from untapped sea resources. Globally, according to experts, blue economy has resources worth $24 trillion, but so far only around $3.0 trillion worth of resources has been utilised.
Ocean economy is an integral part of today's development paradigm, emphasising greener and more sustainable and inclusive economic development paths consistent with the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs), especially Goal 14 (conservation and sustainable use of oceans, seas and marine resources for sustainable development).
The need for a well-empowered authority for methodical exploration of the sea resources cannot be overemphasised. Experts strongly support the idea because besides putting in place a general framework of activities including implementation and monitoring, a high level body such as the blue economy authority could be the appropriate agency to specifically outline proper business modules for investors in a planned way. Many sectors of the economy can immensely benefit from the marine resources. These include -- fisheries, mineral resources, pharmaceuticals, transportation, energy, foods, health and tourism etc. According to experts, the country's expanded sea area is almost 81 per cent of the entire mainland. The country has a total of 660 km-long sea boundary, but the fishing vessels cannot catch fish beyond 70 km. It means we have no access to almost 600 km. That's why fishing vessels from India and Myanmar often come to catch fishes from our territory. Not only that, our fishing net cannot go below 200 feet of water, whereas the high-valued fishes like Tuna and Swordfish are available in the deep water.
In this connection, it may not be out of place to mention that the UNCTAD has come up with some proactive moves to facilitate countries in need of financial and technical resources to seek assistance under what is called OETS (ocean economy and trade strategy) project. The OETS project aims to support developing countries in realising economic benefits from the sustainable use of marine resources. It will assist coastal and developing countries in promoting sustainable trade of products and services in ocean-based economic sectors by analysing, elaborating and adopting evidence-based and policy-coherent ocean economy and trade strategies and contribute to building national capacities to implement them. Some countries have already expressed interest to be part of the project. Bangladesh may also like to examine the scope for reaping benefits from the UNCTAD project.
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