[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Review of the White Paper on Bangladesh economy

Injustice anywhere is a threat to justice everywhere." - Martin Luther King Jr. The publication of the White Paper on Bangladesh’s economy, revealing widespread corruption under the Awami League-led regime, stands as a defining moment for accountability and a catalyst for future eco

thefinancialexpress.com.bd

Review of the White Paper on Bangladesh economy
Serajul I. Bhuiyan
Published :
Dec 23, 2024 21:32
Updated :
Dec 23, 2024 21:32

Injustice anywhere is a threat to justice everywhere."

- Martin Luther King Jr.

The publication of the White Paper on Bangladesh’s economy, revealing widespread corruption under the Awami League-led regime, stands as a defining moment for accountability and a catalyst for future economic reforms. Unveiled on December 1, 2024, by economist Dr. Debapriya Bhattacharya and his 12-member committee, the report exposes deep-rooted financial mismanagement, extensive money laundering, and pervasive corruption across critical sectors. The revelations underscore the economic injustices that have fueled Bangladesh’s financial instability and call for decisive corrective action.

Dr. Bhattacharya described that the deep-rooted corruption resulted in a culture of Chortantra, an institutionalised theft, whereby it was deeply ingrained within fraudulent practices that shook the innermost core of Bangladesh’s economy. By highlighting these chronic issues, the White Paper calls for urgent reform and draws thought-provoking parallels with global corruption cases. This article examines the critical points from the White Paper, detailing historical patterns and strategies for the road to economic recovery in ways that could reshape the future of Bangladesh.

A CASE OF DEEP-SEATED CORRUPTION

Systemic money laundering: The report estimates that as much as $16 billion was siphoned off annually through money laundering during the AL regime. This amounts to over $240 billion in 15 years, a staggering figure that dwarfs the country’s total development budget.

According to Dr. Bhattacharya, the diversions of public money in the form of hundis and foreign accounts became all-pervasive among the recruiting agencies, bureaucrats, and influential business groups. As he said, “The scale of misappropriation was way beyond what we had anticipated.

The White Paper also criticises the distorted economic data presented by the past regime, which had duped the domestic and international stakeholders. International organisations and foreign donors have been blamed for accepting inflated economic projections with minimum due diligence.

Banking sector— loss of credibility: The report termed the banking sector as the “most corruption-ravaged” segment of the economy. Ten banks, including state-owned and Shariah-based private ones, were found “technically bankrupt.” Politically motivated loans, inflated project costs, and deliberate NPL write-offs resulted in distressed assets of Tk 675,000 crore ($62 billion).

Former U.S. Federal Reserve Chairman Paul Volcker’s warning finds relevance here: “The single greatest threat to our economic system is the failure of financial institutions due to unchecked corruption and mismanagement.”

Public Sector Scams and Mismanagement: The report found project costs inflated by more than Tk 195,000 crore ($17 billion) through land procurement scams, manipulated bidding, and procurement fraud in 29 major development projects reviewed. Infrastructure projects that were supposed to become the symbols of national progress turned out to be symbols of unbridled corruption.

Power and energy— projects driven by greed: The power sector was another hotbed of financial malpractices, attracting an estimated $30 billion investments; at least $3 billion in illicit transactions in energy projects is estimated to have been lost. Politically connected businesses got hold of lucrative contracts while sidelining capable entrepreneurs.

Tax evasion and elite privilege: The report cited widespread exemptions in taxation amounting to 6 per cent of GDP, which kept the government away from the much-needed revenue. This figure could have doubled the education budget and tripled the health budget. Tax concessions were often given to businesses with political connections, further deepening income inequality.

HISTORICAL COMPARISONS

Corruption on a Global Scale: Corruption scandals from countries like Nigeria, Venezuela, and Malaysia are testaments to the potential impact that financial mismanagement and unaccountable power can have on the devastation of a national economy. These examples offer salient lessons for Bangladesh as it grapples with the own revelations of systemic corruption outlined in the White Paper.

Nigeria’s oil scandal: The Looting of a Nation: During the 1990s, Nigeria went through one of the most notorious single cases of state-level corruption, amounting to about US$16 billion siphoned off from oil revenues. Senior government officials, military generals, and political elites manipulated oil export contracts and siphoned proceeds into offshore bank accounts. International investigations led to the seizure of millions in assets, while pressure from the international community compelled Nigeria’s government to firm up its anti-corruption framework.

Punitive Measures:

The Nigerian government established the Economic and Financial Crimes Commission (EFCC), which secured convictions against numerous high-profile politicians and military leaders.

International banks froze accounts linked to Nigerian officials, leading to the recovery of significant stolen assets.

Lesson for Bangladesh: Bangladesh needs to empower the anti-corruption agencies by enforcing asset recovery agreements along with strengthening financial oversight for preventing large-scale misappropriations of state funds. As pointed out by former UN Secretary-General Kofi Annan, “Good governance is perhaps the single most important factor in eradicating poverty and promoting development.”

Venezuela’s PDVSA crisis: A Nation’s Collapse: Venezuela’s state-owned oil company, PDVSA, became a symbol of how a resource-rich nation could be brought to its knees by political mismanagement and endemic corruption. Billions had been embezzled through inflated contracts, fake invoices, and kickback schemes. Lack of reinvestment of oil profits into public services by the government resulted in hyperinflation, food shortages, and mass migration.

Punitive Measures:

U.S. and European authorities launched money-laundering investigations, leading to asset freezes and criminal charges against top Venezuelan officials.

International sanctions targeted Venezuela’s oil industry, crippling its export potential but failing to reform domestic governance.

Lesson for Bangladesh: Bangladesh needs to ensure transparent bidding for public contracts, develop independent audit bodies, and depoliticise state-owned enterprises if it wants to avoid the same fate. As Margarita López Maya, a Venezuelan historian, says, “Corruption is not just a failure of ethics; it is the engine of institutional decay.”

Malaysia’s 1MDB scandal: Global Financial Shockwaves: The 1MDB (1Malaysia Development Berhad) scandal exposed a web of financial corruption involving former Prime Minister Najib Razak. An estimated $4.5 billion was misappropriated through complex money-laundering schemes spanning multiple countries. Luxury real estate purchases, super yachts, and extravagant art acquisitions were linked to embezzled funds.

Punitive measures:

Najib Razak was arrested, convicted on multiple charges of corruption, and sentenced to 12 years in prison.

International cooperation led to asset seizures worth over $1 billion, including jewelry, artwork, and yachts.

Global financial institutions faced fines for failing to flag suspicious transactions related to 1MDB.

Lesson for Bangladesh: Bangladesh should enhance its cooperation with international financial watchdogs like the Financial Action Task Force (FATF) and strengthen its banking regulations to prevent money laundering. As former U.S. President Theodore Roosevelt warned, “No man is above the law, and no man is below it.” Effective law enforcement and judicial independence remain critical to combating corruption.

Final reflections: These lessons from Nigeria, Venezuela, and Malaysia, show how unbridled corruption can destabilise a nation, make its citizens poor, and tarnish international reputation. The messages going forward to Bangladesh are very clear: combat corruption with transparent governance, enforce strict financial policing, and judicial accountability. As the late former President of South Africa Nelson Mandela aptly puts it, “It is not beyond our power to create a world in which all children have access to a good education. Those who do not prevent corruption rob the future.”

IMPACT ON BANGLADESH’S ECONOMIC FUTURE

The White Paper paints a bleak picture of Bangladesh’s economy but also provides a roadmap for recovery. Key recommendations include:

Institutional reforms: Strengthen institutions like the Anti-Corruption Commission (ACC), ensuring they operate independently.

Judicial accountability: Enforce legal action against corrupt officials and business figures involved in financial crimes. No reform will succeed without holding individuals accountable.

Banking sector overhaul: Implement tighter regulations on financial institutions, create an independent banking commission, and end politically driven lending.

Transparent governance: Introduce real-time financial monitoring systems for government-funded projects. Ensure transparency through parliamentary oversight.

5.Economic diversification: Go beyond capital-intensive mega-projects and invest in small and medium enterprises, sustainable industries, and technology-driven development.

A DEFINING MOMENT FOR BANGLADESH

The White Paper shows how the immense possibility of the economy has been consistently undermined by systemic corruption, political favouritism, and institutional breakdowns. In this regard, the White Paper provides an opportunity for reform. As Dr Bhattacharya reiterated, “We must use this crisis as a wake-up call, not just for accountability, but to reshape our national future.”

By embracing accountability, transparency, and institutional reforms, Bangladesh can rewrite its economic story. If the interim government under Dr. Muhammad Yunus can implement the White Paper’s recommendations, it could transform Bangladesh from a state plagued by economic mismanagement to a nation defined by equitable growth and democratic accountability.

Dr. Serajul I. Bhuiyan, Professor and Former Chair, Department of Journalism and Mass Communications, Savannah State University, Georgia, USA.​

 

[Bilal9]

Elon Musk to attend Dhaka investment conference​

Click Ittefaq Desk
Publish : 24 Dec 2024, 12:09
https://en.ittefaq.com.bd/10137


File photo.

Bangladesh is set to host an international investment conference in April 2025, and global business magnate Elon Musk is expected to attend this landmark event in Dhaka.

According to multiple reliable sources, the government is optimistic about Musk's participation.

In a promising development, Musk's senior security advisor recently visited Dhaka to assess arrangements, bolstering the likelihood of his presence.

The conference, organized by the Bangladesh Investment Development Authority (BIDA), aims to attract global investors and showcase Bangladesh as a promising destination for international investment.

Government officials have expressed their determination to make this conference the most significant of its kind in Bangladesh's 53-year history.

Preparations are underway, with a proposed three-day schedule and a curated guest list targeting some of the world's wealthiest and most influential figures, including Amazon founder Jeff Bezos and Oracle co-founder Larry Ellison.

Elon Musk: A Global Economic Force

Elon Musk's attendance would be a significant milestone for the conference. Recently, he made headlines for becoming the first person in history to reach a net worth of $400 billion, according to Bloomberg.

This achievement reflects the extraordinary growth of his companies, Tesla and SpaceX, solidifying his status as the world's richest individual.

Beyond his business accomplishments, Musk has also made his mark in the political sphere. His influence in Donald Trump's recent re-election as President of the United States is notable, with reports suggesting that favorable market conditions under Trump’s administration have boosted Musk's business ventures.

Furthermore, Musk’s close associate, Sriram Krishnan, of Indian origin, has been appointed to the White House's AI policy-making committee, a move announced by President Trump himself.

Nobel Laureate Dr. Muhammad Yunus to Play a Key Role

Nobel laureate Dr. Muhammad Yunus, serving as the chief advisor to Bangladesh’s interim government, is expected to play a pivotal role in the event.

Efforts are being made to leverage his global reputation and influence to secure the participation of high-profile international guests, including Musk, Bezos, and Ellison. Dr. Yunus’s involvement is seen as crucial for ensuring the conference's success and attracting significant foreign investment.

Aiming for Success Amidst Past Challenges

While Bangladesh has organized investment conferences in the past, none have achieved the desired impact. However, this upcoming conference, scheduled for early April, is being positioned as a game-changer.

The entire government machinery is involved in its planning and execution, with the aim of making it a landmark event in the country’s economic history.

A Promising Future

By targeting global tycoons and presenting Bangladesh as an emerging hub for investment, the government seeks to chart a new path of economic progress.

The potential presence of Elon Musk, along with other global investors, underscores the ambitious vision of this conference.

 

[Saif]

Bangladesh must boost investment to avoid economic crisis: Analysts

The country risks plunging into an economic crisis in the coming days if the government fails to accelerate public and private investments within the shortest possible time, analysts have warned. According to Planning Adviser Dr Wahiduddin Mahmud, private investment remains stagnant in the country

thefinancialexpress.com.bd

Bangladesh must boost investment to avoid economic crisis: Analysts
UNB
Published :
Dec 23, 2024 12:00
Updated :
Dec 23, 2024 12:00

The country risks plunging into an economic crisis in the coming days if the government fails to accelerate public and private investments within the shortest possible time, analysts have warned.

According to Planning Adviser Dr Wahiduddin Mahmud, private investment remains stagnant in the country.

"At present the stagnant situation of private investment is going on, this is due to instability and political insecurity and indiscipline," he said recently during a briefing on ECNEC meeting.

According to sources in the Planning and Finance Ministry, the country is now facing challenging times in sustaining production in the private sector.

Already RMG and other factories in the private sector have faced serious instability and disruption of production due to various types of movement including labour movement.

"There is no interest at all (from the private investors) in investment in the private sector," the planning adviser had told the briefing.

Meanwhile, the accelerating interest rate on bank lending caused another trouble for the economy as this acceleration put barriers for the private investors to take loans from the banks.

"As a result, the investors are not showing interest in going for new investments," Wahiduddin said.

Bangladesh Bank on October 22 hiked the policy or repo rate further by 50 basis points to 10 per cent in its efforts to rein in inflation, which has been stubbornly high for the last two years. Banks borrow from the central bank at the repo rate. The latest hike comes in less than a month after the BB increased the repo rate to 9.50 per cent from the previous 9.0 per cent.

The general point-to-point inflation rate in Bangladesh rose in November reaching 11.38 per cent, up from 10.87 per cent in October 2024. This rate is the highest in the last four months.

According to the latest data from the Bangladesh Bureau of Statistics (BBS), the increase was driven by a rise in food inflation, which jumped to 13.80 per cent from 12.66 per cent.

Meanwhile, non-food inflation showed a slight rise of 9.39 per cent from 9.34 per cent in November.

The general point-to-point inflation rate both in urban and rural areas also increased last month.

The point-to-point inflation in rural areas in November was 11.53 per cent which was 11.26 per cent in October. The food inflation in the rural areas was 13.41 per cent in November from 12.75 per cent in October while the non-food item was 9.72 percent in November from 9.72 percent in October.

On the other hand, the point-to-point inflation rate in urban areas in November was 11.37 per cent which was 10.44 per cent in October. The food inflation in November was 14.63 per cent which was 12.53 per cent in October while the non-food item in November was 9.31 per cent which was 9.06 per cent in October.

The wage rate index in November was 8.10 per cent which was 8.07 per cent in October 2024.

On the other hand, the review meeting of the Bangladesh Bank (BB) monetary policy committee (MPC) has decided not to increase the policy interest rate for the time being.

The committee acknowledged that although inflation remains elevated, the monetary policy stance is on the right track and there is no immediate need to raise the policy rate further.

The MPC assessed the current macroeconomic situation, challenges, and outlook from domestic and global perspectives.

Moreover, the MPC focused on reviewing the current inflation trend and outlook, economic activities and growth prospects, recent financial market developments, and developments in the external sector.

Specifically, the MPC extensively reviewed the overall banking sector's liquidity situation, particularly the cash flow shortage of some conventional as well as Islamic banks, interest rate trends, the foreign exchange reserve position, and exchange rate developments.

The committee anticipates that inflation will likely decrease due to the downward trend in the global price outlook, moderation in geopolitical tensions, the stability in our exchange rate, the expected good harvest of Aman paddy, and the increasing supply of winter season vegetables.

Meanwhile, Bangladesh Bank (BB) has fixed the maximum interest rate on credit cards at 25 per cent from 20 per cent after banks insisted the central bank raise the rate to recover operation costs.

According to the BB, banks will be able to charge a maximum interest of 25 per cent from credit card customers. So far, the maximum interest limit was 20 per cent.

The planning ministry officials apprehended that as the private investment is remaining stalled and public investment is experiencing lowest ever, the economy of the country might go through a tough time in the coming days.

"If the public expenditure does not improve also then there would be an economic recession in the country," the planning adviser had said in the briefing.

During the first four months of the current fiscal year, from July to October, the ADP implementation rate stood at only around 8.0 per cent, the lowest figure in recent years, according to the Implementation Monitoring and Evaluation Division (IMED) of the Planning Ministry.

Its data highlights that, in contrast, the same period last year saw an execution rate of 11.54 per cent.

Specifically, for the period from July to October of the current fiscal year, the government managed to implement development projects worth Tk 219.78 billion, according to the IMED.

Finance Ministry sources said that as the stagnant situation is on and the inflation is increasing, employment generation will suffer whether the economy does not see any expansion in the coming days.

They mentioned that middle income group and lower middle income group are experiencing the worst of this inflation.

The planning commission officials hoped that while stability will come in the economy, the private investors will step forward with their investments.​

 

[Saif]

Economic stabilisation should be first priority

Speakers say at annual ICMAB conference

www.thedailystar.net

Economic stabilisation should be first priority
Speakers say at annual ICMAB conference

Bangladesh needs both economic and political reforms to address three major challenges, namely macroeconomic instability, rising inequality and poor governance, which are restricting the country's development potential, according to experts.

Against this backdrop, they said forming a comprehensive and coordinated stabilisation programme should be the first priority in efforts to restore the country's macroeconomic stability.

They were speaking at a daylong annual conference organised by the Chattogram branch of the Institute of Cost and Management Accountants of Bangladesh (ICMAB), styled "Navigating Bangladesh's Evolving Economic Landscapes".

Criminalisation grew in the industrial sector during the ousted Awami League's regime, said Commerce Adviser Sheikh Bashir Uddin while addressing the event's inaugural session at the Radisson Blu Chattogram Bay View today.

"It is very sad that every sector from business communities, bureaucracy, judiciary, secret service and police were part of this nexus," the commerce adviser added.

Mentioning how the country suffers from crony capitalism in different sectors, Uddin said a situation akin to circular debt has been created in power tariffs.

Still, businesses are asking for more incentives to allay the coming headwinds of Bangladesh's graduation from a least developed country.

As such, he stressed for increasing value added taxes to cover costs of increased incentives.

"An economy like ours is very sensitive to changes in global commodity prices. So, everybody is looking for how the state will incentivise them. But where will the state get the money from?" he said.

Uddin further said that the 100 chief executive officers and 300 chief finance officers of different private organisations that are ICMAB members should work together to find a solution for the country's dearth of revenue.

Presenting a thematic paper at the session, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said economic reforms are absolutely critical and must be prioritised alongside political reforms for Bangladesh's advancement.

The first priority of economic policymaking should be restoring macroeconomic stability, he said while adding that a comprehensive and coordinated stabilisation programme is needed to this end.

He emphasised on boosting private investment and job creation with the aim of addressing the economic struggles of average citizens.

The business community is seeking assurance from policymakers on efficient port and logistic facilities alongside a stable supply of gas and electricity and resolution of law-and-order issues to enhance business confidence, he said.

Khan added that a potential economic stabilisation programme of the interim government would require a coordinated action plan to guide policy measures across government agencies, with regular updates and monitoring.

To this end, he emphasised on establishing an economic advisory council comprising key ministry advisers, the Bangladesh Bank governor, independent experts, business and labour leaders with support from the bureaucracy.

Presenting the keynote at a technical session, Economist M Masrur Reaz said the main cause for persistent inflation is supply constraints for declining imports due to the foreign exchange shortage.

Food inflation rose 13.8 per cent in November, up from 12.66 per cent in October, contributing to a general inflation rate of 11.38 per cent.

He recommended promoting agricultural production through modern techniques, improving rural infrastructure and providing support to farmers in facing challenges of low agricultural productivity and high food inflation in the country.

He also urged for improving the quality of public spending, focusing on urgent issues like social safety nets and climate adaptation, while reducing harmful subsidies.

Md Selim Uddin, secretary of the commerce ministry, Md Abdur Rahman Khan, chairman of the National Board of Revenue, Alihussain Akberali, chairman of BSRM, and Mahtab Uddin, president of ICMAB, also spoke at the event.

The inaugural session was chaired by Pradip Paul, chairman of the ICMAB's branch in Chattogram.​

 

[Saif]

Growth obsession deepened rich-poor divide

Income inequality in Bangladesh has seen a steep rise over the past 12 years till 2022, according to official data, as economists blame a singular focus on growth rather than sorting out income disparities.

www.thedailystar.net

2024 The year that was
Growth obsession deepened rich-poor divide

Income inequality in Bangladesh has seen a steep rise over the past 12 years till 2022, according to official data, as economists blame a singular focus on growth rather than sorting out income disparities.

The Gini coefficient, a measure of inequality, increased from 0.458 in 2010 to 0.48 in 2016. This upward trend continued, reaching 0.50 in 2022, according to the Bangladesh Bureau of Statistics (BBS). This places Bangladesh among the countries with the highest income disparities globally.

A number of proxies throughout 2024 suggested that income inequality might have widened in the outgoing year. For example, consider the number of bank accounts holding Tk 1 crore or more.

In the April-June period of this year, this number increased by 2,894.

In contrast, high inflation over the past two years has pushed at least 78 lakh people into poverty, with 38 lakh of them falling into extreme poverty, according to the non-governmental think tank Research and Policy Integration for Development (RAPID).

According to the World Bank definition, people belonging to the extreme poverty group could not earn even Tk 256 per day over the past two years.

Amid this inflationary pressure, the Bangladesh Institute of Development Studies (BIDS) reported that the poorest rural residents were increasingly relying on rice to satiate their hunger, cutting back on protein-rich foods.

Paradoxically, the country in the past six months imported eight luxury Rolls-Royce cars, priced between Tk 3.5 crore and Tk 8 crore.

Drawing on his long experience as a bureaucrat, economist AB Mirza Azizul Islam said previous governments have shown little interest in reducing inequality.

"Their main focus has been on GDP growth," he said. To reduce inequality, Islam recommended generating more jobs.

"Private investment has remained stagnant for years," he noted. "Increased investment would lead to job growth and higher incomes, possibly reducing inequality."

WEALTH INEQUALITY A DEEPER PROBLEM

Compared to income inequality, wealth inequality is way worse in Bangladesh, which means a minuscule portion of the population owns a disproportionate amount of wealth compared to the majority.

The "White Paper on the State of the Bangladesh Economy", prepared by a panel of economists and experts and was submitted to the chief adviser of the interim government in December, says wealth inequality increased from 0.82 to 0.84 between 2016 and 2022.

Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (INM), said a lack of timely intervention has led to the historically high levels of income and wealth inequality.

He said that as economies grow, income opportunities increase, especially in urban areas. However, if governments fail to address these disparities, inequality can worsen.

"Corruption has also contributed to high inequality, as power, income and wealth are interconnected in Bangladesh," Mujeri added.

IS HIGHER TAXATION THE ANSWER?

To reduce income inequality, Mujeri, a former director general of the BIDS, suggested a progressive income tax system, where higher incomes are taxed at higher rates.

However, he acknowledged obstacles like the difficulty of accurately assessing the real income of high earners and the influence of wealthy individuals on policymaking.

Therefore, alongside tax policies, the government should prioritise creating opportunities for the less fortunate. This includes improving education for low-income families, enhancing healthcare access for marginalised groups and expanding social safety net programmes with minimal misuse of funds, he said.

Such measures are urgent to create a socio-economic structure that is more inclusive and equitable, he added.​

 

[Saif]

Economy largely stagnant, with slight relief in reserves

The country began 2024 with negative economic indicators and when the political landscape changed in August, the economy was in dire state. While the interim government took some measures to handle the pressure, the economy did not pick up speed over the past five months

en.prothomalo.com

Economy largely stagnant, with slight relief in reserves
Jahangir Shah
Dhaka
Updated: 25 Dec 2024, 18: 15

The country began 2024 with negative economic indicators and when the political landscape changed in August, the economy was in dire state.

While the interim government took some measures to handle the pressure, the economy did not pick up speed over the past five months.

The biggest achievement during this period has been the acknowledgment of the economic crisis. The white paper detailing the economic situation also revealed widespread corruption under the Awami League government.

The people in general continue to suffer under high inflation. The price of the dollar has surpassed Tk 120. There are some positive developments in exports and remittances, but nearly all other macroeconomic indicators remain at rock bottom. Political uncertainty has led to stagnation in investment.

After the mass movement in July-August, the law and order situation has not been fully brought under control. As a result, there is ongoing instability in the industrial sector, particularly in the garment industry. Extortion continues, although reports indicate that some extortionists are being replaced. Overall, it can be said that 2024 is ending with the economy still in crisis.

After the change in power on 5 August, there were significant changes in economic leadership. Key positions, such as finance adviser, planning adviser, trade adviser, as well as the governor of Bangladesh Bank and the chairman of the National Board of Revenue (NBR), were filled with individuals of a good reputation. Over the past five months, the new economic leadership has mostly been focused on clearing the "mess" left by the previous government.

Inflation is villain of the year

The biggest struggle for the general public in the outgoing year has been the cost of daily necessities. For eight consecutive months, food inflation remained in double digits. Even though supply increased during the winter season, the price of vegetables did not decrease significantly. As a result, people with fixed incomes are struggling to make ends meet. According to the latest data from the Bangladesh Bureau of Statistics (BBS), food inflation in November reached 13.80 per cent, the second-highest in the past 13 and a half years. In July, food inflation had risen to 14.10 per cent.

Overall inflation has remained around double digits, but the national wage rate has been stuck at around 8 per cent for several months, meaning people's income is growing at a much slower rate than inflation. After the new government took office, steps like raising interest rates and reducing some duties were taken, but inflation has not been brought under control.

A look at the economy through the white paper

One of the major initiatives of 2024 was the publication of a white paper on the economy. For the first time, this document highlighted how bad the situation had become due to corruption at every level. It was revealed that during the Awami League government's tenure, nearly Tk 28 trillion had been laundered abroad, with an average of Tk 180 billion being sent out each year.

Over a period of 15 years, politicians and bureaucrats took bribes of up to Tk 2500 billion from government procurement. Development projects were plundered to the tune of nearly Tk 3 trillion, while the amount embezzled from the stock market amounted to Tk 1 trillion.

Over a period of 15 years, politicians and bureaucrats took bribes of up to Tk 2500 billion from government procurement. Development projects were plundered to the tune of nearly Tk 3 trillion, while the amount embezzled from the stock market amounted to Tk 1 trillion.

Current state of the economy

The revenue sector is struggling. According to the latest data from the National Board of Revenue (NBR), there was a shortfall of Tk 307.68 billion in customs and tax collection during the first four months of the current fiscal year (July-October). NBR has been falling short of its collection targets every month.

Expenditure on development projects has decreased. Due to many contractors with ties to the Awami League fleeing, the implementation of the Annual Development Programme (ADP) has been poor. In the July-November period, spending was Tk 1.25 trillion less compared to the previous year.

However, the good news is that there has been some momentum in exports and remittances under the interim government. For four consecutive months, remittances have exceeded 2 billion dollars each month. In the first five months of the 2024-25 fiscal year, remittances grew by approximately 26.4 per cent. Additionally, thanks to various measures, export earnings have surpassed 20 billion dollars in the past five months.

The positive performance of exports and remittances has helped prevent a further depletion of reserves.

However, non-performing loans have surged significantly. The loans taken from banks during the Awami League government's tenure, through irregularities and corruption, are now beginning to default. By the end of September, non-performing loans amounted to Tk 2.849 trillion.

Economists' view

Mustafizur Rahman, a distinguished fellow at the Center for Policy Dialogue (CPD), told Prothom Alo that the economy of 2024 should be viewed in two parts: one under the previous government and the other after the student-led uprising. Despite socio-economic progress under the Awami League government, various pressures were building up within the economy, such as unfair distribution, diminishing purchasing power, a sharp fall in the exchange rate, and high inflation. The accumulated economic issues also played a role in the student and public movements.

Mustafizur said that there are high expectations for the interim government regarding the economy and good governance. The second chapter, with aspirations for change, has begun. Issues of inequality and fair distribution are being discussed, but many economic problems remain, such as high inflation and a continuing decline in people's living standards.

The interim government is trying to tackle inflation through contractionary monetary policies, revenue policies, and market monitoring. However, it has not been able to bring about significant change in many economic indicators, and the economy has not gained momentum.​

 

[Bilal9]

Remittances reached $1.38 billion in 14 days of December​

As a result, the average daily remittance received was 98.7 million dollars.

https://bangla.dhakatribune.com/89550


Dollar/File Photo/AFP



Published: 15 December 2024, 07:47 PMUpdate: 15 December 2024, 07:47 PM

In the first 14 days of December, remittances worth 1.38 billion US dollars have been received in the country. In local currency, the amount stands at 16,576 billion taka (based on 120 taka per dollar). This brings the average daily remittance to 98.7 million dollars or 1,184 crore taka.

This information was revealed in an updated report published by the central bank on Sunday (December 15).

The report said that of the remittances received in the country in the first 14 days of December, $447.6 million came through state-owned banks, $69.4 million through a specialized bank, $860 million through private banks, and $3.88 million through foreign banks.

Additionally, remittances totaled $1.137 billion in the first five months (July-November) of the current 2024-25 fiscal year.

According to central bank sources, expatriates sent back $616.45 million to the country in the first week of December. And from December 8 to 14, remittances to the country totaled $764.91 million.

 

[Saif]

Horse-drawn carts, the lifeline of char economy

Horse-drawn carts remain the primary mode of transportation for goods in the char areas of Kurigram and Lalmonirhat, where the sandy riverbeds of the Brahmaputra, Teesta, Dharla, Dudhkumar, and Gangadhar rivers dominate the landscape.

www.thedailystar.net

Horse-drawn carts, the lifeline of char economy

Photo: S Dilip Roy/Star

Horse-drawn carts remain the primary mode of transportation for goods in the char areas of Kurigram and Lalmonirhat, where the sandy riverbeds of the Brahmaputra, Teesta, Dharla, Dudhkumar, and Gangadhar rivers dominate the landscape.

Each char typically has 10 to 50 horse-drawn carts, with approximately 500 chars spread across the region -- 400 in Kurigram and 100 in Lalmonirhat.

While buffalo carts were once common in these areas a decade ago, they have largely disappeared, though buffaloes are still reared for other purposes.

Raju Islam, a cart driver from Char Shakhahati on the Brahmaputra, said buying a horse costs between Tk 20,000 and 50,000, while building a cart can cost up to Tk 80,000.

The carts can carry 10-15 maunds of goods, but drivers usually limit loads to 7-8 maunds per trip to maintain the horses' health. They charge Tk 80-100 per maund for every 3-4 kilometres travelled on the sandy char land.

"The work is as hard for us as it is for the horses," said Raju.

Ahadul Haque from Char Kalmati on the Teesta river said horse-drawn carts are essential for transporting goods between the mainland and chars during the dry season. He earns Tk 1,200-1,500 daily from 3-4 trips but spends Tk 500-600 on horse feed.

Shafiqul Islam from Char Jatrapur in Kurigram said horse-drawn carts are even used to transport sick individuals and enable government officials and NGO workers to reach remote areas in the absence of other vehicles.

During the rainy season, boats replace carts as the main mode of transport.

"Until a specialised vehicle is invented for char terrain, horse-drawn carts will remain our primary form of transport," said Meher Ali from Char Harinchara on the Teesta.

Kabir Hossain, a trader at Jatrapur Haat, said the local economy revolves around horse-drawn carts. Goods are transported between the chars and mainland markets, but rising costs of horse feed have driven up transportation expenses.

Ahsanul Kabir Bulu, an NGO official working in the chars, said, "During the dry season, horse-drawn carts are the only way to transport goods across the sandy terrain. The economy of the chars cannot be imagined without them."​

 

[Saif]

Economy largely stagnant, with slight relief in reserves

The country began 2024 with negative economic indicators and when the political landscape changed in August, the economy was in dire state. While the interim government took some measures to handle the pressure, the economy did not pick up speed over the past five months

en.prothomalo.com

Economy largely stagnant, with slight relief in reserves
Jahangir Shah
Dhaka
Updated: 25 Dec 2024, 18: 15

The country began 2024 with negative economic indicators and when the political landscape changed in August, the economy was in dire state.

While the interim government took some measures to handle the pressure, the economy did not pick up speed over the past five months.

The biggest achievement during this period has been the acknowledgment of the economic crisis. The white paper detailing the economic situation also revealed widespread corruption under the Awami League government.

The people in general continue to suffer under high inflation. The price of the dollar has surpassed Tk 120. There are some positive developments in exports and remittances, but nearly all other macroeconomic indicators remain at rock bottom. Political uncertainty has led to stagnation in investment.

After the mass movement in July-August, the law and order situation has not been fully brought under control. As a result, there is ongoing instability in the industrial sector, particularly in the garment industry. Extortion continues, although reports indicate that some extortionists are being replaced. Overall, it can be said that 2024 is ending with the economy still in crisis.

After the change in power on 5 August, there were significant changes in economic leadership. Key positions, such as finance adviser, planning adviser, trade adviser, as well as the governor of Bangladesh Bank and the chairman of the National Board of Revenue (NBR), were filled with individuals of a good reputation. Over the past five months, the new economic leadership has mostly been focused on clearing the "mess" left by the previous government.

Inflation is villain of the year

The biggest struggle for the general public in the outgoing year has been the cost of daily necessities. For eight consecutive months, food inflation remained in double digits. Even though supply increased during the winter season, the price of vegetables did not decrease significantly. As a result, people with fixed incomes are struggling to make ends meet. According to the latest data from the Bangladesh Bureau of Statistics (BBS), food inflation in November reached 13.80 per cent, the second-highest in the past 13 and a half years. In July, food inflation had risen to 14.10 per cent.

Overall inflation has remained around double digits, but the national wage rate has been stuck at around 8 per cent for several months, meaning people's income is growing at a much slower rate than inflation. After the new government took office, steps like raising interest rates and reducing some duties were taken, but inflation has not been brought under control.

A look at the economy through the white paper

One of the major initiatives of 2024 was the publication of a white paper on the economy. For the first time, this document highlighted how bad the situation had become due to corruption at every level. It was revealed that during the Awami League government's tenure, nearly Tk 28 trillion had been laundered abroad, with an average of Tk 180 billion being sent out each year.

Over a period of 15 years, politicians and bureaucrats took bribes of up to Tk 2500 billion from government procurement. Development projects were plundered to the tune of nearly Tk 3 trillion, while the amount embezzled from the stock market amounted to Tk 1 trillion.

Over a period of 15 years, politicians and bureaucrats took bribes of up to Tk 2500 billion from government procurement. Development projects were plundered to the tune of nearly Tk 3 trillion, while the amount embezzled from the stock market amounted to Tk 1 trillion.

Current state of the economy

The revenue sector is struggling. According to the latest data from the National Board of Revenue (NBR), there was a shortfall of Tk 307.68 billion in customs and tax collection during the first four months of the current fiscal year (July-October). NBR has been falling short of its collection targets every month.

Expenditure on development projects has decreased. Due to many contractors with ties to the Awami League fleeing, the implementation of the Annual Development Programme (ADP) has been poor. In the July-November period, spending was Tk 1.25 trillion less compared to the previous year.

However, the good news is that there has been some momentum in exports and remittances under the interim government. For four consecutive months, remittances have exceeded 2 billion dollars each month. In the first five months of the 2024-25 fiscal year, remittances grew by approximately 26.4 per cent. Additionally, thanks to various measures, export earnings have surpassed 20 billion dollars in the past five months.

The positive performance of exports and remittances has helped prevent a further depletion of reserves.

However, non-performing loans have surged significantly. The loans taken from banks during the Awami League government's tenure, through irregularities and corruption, are now beginning to default. By the end of September, non-performing loans amounted to Tk 2.849 trillion.

Economists' view

Mustafizur Rahman, a distinguished fellow at the Center for Policy Dialogue (CPD), told Prothom Alo that the economy of 2024 should be viewed in two parts: one under the previous government and the other after the student-led uprising. Despite socio-economic progress under the Awami League government, various pressures were building up within the economy, such as unfair distribution, diminishing purchasing power, a sharp fall in the exchange rate, and high inflation. The accumulated economic issues also played a role in the student and public movements.

Mustafizur said that there are high expectations for the interim government regarding the economy and good governance. The second chapter, with aspirations for change, has begun. Issues of inequality and fair distribution are being discussed, but many economic problems remain, such as high inflation and a continuing decline in people's living standards.

The interim government is trying to tackle inflation through contractionary monetary policies, revenue policies, and market monitoring. However, it has not been able to bring about significant change in many economic indicators, and the economy has not gained momentum.​

 

[Saif]

Foreign fund flow, new pledges dwindle as debt servicing surges

Bangladesh’s foreign debt servicing surged 28 percent year-on-year in the first five months of fiscal year 2024-25 owing to the country’s expanded foreign loan portfolio and a rise in global interest rates.

www.thedailystar.net

Foreign fund flow, new pledges dwindle as debt servicing surges

Bangladesh's foreign debt servicing surged 28 percent year-on-year in the first five months of fiscal year 2024-25 owing to the country's expanded foreign loan portfolio and a rise in global interest rates.

In the same period, foreign loan disbursement fell by 27 percent year-on-year while commitments for new loans dropped by 91 percent, according to data released by the finance ministry yesterday.

With the obligations mounting and foreign funds diminishing, economists called for rejuvenating development spending as they argue this would streamline the foreign loan pipeline.

During the July-November period of FY25, the country returned $1.71 billion in principal and interest payments on foreign loans, up from $1.33 billion during the same period of FY24, according to finance ministry data.

According to the breakdown, the value of principal payments climbed by 37 percent to $1.05 billion while interest payments rose by 17 percent to $655 million.

Adding to the fiscal pressures, foreign assistance commitments have fallen precipitously.

In the first five months of FY25, total commitments for grants and loans stood at just $522.68 million -- a sharp drop from $5.86 billion in the previous year.

Loan commitments fell from $5.57 billion to $248.88 million while grant commitments remained relatively flat.

Disbursements also declined in the July-November period, with total project-related disbursements amounting to $1.54 billion, down from $2.11 billion during the same period last year.

This decrease reflects a slowdown in project loan inflows at a time when Bangladesh relies heavily on external financing for infrastructure and development initiatives.

The combination of rising debt obligations and declining foreign assistance is presenting a huge challenge for Bangladesh's fiscal management.

To cushion the increasing burden, economists suggested that the government should set priorities for annual development programme (ADP) implementation, stabilise the exchange rate and enhance domestic revenue mobilisation.

"The debt-servicing cost was supposed to surge as we have already seen the uptrend in the last couple of years," said MA Razzaque, chairman of Research and Policy Integration for Development (RAPID), a local think-tank.

Razzaque said higher interest rates and shorter grace and maturity periods for foreign loans are contributing to the debt burden.

However, the fall in foreign loan disbursement is a matter of fresh concern, he said.

"A lower government expenditure, including development spending, has contributed to the slow disbursement," he said, referring to a large chunk of foreign loans stuck in the pipeline.

"But the interim government is yet to streamline the loan pipeline as ADP spending slowed after the political changeover."

In the first five months of FY25, public agencies managed to spend Tk 34,214 crore or 12.29 percent from the overall development fund, as per the Implementation Monitoring and Evaluation Division (IMED) data.

The economist suggested trimming the ADP allocation and prioritising foreign funded projects.

In a recent report, titled "Medium-Term Macroeconomic Policy Statement (MTMPS)", the finance ministry said interest payments would continue to rise gradually in the coming years.

The proportion of external interest payments as a percentage of the national budget will rise to 2.6 percent in FY27 from 0.9 percent in FY22, reflecting the growing impact of external debt, the report said.

However, Ashikur Rahman, principal economist at the Policy Research Institute (PRI) of Bangladesh, does not believe the debt servicing would pose any risk for the country.

"Despite the rise in debt servicing, it does not pose any major risk even in absence of new loan commitments as exports and remittances offer a reasonable cushion that can help the treasury meet its immediate international debt obligations," he told The Daily Star.

"In the current fiscal year, foreign exchange earnings from exports and remittances are likely to cross $70 billion, which means even if debt obligations reach $4-5 billion, it poses no significant default risk for Bangladesh."

Nonetheless, given the local currency Taka is likely to further lose its value against the US dollar, the domestic fiscal burden of additional international debt servicing is going to intensify, he said.

"It necessitates that the Ministry of Finance keeps committing to streamlining domestic resource mobilisation initiatives that can offer the treasury more fiscal space to manage this additional pressure," Rahman added.

However, domestic revenue mobilisation does not offer much hope.

During the July-November period of FY25, revenue collection logged nearly a 2.5 percent negative growth year-on-year, according to national revenue board sources.​

 

[Saif]

Brains before bridges: Prioritising human capital over infrastructure

A glance at the recent history of the world’s most developed nations reveals a compelling truth: no country has ever achieved sustainable development without first investing in education and research.

www.thedailystar.net

Brains before bridges: Prioritising human capital over infrastructure

Rooppur Nuclear Power Plant. It is difficult to name a single country, other than Bangladesh, that has built a nuclear power plant using foreign loans and foreign supervision without having its own world-class nuclear physicists or engineers.

A glance at the recent history of the world's most developed nations reveals a compelling truth: no country has ever achieved sustainable development without first investing in education and research. The stories of South Korea, China, Malaysia, Taiwan, and Singapore stand as powerful testaments to this principle. These nations prioritized human capital development over physical infrastructure, understanding that educated minds and innovative ideas are the true engines of progress. Instead of focusing solely on roads, bridges, and skyscrapers, they built world-class educational institutions, fostered a culture of research, and invested in technology and knowledge-driven industries. This strategic approach enabled them to create self-sustaining economies with skilled workforces capable of driving innovation from within. Today, these countries are global leaders in manufacturing, technology, and advanced research — a testament to the transformative power of prioritizing education before infrastructure. Their success offers a clear lesson for other developing nations: lasting development is not built with bricks and mortar alone but with minds and ideas that shape the future.

While Vietnam is currently following the proven path of prioritising education and research as the foundation for development, Bangladesh remains an exception. Over the past 14 years, Bangladesh has pursued a development strategy that places physical infrastructure ahead of human resource development. The fundamental flaw in this approach lies in its misplaced priorities — infrastructure requires skilled people to build, operate, and sustain it, not the other way around. By focusing on constructing nuclear power plants, satellites, bridges, and metro rail systems without first developing a pool of skilled local experts, Bangladesh has become heavily dependent on foreign engineers, consultants, and technology. These large-scale projects, financed by foreign loans, are operated and supervised by foreign experts, leaving little room for local capacity building. This approach creates a cycle of dependency, where the nation's pride in grand infrastructure is overshadowed by its reliance on external support. True progress lies in empowering local human capital, for it is skilled people who create self-reliant nations — not merely bricks, steel, and concrete.

Curzon Hall, Dhaka University. Bangladesh’s premier institution of higher education is witnessing a significant decline in its standing within international university rankings.
It is difficult to name a single country, other than Bangladesh, that has built a nuclear power plant using foreign loans and foreign supervision without having its own world-class nuclear physicists or engineers. Likewise, launching a national satellite without the backing of skilled, homegrown engineers is nearly unheard of. Consider India as a case in point. India's rise as a technological powerhouse was not accidental — it was the result of deliberate investment in human capital. Instead of rushing to build monumental infrastructure, India focused on creating a foundation of knowledge and expertise. The establishment of world-class educational and research institutions like the Indian Institutes of Technology (IITs) and the Indian Space Research Organisation (ISRO) enabled the country to produce a generation of engineers, scientists, and innovators. This approach allowed India to develop and launch its own satellites, build its metro systems, and develop its nuclear technology, all with minimal reliance on foreign expertise. The lesson is clear: a nation must first build its people before it builds its infrastructure. Without skilled human resources, infrastructure becomes a borrowed achievement — impressive to look at, but dependent and fragile at its core.

Why Do We Need Institutes?

The recent Nature Index ranking of the world's top 200 science cities offers a profound lesson in the power of education and research. Beijing holds the top spot, followed by Shanghai and New York, with five of the top 10 positions occupied by Chinese cities. This dominance is no coincidence. For over 30 years, China has relentlessly invested in education, research, and the development of world-class institutions. Today, multiple Chinese universities are counted among the world's top 20, reflecting the tangible returns on this long-term strategy. But the story doesn't end with China. In India, Kolkata has re-emerged as the country's No. 1 science city, ranking 84th globally — ahead of Bangalore (85th), Mumbai (98th), Delhi (124th), and Hyderabad (184th). Surprisingly, Kolkata also surpasses renowned scientific hubs like Tel Aviv, Uppsala, Glasgow, and Leipzig. How did this happen? The answer lies in the presence of well-established research institutions like the Indian Statistical Institute (ISI), the Indian Association for the Cultivation of Science (IACS), and Jadavpur University, which have cultivated a rich academic and research ecosystem. The success stories of Beijing, Shanghai, and Kolkata underscore a simple but vital truth: nations and cities that prioritise education and invest in top-tier institutes do not just compete — they lead. Institutes are not mere buildings; they are crucibles of innovation, talent, and discovery. Without them, no nation can hope to achieve lasting progress or global influence in science, technology, or industry.

The Power of World-Class Research Institutions

The backbone of any nation's scientific and technological progress lies in its research institutions. Take India, for example, where institutions like the Indian Association for the Cultivation of Science (IACS), S.N. Bose National Center for Basic Sciences, Indian Statistical Institute (ISI), Indian Institute of Science Education and Research (IISER), and Saha Institute of Nuclear Physics have played a pivotal role in propelling the country's scientific standing. These institutions boast world-class researchers, robust PhD and postdoctoral programs, attractive research facilities, competitive salaries for scholars, and collaborative research environments. Their contributions are consistently recognized in leading international journals like Physical Review Letters, Nature, and Science, underscoring their global impact.

In stark contrast, Bangladesh does not have a single world-class research institute. The absence of strong PhD and postdoctoral programs and a limited pool of internationally competitive researchers has hindered the country's ability to make a mark in the global scientific arena. This is a critical gap in development strategy. Nations like the United States became superpowers not merely because of natural resources but because they built educational and research giants like MIT, Harvard, Princeton, Yale, Caltech, and Stanford. Similarly, South Korea has the Institute for Basic Science (IBS), Japan has the National Institute of Natural Sciences, and India has the Tata Institute of Fundamental Research (TIFR). Even Vietnam, once seen as a developing nation, has established advanced research institutions and is already reaping the benefits.

The lesson is clear: nations that prioritise education and research institutions create a self-sustaining cycle of innovation, skilled human resources, and technological independence. For Bangladesh to break free from its reliance on foreign expertise and loans for major projects, it must invest in building its own world-class research institutions. Without them, the dream of self-sufficiency in science, technology, and industry will remain out of reach.

A grim view of a Dhaka university dormitory, where students are forced to huddle together in overcrowded, substandard living conditions, offering minimal and wholly inadequate residential support.

What About Bangladesh's Universities?

Bangladesh currently has around 150 universities, but do we have enough competent faculty members to staff even 50 of them? The shortage of qualified teachers is a critical issue that threatens the quality of education in the country. In addition to these universities, over 800 colleges under the National University offer honors and master's degrees, essentially functioning as universities themselves. For perspective, consider Imperial College London — though it is called a "college," it ranks among the world's top 10 universities due to its world-class faculty and research resources. In Bangladesh, however, there is a growing trend to convert large colleges into universities under the misguided belief that a name change alone will ensure academic excellence.

But where are the qualified teachers to support this expansion? Without creating a robust pipeline of highly trained faculty members, no university can hope to achieve world-class status. Bangladesh needs to focus on developing world-class research institutes that can train scholars who will eventually become the next generation of professors. The key to this transformation lies in nurturing excellence, not merely expanding quantity.

What Kind of Institute Do We Need?

To build a world-class research institute, Bangladesh needs to create an environment conducive to deep thinking, research, and reflection. Here's a vision for what such an institute should look like:

• Natural Setting: The institute should be designed like a serene park, filled with trees, birdsong, and tranquil spaces. Research and creativity thrive in natural, peaceful environments.

• Collaborative Spaces: Outdoor benches under trees where researchers can reflect and engage in deep intellectual conversations should be a feature of the campus. Genius often emerges from moments of quiet reflection.

• Comfortable Accommodation: The institute should have a world-class guest house to host visiting scholars from abroad. Comfortable accommodation is essential to attract and retain international collaborators.

• State-of-the-Art Research Facilities: Advanced research infrastructure like supercomputer laboratories are essential to attract the best researchers, both local and foreign. Cutting-edge equipment and modern technology are prerequisites for high-impact research.

• Residency Programmes: The institute should invite top Bangladeshi researchers from abroad to return to the country for 2-3 months a year. This would create a dynamic research environment where local and international researchers can collaborate on high-impact projects. In addition, the institute should invite foreign scholars, and organise schools and conferences around the year.

• Degree it may offer: The institute will offer world-class MS and PhD degrees. It must have its own renowned resident scientists and world-class post-docs. These resident scientists, post-docs together with guest scientists will supervise PhD and take classes at the graduate levels.

The AL government prioritised costly ventures like the Tk10,000 crore Karnaphuli Tunnel over higher education. Despite its hefty price tag, the tunnel stands as an underutilised and inefficient infrastructure project.

How Will This Help Bangladesh?

Supply of Teachers for Universities: With strong PhD and postdoctoral programs, the institute will create a continuous pipeline of highly qualified faculty members for universities and colleges. This will address Bangladesh's chronic shortage of competent university teachers.

Attracting Global Talent: By establishing world-class facilities and offering competitive research opportunities, Bangladeshi researchers living abroad will be more inclined to return, even for short-term assignments. Additionally, international scholars can be invited to join collaborative research projects.

Promoting Research Publications: If the institute fosters research that is published in top-tier journals like Nature and Science, Bangladesh's visibility in the global scientific community will increase. This recognition can attract international grants and partnerships.

Postdoctoral Programs: Strong postdoctoral programs will ensure that PhD graduates remain in Bangladesh, contributing to local innovation instead of seeking better opportunities abroad. This will help retain the country's brightest minds.

Fostering a Research Ecosystem: The creation of this institute will spark an ecosystem of collaborative research and innovation. Such a research ecosystem has the potential to drive progress in various sectors, from technology to healthcare, ultimately benefiting the entire nation.

Instead of focusing solely on physical infrastructure, Bangladesh must prioritise human infrastructure. No nation has ever achieved sustainable development without first investing in education, research, and knowledge creation. Countries like China, South Korea, India, and Vietnam have all demonstrated this path to progress. Without world-class research institutes, Bangladesh will remain dependent on foreign expertise for major development projects like nuclear power plants, satellites, and metro rail systems.

Bangladesh must establish at least one world-class institute for natural or fundamental sciences to achieve truly sustainable development. Such an institute would act as a hub for nurturing the next generation of scholars, engineers, and innovators. While this path may not yield immediate results, it will, over time, produce a self-sufficient, knowledge-driven nation capable of sustainable and independent development. Only through cultivating human potential can Bangladesh achieve the status of a truly developed nation.

Kamrul Hassan is a professor in the Department of Physics at Dhaka University.​

 

[Saif]

NBR eases e-return registration for taxpayers without verified SIMs

The National Board of Revenue has taken special measures for taxpayers who could not submit their tax returns online due to not having biometrically-verified mobile SIM cards.

www.thedailystar.net

NBR eases e-return registration for taxpayers without verified SIMs
The taxpayers must submit a written application in person at room number 717 of the NBR to get registered

The National Board of Revenue has taken special measures for taxpayers who could not submit their tax returns online due to not having biometrically-verified mobile SIM cards.

To complete registration on the e-Return system for return submission, these taxpayers must submit a written application in person at room number 717 of the NBR.

Typically, a taxpayer must have a verified SIM card to log into the e-Return system. However, the tax administrator, which shared this information today in a statement, has introduced this measure as many taxpayers were facing difficulties.

Currently, approximately 10 lakh taxpayers have filed their taxes through the e-Return system. The NBR has requested the remaining taxpayers to file their returns by January 31 of next year.​

 

[Saif]

Decoding the economic impact of BDT/USD movements

In 2024, we have seen the highest devaluation of the Bangladeshi taka (BDT) against the United States dollar (USD).

www.thedailystar.net

Decoding the economic impact of BDT/USD movements

In 2024, we have seen the highest devaluation of the Bangladeshi taka (BDT) against the United States dollar (USD). The exchange rate between the BDT and the USD significantly influences various facets of business operations in Bangladesh, including import and export costs, foreign investment, profitability, and inflation. Incorporating statistical data from authoritative sources provides a clearer understanding of these impacts. In 2000, the exchange rate was approximately BDT 52 per USD.

Ten years later in 2010, it rose to BDT 69 per USD. On December 27, 2024, as per Bangladesh Bank, the amount was 120. A crawling peg exchange rate was introduced in May this year, allowing banks to buy and sell US dollars freely within a mid-range of Tk 117. However, it rose to 127 plus or minus in the curb market.

A weaker taka makes imports more expensive, increasing costs for businesses reliant on foreign goods. The export-oriented industries benefit from enhanced competitiveness, as Bangladeshi goods become cheaper for international buyers.

However, we have historically seen that international buyers adjust buying prices according to the movement of the exchange rate.

Naturally, on the counter-narrative, appreciation of the taka reduces import costs, benefiting businesses reliant on foreign raw materials. It may also reassure investors about the economic strength of the country. However, it hurts export competitiveness, as Bangladeshi products become more expensive for foreign buyers.

Unfortunately, we have seen depreciation of taka for a while now. It makes investments in Bangladesh more attractive in local currency terms, enticing foreign investors.

However, excessive depreciation can raise concerns about economic stability. Bangladesh's foreign exchange reserves, as per the last published amount on the Bangladesh Bank website, are approximately $24.35 billion in November 2024.

On a worrisome level, the Inflation reached 11.38 percent in November 2024, driven by rising import costs and currency depreciation, according to the Bangladesh Bureau of Statistics. To stabilise the economy, the Bangladesh Bank raised its repo rate to 10 percent, aiming to curb inflation and support the currency. However, higher interest rates have increased borrowing costs for businesses.

We have seen the impact of the increased rate of borrowing for project finance in the drop in the percentage of private sector credit growth. This is paradoxical, as private sector investments will be crucial to overcoming the economic crisis we face as a nation.

Going forward, businesses can mitigate exchange rate risks through hedging strategies to offset potential losses. They can also diversify sourcing and markets to reduce reliance on any single currency and implement flexible pricing models to adjust for currency fluctuations.

The BDT/USD exchange rate is a critical factor influencing the Bangladesh economy. Its effects are wide-ranging, from importers grappling with rising costs to exporters capitalising on competitiveness. By staying informed through reliable data from sources such as the Bangladesh Bank, Bangladesh Bureau of Statistics, and Trading Economics, businesses can navigate these challenges effectively, maximising opportunities and minimising losses.

The writer is a former president of the Dhaka Chamber of Commerce & Industry (DCCI)​

 

[Saif]

Economic woes far from over

Just a year ago, this newspaper ran a story leaving a question for our readers as to whether Bangladesh would be able to put its economy back on track in 2024.

www.thedailystar.net

Economic woes far from over

Just a year ago, this newspaper ran a story leaving a question for our readers as to whether Bangladesh would be able to put its economy back on track in 2024.

As we look back, the nation is set to bid farewell to one of the most significant years -- both politically and economically -- since its journey began more than five decades ago.

The country saw a political changeover in early August following a mass uprising just seven months after the national election.

Besides, the economic challenges that persisted in 2023 continued in the outgoing year, with the situation getting worse in many cases.

Despite policy tightening by the authorities, inflation, which has hovered above 9 percent since March 2023, stayed elevated as the prices of various locally produced and imported items continued to soar, leading to a gradual erosion of living standards for middle and low-income groups.

The strain on the foreign exchange reserves and pressure on external accounts also persisted as exports did not pick up enough to bolster the forex flow despite a contraction in imports due to policy measures by the central bank.

Industrial production growth slowed sharply, suffering from a decline in the people's purchasing capacity amid high inflation and sluggish exports.

After posting only 4.2 percent growth in the 2023-24 fiscal year that ended in June, the general index of large-scale industrial production fell by 0.71 percent year-on-year during the July-September of FY25 compared to 11.87 percent growth during the same period a year ago, according to the Bangladesh Bank.

There was no good news in private investment.

Amid high inflation, rising interest rates and uncertainty, the appetite for investment waned as evinced by a dip in imports of capital machinery, a key indicator of private investment. Growth of private credit declined as well in the outgoing year.

And the challenges increased further amid the deepening banking crisis. Non-performing loans surged to a multiyear high -- around 17 percent of the total outstanding loans of Tk 16.82 lakh crore -- in September this year.

One good news is the revival in the flow of remittances as the use of informal channels for transferring money reduced after the political changeover in August that ended the 15-year rule of Awami League.

Against this backdrop, the International Monetary Fund (IMF) and other major multilateral agencies predicted a slower growth of Bangladesh's economy.

Recently, the IMF said Bangladesh's economy may grow 3.8 percent in FY25, the slowest since FY20, because of output losses caused by the July uprising, floods and tighter policies.

It said annual average inflation is anticipated to remain around 11 percent in FY25 before declining to 5 percent in FY26, supported by tighter policies and easing supply pressures.

However, the outlook remains highly uncertain, with risks skewed to the downside, it added.

"The year 2024 has been an unprecedentedly challenging year marred by numerous obstacles, be it the economic slowdown, environmental disasters or mass uprising in July-August," said Zaved Akhtar, president of the Foreign Investors Chamber of Commerce and Industry (FICCI).

"Businesses had to work with three multifaceted stakeholders and environments, one pre-election, one post-election and then the final set with the interim government."

Deen Islam, associate professor of economics at the University of Dhaka, said 2024 was an especially difficult year for poor and vulnerable groups.

"Rising prices of essential commodities, such as food and fuel, disproportionately affected those with limited financial resilience. Price hikes of basic necessities, including rice, wheat and edible oil, placed a significant strain on household budgets, exacerbating poverty and inequality."

"The economic pain was further compounded by two devastating floods, which disrupted agricultural production and threatened local food security," he added.

Islam further said that the year 2024 stands out as one of the most eventful and challenging periods in Bangladesh's economic history.

Shams Mahmud, managing director of Shasha Denims Ltd, an apparel exporter, said the year 2024 will be remembered as a watershed year for Bangladesh.

"We had seen the policies undertaken by the previous government stifle private sector growth as well as reinvestment," he added.

"Oligarchs and their businesses were prioritised at the expense of the private sector of Bangladesh."

Tanvir Ahmed, managing director of Sheltech and Envoy Legacy, said the political uncertainty has impacted consumer confidence on products and services offered by local industries.

"From construction and real estate to ceramics, steel, cement, rod, commodity industries and also the stock market, are all experiencing low demand for their products."

"While prices have driven the elasticity of demand in previous situations, this time it is more of socio-political issues that are keeping customers and consumers from spending their disposable income," he added.

LOOKING FORWARD TO 2025

Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh, said the outlook for FY25 is also cloudy primarily owing to the difficult law and order situation and political uncertainties.

"While there is an encouraging recovery in exports and remittances, import recovery is lukewarm and both public and private investment are down. The ADB, IMF and World Bank have all revised their growth projections downwards for FY25," he added.

Deen Islam said global market trends suggest the prices of essential commodities like rice, wheat and edible oil are likely to rise further, driven by supply chain disruptions and climatic challenges.

To prevent a deepening crisis, the interim government must adopt proactive policies to safeguard the food supply and protect vulnerable populations.

Zaved Akhtar, also chairman and managing director of Unilever Bangladesh, said the global business environment will continue to be difficult given the geopolitical tensions and higher global energy and commodity costs in 2025.

He said in recent periods, businesses have seen challenges with the exchange rates of currencies.

While currencies tend to depreciate to adjust their values amid market forces, sudden and sharp depreciation creates an immediate impact on businesses and the economy as business plans and assumptions are based on currency forecasts.

"In addition, given our country's import dependency, inflation is now unlikely to be abated soon and the cost of operations will likely go up. Companies that have exposure to foreign currency will have increased cost exposure," Akhtar said.

Kanti Kumar Saha, chief executive officer of Alliance Finance PLC, said following the political changeover in August, there has been growing optimism for reform on the macroeconomy and business fronts.

However, he said much will depend on reforms in the financial and other sectors alongside timely utilisation of the annual development fund to bring back the country's growth momentum.

Also, the adoption of market-based exchange rates is needed to support international trade, which is a lifeline for the domestic economy.

Ease of doing business, bringing down inflation and non-performing loans, maintaining remittance and export growth, and improving revenue collection will be key challenges in 2025, Saha said while suggesting that the right reforms for the capital market can boost investor confidence in the new year.​

 

[Saif]

Liberalising the foreign exchange regime

Since our independence, 53 years have gone by and the country has already become a quasi-dominant player in the global supply chain. Y

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Liberalising the foreign exchange regime

Since our independence, 53 years have gone by and the country has already become a quasi-dominant player in the global supply chain. Yet our dominant stakeholders are being forced to take shelter under the Foreign Exchange Regulation Act (FERA) 1947 delineated by East India Company, barring foreign exchange liquidity or exchange rate stability issues. Our trading community and investors, local or foreign, still find our foreign exchange regime to be the most cumbersome and complex among emerging economies. We, in most cases, have to go back to our central bank for almost every other cross-border transaction approval. Hence, it is not helping us at all. No matter how sympathetic our central bank officials are, they are mostly busy with day-to-day transaction approvals, with no time to think beyond or reforming the cross-border transaction domain we are in.

What do we need to do?
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• Implement an easier pre-and post-facto approval process against outward remittance of surplus earnings, dividends, training, technical know-how, operational assistance, software purchase and renewal fees, etc.​
• Liberalise the external borrowing guideline to promote access to cost-effective financing options for Bangladeshi borrowers.​
• Develop a comprehensive guideline to promote financial market growth by removing case-to-case time-consuming approval.​
• Allow a discount against export on compelling grounds (e.g., quality issues): As of now, the pre-facto discount approval process is quite painstaking and uncertain. Such a conservative approach remains a hindrance to remaining competitive, notably with increasingly demanding global apparel buyers.​
• Open account trade is still restricted in the local context while global trade is heavily reliant on this.​
• Allow electronic presentation of import and export-related trade documents through secured electronic platforms.​

A few more points on process and technical approaches could be:
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• Relook at the role of exchange houses. Like exports, it has to happen like USD drawing arrangements (no buying of Taka, which is currently in place); the flow has to come in USD in designated banks and be converted into a published rate. With Taka buying, competition happens, and less USD comes into the country.​
• Interbank foreign exchange market should be built up from the ground again. In absence of brokers like other similar countries, here interbank trades are one way traffic only -- between two banks with sides known to each other. So, no market making is happening. In an ideal situation all excess from one bank to another bank should route via buy /sell through brokerage houses and in the absence, the central bank. In this way, transparency in rate may be ensured.​
• L/C clearance mechanism not needed; as official outflow is already significantly down. The L/C clearance process may unnecessarily delay the process or may lead to unofficial forex outflow.​

One may of course argue that external borrowing rates are already high now. Hence, it is not certain if liberalising would help.

Without liberalising interest rates of the government bills and bonds, and letting FX forward pricing based on market forces, steps may not be very effective.

I would also push for a few more fundamental points:

(a) The quality of auditors and BB's enlistment process for auditors. It must be made more stringent; (b) strict compliance with local rating companies' rating process. A local rating company rated known to be 'quite bad bank' AAA. What would you think, when a relatively far better bank is rated AAA? After S Alam took over and bad loans started piling up, Islami Bank's rating improved.

We are now talking of various reforms with the interim government, then why not reforming our cross-border trade, remittance and payment regime?

The writer is the chairman at Financial Excellence Ltd​