[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

IMF Loan: Govt may miss two key targets set for fourth tranche

The government is likely to ask the International Monetary Fund (IMF) to revise down two key targets related to Net International Reserves (NIR) and tax revenue collection, set for June this year for the release of the fourth tranche of its $4.7 billion loan, finance ministry officials said.

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IMF Loan: Govt may miss two key targets set for fourth tranche

The government is likely to ask the International Monetary Fund (IMF) to revise down two key targets related to Net International Reserves (NIR) and tax revenue collection, set for June this year for the release of the fourth tranche of its $4.7 billion loan, finance ministry officials said.

An eight-member IMF mission, led by Chris Papageorgiou, has been in Dhaka since April 24 for the second review of the loan programme before releasing the third tranche worth $681 million, expected in June.

The mission held a series of meetings with key government bodies, including the finance ministry, Bangladesh Bank and National Board of Revenue (NBR) over the last few days, and is now assessing Bangladesh's progress related to the conditions set for the third tranche.

The meetings also discussed the key conditions for the fourth and fifth tranches, officials said.

The fourth tranche is expected in December this year.

Yesterday, the IMF mission held a meeting with government officials and came up with a mid-term review on the outcome of the meetings held in the past few days.

Already, finance ministry and Bangladesh Bank officials communicated with the IMF mission that the government may fail to meet the NIR and revenue collection targets set for the fourth tranche on time.

For the third tranche, Bangladesh has met all but one conditions related to NIR set for December last year. The revised NIR target was $17.78 billion in December, but the country fell short by $58 million.

For the fourth tranche, the IMF set the NIR target for June this year at $20.1 billion.

As its loan condition, IMF considers NIR by deducting about $3 billion from the gross reserves. So, if Bangladesh is to meet the $20.1 billion NIR condition, its gross reserves have to cross $23 billion in June.

However, the reserve situation has not improved much since the commencement of the loan programme January last year. The country's gross forex reserves have been around $20 billion in recent months, as per an IMF calculation. It was $19.97 billion on April 24.

The government had expected the reserve to improve after the January 7 election, but it did not.

The central bank blames it on the huge deficit of financial account of balance of payment, which crossed $8 billion in the first eight months of the current fiscal year.

According to the IMF assessment, the reason behind the deficit in the financial account is that the exchange rate is not market-based. As a result, export proceeds are not coming to the country while remittances are coming through unofficial channels.

A finance ministry official said even if IMF revised down the NIR condition, it could put various conditions to make the exchange rate market-oriented.

Meanwhile, although Bangladesh has met the floor tax revenue collection target for the third tranche, it may fail to meet the target of collecting Tk 3,94,530 crore by June set for the fourth tranche, finance ministry sources said.

To meet the June target, 20.39 percent growth in tax revenue collection is required. However, in the first seven months of the current fiscal year, tax revenue collection growth was 12 percent.

As per the finance ministry estimate, highest Tk 3,80,000 crore could be collected by the end of June.

For the $4.7 billion loan, the IMF has set two types of conditions -- six performance conditions and several structural conditions.

For the next tranches, the government has been discussing structural conditions with IMF.

A finance ministry official said IMF may set a condition for the government to reduce its spending on subsidy.

The government has already introduced an automated pricing formula for fuel as it no longer subsidises the sector.

However, as the government still provides subsidy for electricity and gas, the IMF may set conditions to follow a timeline for gradually reducing subsidy for these two items.

Already, IMF has collected data on government spending in subsidy for electricity and gas.

The global lender has also put several conditions for NBR to increase revenue collection.

Under one condition, NBR has to finalise its medium- and long-term revenue strategies covering indirect and direct taxes and accompanying implementation framework by September this year.

Another condition is requirement of e-return filing and online payment for tax years starting after June 30, 2024, for all large corporations and any corporation that claims any tax performance (such as an exemption, lower tax rate, or tax holiday) by the end of June 2025.

Also, IMF may put a condition to reduce default loan including setting a ceiling on the percentage of classified loan.​

 

[Saif]

Move to check forex reserve depletion: Govt wooing quick release of foreign loan

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Move to check forex reserve depletion: Govt wooing quick release of foreign loan
30 Apr 2024, 12:00 am

Staff Reporter :

The government is waxing its policy to obtain more foreign loans as a strategic measure to prevent the depletion of the country's foreign exchange reserves and to bolster the supply of dollars.

The Economic Relations Department (ERD) under the Finance Ministry is actively engaging with development partners, aiming to secure at least $1 billion from pledged foreign loans by June.

Ministry officials have disclosed that they are urging development partners to expedite the disbursement process for pledged funds from foreign-funded projects, emphasising the need for ease and speed in accessing these funds.

Additionally, the government is vigorously advocating for flexible or low-interest loans and assistance. Furthermore, there are plans to expand the scope of acquiring hard-term or rigid loans to strengthen foreign exchange management.

Despite efforts to address the ongoing dollar crisis, which has persisted for more than two years, challenges remain.

Remittance flows and export earnings are not showing significant improvement to alleviate the crisis. Meanwhile, the inability to reduce the cost of imports exacerbates the dollar shortage, posing a significant challenge for policymakers, especially with the government facing a current account deficit.

Given the circumstances, external borrowing is viewed as a viable solution to mitigate the deficit. Over the past few years, the government has increasingly leaned towards securing hard loans, a trend that is expected to continue, according to ERD officials.

At the same time, initiatives have been taken to increase the flow of foreign currency to deal with the long-standing dollar crisis in the country, implement foreign-aided projects, and speed up loan repayments, they said.

Policymakers believe that the quick disbursement of the loans will help to increase foreign exchange reserves as well as the dollar supply in the country.

Meanwhile, the Planning Commission feels that proper utilisation of foreign loans and grants plays a helpful role in maintaining sustainable growth and a balanced trade situation.

Economists said that it is very important to take measures to disburse the foreign aid at the time, as there is no alternative to increasing the supply of dollars to overcome the dollar crisis and to maintain foreign exchange reserves.

Dr. Zahid Hussain, former lead economist of the World Bank Dhaka office, told The New Nation, "As the reserves are not growing much relying on remittances and export earnings, the government has no alternative to being dependent on foreign loans. If the flow of foreign loans rises, the flow of dollars in the country will increase."

According to the latest report prepared by the ERD on the current situation of the country's foreign debt, the Asian Development Bank (ADB) is at the top of the list of foreign loan disbursements to Bangladesh.
ADB disbursed $1.4 billion in the first nine months (July–March) of the current fiscal year.

Japan is in second place, as the country gave $1.35 billion. The World Bank, which is in third place, has released $0.96 billion. Russia and China are ranked fourth and fifth, respectively. These two countries have disbursed $0.8 billion and $0.36 billion, respectively, during the mentioned period.​

 

[Saif]

IMF prescribes ending tax exemptions

It recommended the National Board of Revenue (NBR) discontinue the tax holiday for the information and communication technology industry and abolish the tax benefit for mining and petroleum extracting companies.

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IMF prescribes ending tax exemptions

The International Monetary Fund (IMF) has prescribed that Bangladesh must abolish VAT and income tax exemptions in various areas in order to accelerate revenue collections from the next fiscal year.

It recommended the National Board of Revenue (NBR) discontinue the tax holiday for the information and communication technology industry and abolish the tax benefit for mining and petroleum extracting companies.

The multilateral agency also proposed imposition of a 15 percent VAT on all businesses with over Tk 3 crore annual turnover and offering them input tax credits. It suggested elimination of truncated VAT rates to accelerate overall revenue collection.

The recommendations were made by the visiting mission of the IMF during a meeting with the NBR at the latter's headquarters in Dhaka.

The delegation is in the capital to review the progress of the $4.7 billion loan programme before releasing around $681 million in the third tranche in May to help the country overcome severe economic challenges.

The team is meeting officials of the finance division, the Bangladesh Bank, the NBR and other government bodies.

Bangladesh's revenue as a share of GDP is among the lowest in the world and significantly below peers. This has significantly limited the fiscal space necessary for critical public investments and social sector spending.

As part of the conditions attached with the IMF loan approved in January last year, the NBR will have to collect Tk 394,530 crore in the current fiscal year ending in June. Until March, the tax collector raised Tk 259,866 crore, posting a 15 percent year-on-year growth.

In a presentation, the NBR's income tax wing projected to collect Tk 15,300 crore in tax in 2024-25 through policy measures, including enforcing tax compliance and limiting tax expenditures such as exemptions and rebates.

The IMF suggested the NBR scrap the VAT exemptions for clothing and footwear, liquefied petroleum gas (LPG), and mobile phone manufacturing.

At present, customers pay 7.5 percent VAT on clothing. However, they do not need to pay any VAT for sandals priced below Tk 150 a pair.

The existing VAT on LPG cylinders is 5 percent, and locally manufactured mobile phones are subject to a 2 percent to 7.5 percent VAT.

The IMF wants the NBR to replace these reduced rates with a 15 percent VAT.

If the tax administration ends the tax expenditures on clothing, footwear, LPG, mobile phones, and other products, it would provide additional taxes that are equivalent to 0.31 percent of gross domestic product (GDP), according to an estimate by the IMF presented at the meeting.

An NBR official said they would implement IMF's recommendations gradually since any abrupt move would affect domestic trade and industries.

"We must take into account the country's socio-economic situation before withdrawing tax exemptions fully."

The IMF urged the VAT wing to submit the VAT exemption report and the medium and long-term revenue strategy by June. It wants the NBR to move away from multiple VAT rates and impose a 15 percent standard rate.

The official, however, said multiple VAT rates exist in many countries, including those in the European Union.

"If they can have multiple VAT rates, why can't Bangladesh have the same? We are not avoiding the global best practices."

The Washington-based lender recommended advancing short and medium-term reforms in the next budget and called for fresh measures that would fetch revenues worth 0.5 percent of GDP in FY25.

It set new structural benchmarks for the NBR and suggested the revenue administration finalise a medium- and long-term revenue strategy covering indirect and direct taxes and an accompanying implementation framework by September this year.

The IMF called for rolling out e-return filing and the online payments facility for large corporations and companies that claim tax preferences such as exemptions, lower rates, or a tax holiday.​

 

[Saif]

Bangladesh’s financial account not performing well: IMF

The financial account of Bangladesh is not performing very well, said Krishna Srinivasan, the director of the Asia and Pacific department of the International Monetary Fund, during a virtual briefing from Singapore on Tuesday...

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Bangladesh's financial account not performing well: IMF
Bangladesh Sangbad Sangstha . Dhaka 30 April, 2024, 22:50

The financial account of Bangladesh is not performing very well, said Krishna Srinivasan, the director of the Asia and Pacific department of the International Monetary Fund, during a virtual briefing from Singapore on Tuesday.

'So, in some sense, you could see the depletion in the foreign exchange reserve, and the taka was coming under pressure,' he mentioned.

He said Bangladesh should allow greater flexibility in its exchange rate to address issues in its external account, particularly the deficit in the financial account.

'Once you implement this, you will see a greater sense of stability returning to the external account,' he added.

Srinivasan said that with reforms in the exchange rate and improvements in fiscal policy, Bangladesh should see a more sustained recovery from the crisis that every country in the region has faced due to multiple shocks.

Bangladesh has achieved significant improvement in macroeconomic performance, he said.

'Bangladesh was a country that proactively showed the IMF support for the country's home-grown programmes, which have two components — one is macroeconomic stability and the other is addressing the longer-term structural issues related to climate change. On macroeconomic performance, so far there have been significant improvements,' said Srinivasan.

He made the remarks in response to a question at the briefing on the regional economic outlook for Asia and the Pacific.

He said there have been improvements in the monetary policy framework and fiscal performance.

'I think where Bangladesh was struggling was with the current account, which was just balanced partly because there was restraint on imports,' he added.​

 

[Saif]

Frequent loan rescheduling fuels inflation: Farashuddin

Former Bangladesh Bank governor Mohammed Farashuddin on Thursday blamed the frequent rescheduling of classified loans for high inflation persisting in the country...

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Frequent loan rescheduling fuels inflation: Farashuddin
Staff Correspondent 02 May, 2024, 22:25

Mohammed Farashuddin | — Collected photo

Former Bangladesh Bank governor Mohammed Farashuddin on Thursday blamed the frequent rescheduling of classified loans for high inflation persisting in the country.

He made the remark during a programme organised by the Economic Reporters' Forum.

Farashuddin said that loan rescheduling created a liquidity crisis for banks.

To compensate, the central bank is forced to print money, which he believes contributes to inflation instead of curbing it.

He also criticised the ineffectiveness in recovering defaulted loans.

The former governor observed that a crucial problem he believes was originated in 1992 – issuing long-term loans using short-term deposits. He suggested businesses explore the stock market as an alternative source for long-term financing.

Farashuddin expressed concern about the apparent connection between loan defaulters, tax evaders and money launderers.

The former BB governor said that it seemed the government was silent on the money laundering.

The publication of money launderers' list was discussed in parliament, but has not published yet.

Along with the government, the International Monetary Fund is silent on trafficking, which he described as extremely detrimental to the country.

Regarding inflation, Farashuddin stated that despite the 9-per cent inflation rate, government ministers were claiming that people were doing well, which he believes was far from reality.

It could be said that people are faring well in this inflationary environment, he said.

He emphasised that the wealth gap between the rich and the poor has widened, and addressing this disparity requires not only economic but also political measures.

Farashuddin criticised the use of multiple exchange rates, stating that it benefits only intermediaries.

He highlighted that other countries have successfully curbed inflation, raising concerns about Bangladesh's lack of progress.

The former governor criticised the harsh treatment of small loan defaulters, contrasting it with the apparent inaction against those responsible for larger defaults.

He also said the waiver of interest on loans was not a good thing.

He said that merger is an international practice of acquiring a weak bank by a good a bank.

However, both banks must give their consent for the merger as a forced one will be wrong, he said.

He also said that there were other ways than mergers to turn a weak bank into a good one.

ERF president Mohammad Refayet Ullah chaired, while its general secretary Abul Kashem conducted the event.​

 

[Saif]

What does new remittance, export data mean for economy?

The fall in exports in April led to a slowdown in overall exports, which hit 3.93 percent in the ten months since July, the first month of the current fiscal year, compared to 4.39 percent in the July-March period of the same fiscal.

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What does new remittance, export data mean for economy?

The slowdown in exports is not good news at a time when Bangladesh needs foreign currency to overcome both the pressure on its external account and sluggish growth, said two economists today.

The reaction comes as export and remittance, two vital sources of foreign exchange, showed mixed readings.

In April, exports dropped first time in four months while remittances grew 21 percent year-on-year, official data showed.

The fall in exports in April led to a slowdown in overall exports, which hit 3.93 percent in the ten months since July, the first month of the current fiscal year, compared to 4.39 percent in the July-March period of the same fiscal.

Meanwhile, a rise took the overall growth of remittances to 8 percent in the July-April period.

"While the growth of remittance is welcoming, the slowdown in export is not a good sign for the economic growth and balance of payments (BoP)," said Sadiq Ahmed, vice-chairman of the Policy Research Institute (PRI) of Bangladesh.

Economic growth will not pick up without an acceleration in exports, he added, saying that more export is needed to address foreign currency crunch.

Bangladesh has been suffering from the depletion of its foreign exchange reserves and the devaluation of the taka against the US dollar for more than two years. The greenback crisis has persisted despite authorities taking measures to curb imports.

Bangladesh's gross domestic product (GDP), which posted over 6 percent annual average growth in the last 10 years, increased 5.78 percent in the fiscal year 2023-24.

Last month, the International Monetary Fund revised down its GDP forecast to 5.7 percent in 2023-24, from 6 percent forecasted in October amid local and global economic challenges.

The World Bank put the GDP growth figure at 5.6 percent for the same year owing to numerous factors, including high inflation.

Mustafa K Mujeri, executive director at the Institute for Inclusive Finance and Development (InM), said if the slow growth rate in export and remittance earnings prevails, the economic crisis will deepen.

He said although there had been growth in exports and remittances in the July-April period of the current fiscal year, it is not adequate enough to solve the existing dollar crisis.

"It also can impact the manufacturing sector negatively, thus the whole economy, because the industrial sector needs foreign exchange to import raw materials," said Mujeri, a former director general of the Bangladesh Institute of Development Studies and a former chief economist of Bangladesh Bank.

"In this situation, the government needs to rethink and review the export policy and find new and innovative ways to boost export earnings."

Ahmed said supportive policies should be adopted to diversify and boost exports.​

 

[Saif]

LDC graduation: ADB for promoting export diversification

The Asian Development Bank (ADB), in its latest policy brief, has given several recommendations for promoting export diversification of Bangladesh. Given the urgency of the current economic situation, focusing on trade policy issues and improving export competitiveness should be a central part of

thefinancialexpress.com.bd

LDC graduation: ADB for promoting export diversification
FTAs within a short period of time will not be feasible for Bangladesh, it says
FE ONLINE DESK
Published :
Apr 30, 2024 13:33
Updated :
Apr 30, 2024 13:33

The Asian Development Bank (ADB), in its latest policy brief, has given several recommendations for promoting export diversification of Bangladesh.

Given the urgency of the current economic situation, focusing on trade policy issues and improving export competitiveness should be a central part of Bangladesh's reform agenda, it said.

In the context of Bangladesh's upcoming LDC graduation in 2026 and the current economic challenges, there is a growing realisation that policy reforms to enhance export competitiveness might receive stronger domestic support than in the past, ADB said.

While national planning documents like the 6th, 7th, and 8th Five-Year Plans have recommended relevant reforms, these have not been adequately prioritised for implementation, according to the document, reports UNB.

The policy brief, "Expanding and Diversifying Exports in Bangladesh: Challenges and the Way Forward", is authored by Mohammad Abdur Razzaque, an economist (Consultant), South Asia Department (SARD), ADB; Rabiul Islam Rabi, Research Analyst (Consultant) SARD, ADB; and Barun Kumar Dey, Senior Economics Officer, SARD, ADB.

Despite the success in garments exports, Bangladesh's overall export volume remains modest and suffers from a staggering concentration.

Recent unfavourable macroeconomic developments and the impending graduation from least developed country (LDC) status, underscore the importance of expanding and diversifying exports.

High tariff protection favouring import-competing sectors, coupled with weak domestic product standards and compliance, have created policy-induced disincentives for non-readymade garments exports.

With over 70 per cent of Bangladesh's exports benefiting from LDC-specific trade preferences, graduation could impact export competitiveness.

Improving export competitiveness and achieving diversification will necessitate various actions, including tackling policy induced anti-export bias, enhancing product quality and standards, attracting foreign direct investment to connect with global supply chains, conducting prudent exchange rate management to promote external competitiveness, dealing with sector-specific supply-side constraints, and addressing the high business costs.

Proactively seeking trade preferences post-LDC graduation is also crucial for sustaining export competitiveness.

POLICY RECOMMENDATIONS

Tackling policy-induced export disincentives is crucial for export diversification. Bangladesh's protective measures, through high tariffs and para-tariffs, encourage a focus on the domestic market over exports, creating an anti-export bias.

Tariff rationalisation is thus critical in dealing with this policy-induced bias. Lowering tariffs can stimulate domestic manufacturing, potentially balancing any revenue loss from reduced import tariffs.

Enhancing the export performance of non-RMG sectors requires eliminating discriminatory access to policy incentives. The bonded warehouse facilities, in particular, should be granted to all export sectors and units irrespective of whether they are 100% export-oriented or not. Many firms can serve both domestic and international markets, and requiring separate production facilities for exports to access bonded warehouses is impractical. Instead, all exporting firms should have access to bonded warehouses, with import duties adjusted later based on the proportion of goods for domestic and export use. In getting finance, subsidised loans, and other policy support measures, non-RMG sectors should be given equal access.

For non-RMG export items, enhancing product quality and meeting international standards are key for market expansion, as higher standards often yield higher prices. Investing in capacity building to meet international quality and safety standards is essential for potential exporters. Acquiring relevant certifications is critical for building credibility and trust in global markets.

The government can further aid businesses by establishing or supporting accessible testing and certification facilities. Strengthening institutions responsible for quality control and compliance is also crucial, which involves investing in laboratories, equipment, and skilled personnel for efficient testing and certification.

Attracting foreign direct investment can be a driver of export growth and diversification. It can facilitate knowledge and technology transfers and better management practices.

FDI firms are well-integrated into global value chains and can command higher export prices. Bangladesh needs to improve its investment climate, streamline investment procedures, and promote sustainable investment practices to attract foreign investors.

Tackling the high cost of doing business is critical for boosting investment and trade competitiveness. Bangladesh faces a significant disadvantage due to the high cost of doing business.

Weak infrastructure, inefficient inland road transport, complex customs procedures, inadequate port facilities, and inefficient trade logistics contribute to longer lead times and higher costs, which undermine competitiveness.

The two-way shipping costs for exporters importing raw materials and exporting final products exacerbate the problem. Addressing these infrastructural and logistical inefficiencies presents an opportunity to offset some of the losses from the withdrawal of LDC trade preferences and to improve Bangladesh's standing in international markets.

A prudent exchange rate management strategy could significantly enhance export competitiveness, benefiting sectors beyond the RMG industry. Maintaining a competitive and stable exchange rate ensures that exports remain attractively priced in international markets.

This is particularly beneficial for non-RMG exporters who may be trying to establish a foothold in global markets and are more sensitive to price competitiveness. An effectively managed exchange rate can offset some of the cost disadvantages faced by these sectors, making their products more appealing to international buyers.

Addressing the sector-specific supply-side constraints can help with export response from non-RMG sectors. To enhance the supply response of potential export sectors in Bangladesh, it is recommended to address sector-specific supply-side issues through a time-bound action plan.

This plan should be based on the constraints identified in studies like the Diagnostic Trade Integration Study and its 2023 update. The action plan should include specific measures tailored to the unique challenges of each sector, setting clear timelines and responsibilities for implementation.

This targeted approach will ensure that interventions are focused and effective, directly addressing the issues that hinder the productivity and competitiveness of these sectors on the global stage. By systematically tackling these identified constraints, Bangladesh can significantly improve its export performance in these key sectors.

Devising WTO-consistent export-incentive mechanisms is crucial for Bangladesh, given its impending LDC graduation. As export subsidies may not be possible after LDC graduation, learning from non-LDC countries can guide in formulating effective support measures. For example, how the PRC and Vietnam support their export industries can provide important lessons for Bangladesh. Complying with WTO guidelines, especially regarding subsidies and sector-specific support should be important.

Seeking trade preferences beyond LDC graduation comprises an important strategy for export competitiveness. Graduating from the LDC group does not imply the cessation of preferential treatment altogether.

The UK's Developing Countries Trading

Scheme, for instance, will continue to provide improved market access even after LDC graduation. Proactive engagements with the EU may be critical to secure similar preferences. Seeking unilateral trade preferences in the post-graduation period will be essential for Bangladesh, as many competitor countries have taken advantage of free trade agreements (FTAs) to obtain preferential market access.

For instance, Vietnam has secured FTA arrangements with Canada, the EU, and the UK; Cambodia, Myanmar, and Vietnam benefit from duty-free access in India due to the Association of Southeast Asian Nations (ASEAN) free trade agreement; and in Japan and the PRC under the Regional Comprehensive Economic Partnership, among others.

For Bangladesh, striking FTAs within a short period of time will not be feasible. Thus, a renewed focus on retaining trade preferences will be an utmost policy priority.

In preparation for Bangladesh's upcoming LDC graduation, strengthening trade policy and negotiation capabilities to support the export sector is important.

This involves developing a comprehensive capacity-building strategy that focuses on enhancing the skills and knowledge of trade officials, negotiators, and policymakers. It is also important to enhance the capacity of the private sector so it can comprehend the changes in trade preferences and policy space following LDC graduation and thus can take other measures for improving firm-level competitiveness​

 

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Navigating development pathways in the evolving global order

The fundamental principles of a country’s development policy originate from the aspirations of the people through their struggles.

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Navigating development pathways in the evolving global order

VISUAL: REHNUMA PROSHOON

The world, at present, is in an indeterminate state. Covid-19 reaffirmed that no event can be predicted with certainty, and that the entire continuum of any event occurring is possible. There could be known-knowns, known-unknowns, unknown-knowns and unknown-unknowns. Thus, any projected outcomes can be inconclusive, uncertain, chaotic or stochastic. Maximum likelihood estimation or thought experiment could end up like the proverbial Schrödinger's cat—dead and/or alive. A paradoxical trajectory is also a possibility.

The known-unknown quandary has become subtle, with geopolitics and geo-economics added into the development discourse. Thus, knowns and unknowns characterise the global order. The prevalent known-unknown quandary, however, could also create perplexing situations.

These provoke, and agitate us with, many questions. Some of them are: What are the transformational strategies to navigate complexities of the evolving global order? What could be the ways to overcome democratic deficit and governance failure? What are the appropriate approaches for economic diversification for achieving equitable and sustainable development? How will the developing world attain green transition amidst geopolitical tensions and energy politics by charting a path for a planetary resilience? How would such a task be financed?

The fundamental principles of a country's development policy originate from the aspirations of the people through their struggles. Hence, an aspirational development policy is an understanding of the type of society people want to live in. The transformation is deeply rooted in economy, society and polity. There are, therefore, unceasing contradictions and struggles between the two polar opposites: aspirations vis-à-vis impositions.

In recent years, both state and market have become more coercive and unaccountable. Markets have adopted predatory routes. Again, states have been more coercive, and violated their constitutions from which they derive their power. The fragile social contract, consequentially, alienates the state from its citizens. Societal norms and values, over the years, have made citizens conform to discrimination, precipitating clientelist networks to accumulate power.

The configuration of power determines allocation and distribution of public resources. A rentier political settlement dismantles institutions in the absence of accountability, and thus, vested interest is prioritised over citizens' welfare.

The well-being of people is contingent upon "public society." Public society emerges when power lies in the median population, similar to the normal distribution. In reality, though, there is a skewed distribution.

The Covid-19 pandemic exposed fault lines, triggered significant income erosion, and gnawed away at the standard of living due to the absence of social protection, while governments were at a loss, exacerbating the economic divide. The ongoing conflicts have exasperated the woes further. The gap between the income groups is widening.

Some countries are recovering relatively quicker than others owing to existing social coping mechanisms—universal social security, well-structured healthcare, fiscal capacity and technological advancement. Most LDCs are stagnating, even recoiling in their path towards achieving the SDGs and struggling to address the new poor and defenceless population. Hence, between and within countries, the recovery is taking the shape of a diverging K-curve due to the disproportionate policies and embedded structural differences in economic, social and geospatial vulnerabilities.

Many developing countries are yet to acknowledge healthcare, education and social security as people's rights. Many constitutions endorse these as fundamental principles, with no obligation on the state. There is silence about establishing healthcare, education and social security as citizens' rights.

A skewed political settlement breeds unequal economic opportunities. Often, policies, in effect, bail out the very system that causes the crisis in the first place. The rent-distributing government favours Wall Street over Main Street, rescuing financial institutions and patronising ruling elites using public money as opposed to provisioning equal rights to all. Ill-fated citizens, consequentially, suffer through losses of their jobs, savings, and homes.

Old orthodoxies are breaking down, necessitating a new paradigm of development and a new form of cooperation for a course correction from the reversal of the gains made in socio-economic progress in the last three decades. A new social contract amongst and within nations could lead to having a greener, safer and better future for the people and the planet.

The asymmetries—like Covid-19 and artificial intelligence—have stirred public debates in favour of fostering socio-economic, financial and technological resilience against future complex shocks and uncertainties. In order for a transformative change with inter-generational equity, policies require addressing compound risk multipliers such as climate change vulnerabilities, economic and financial shocks, ecological damages, technological uncertainties, and public health emergencies. The world is far away from convergence and entitlements of equality, human rights and social justice.

Bangladesh has travelled over 50 years as an independent state. From the infamous "basket case," the country has transformed into a curious case of "development surprise." Alongside the achievements, major challenges loom large.

Bangladesh is the eighth most populated country in the world, although it ranks 94th in terms of geographic size. Most of the land area is bordered by India and some parts by Myanmar, with China in close vicinity. It occupies a strategically significant position in the Bay of Bengal. It lies at the centre of South and Southeast Asia, and is a source of connecting China's southern landlocked region. The Bay is also a reservoir of huge natural resources. Bangladesh, having experience in engagements with actors in the region and beyond, is now passing a critical moment in its quest for prosperity.

The rise and fall of civilisations, based on scientific historiography, can be a pointer. The grain-based agriculture connected civilisations of Asia, joining civilisations of different geographies. Not only did the two different monsoons help in growing crops—the summer blowing from the southwest, and the winter from northeast—but also allowed for the shipping of goods.

Rice, the monsoon's product, linked Asia. Rice is the least allergenic of grains and produces significant calories per hectare, feeding densely populated societies. Nevertheless, institution and political settlement are key. For example, in Angkor, the hydraulic system broke down and the empire fell.

A recent systematic archaeobotanical evidence, from Wari-Bateshwar ruins in Bangladesh, found Japonica rice, indicating diffusion from the East. This indicates the two-way connectivity of the past. This could herald an optimistic future since the aspirations of the people of Bangladesh are immense.

This article is an abridged version of a presentation prepared for the First Development Studies International Conference, to be held on May 5-6, 2024 by the Department of Development Studies, University of Dhaka, and daily Bonik Barta.

Dr Rashed Al Mahmud Titumir is Professor and Chairman, Department of Development Studies, University of Dhaka.​