[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Private sector struggling under mounting pressure

The private sector is facing increasing uncertainty as stubbornly high inflation, stagnant investments and inconsistent energy supplies continue to weigh on businesses, according to industry leaders.

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Private sector struggling under mounting pressure
Businesses say at seminar

The private sector is facing increasing uncertainty as stubbornly high inflation, stagnant investments and inconsistent energy supplies continue to weigh on businesses, according to industry leaders.

"In recent months, business sentiment has been significantly affected by inflationary pressures, high borrowing costs and exchange rate volatility," said Taskeen Ahmed, president of the Dhaka Chamber of Commerce & Industry (DCCI), at an event in Dhaka yesterday.

He called for policy stability and structural reforms to restore business confidence.

Red-hot prices remain a key concern for both individuals and businesses, with inflation hovering at over 9 percent since March 2023. Making things worse, Bangladesh's foreign exchange reserves have been under strain for nearly three years, leading to a depreciation of the local currency against the US dollar.

For manufacturers, rising commodity prices usually result in reduced demand, while a weaker taka increases operational costs. Besides, authorities have raised interest rates to battle inflation, further pushing up borrowing costs for businesses.

In his keynote address at the event, titled "Bi-Annual Economic State and Future Outlook of Bangladesh Economy – Private Sector Perspective," the DCCI president said that industries are already under pressure due to inconsistent energy supplies, which they fear will worsen during the upcoming summer.

"Industries are struggling with frequent power shortages and an unpredictable energy supply. The cost of gas has increased, yet supply is inconsistent," Ahmed said.

"If this continues, businesses will find it difficult to remain competitive."

The DCCI president mentioned that private investment has stagnated at 24 percent of GDP almost since the pandemic, while foreign direct investment (FDI) has dropped to a six-year low.

"Without urgent interventions, sustaining economic momentum will be challenging."

Regarding the financial sector, Ahmed pointed to the growing liquidity crisis, especially its impact on businesses.

"The central bank hiking the policy rate to 10 percent has made credit inaccessible for small and medium enterprises. Private sector credit growth fell to 7.28 percent in December 2024, well below the target of 9.8 percent for the fiscal year 2024-25. The high cost of borrowing is discouraging investment."

Ahmed called for policy consistency, tax reforms and investment in infrastructure to support private sector growth.

"The private sector is ready to drive economic expansion, but we need clear and stable policies. If inflation, energy crises and financial instability drag on, businesses will struggle to sustain operations," he mentioned.

M Masrur Reaz, chief executive officer of the Policy Exchange Bangladesh, said the country's macroeconomic situation has been in a fragile state since 2022 due to high inflationary pressures.

He believes macroeconomic stability will remain elusive if the foreign exchange reserves do not increase by $7 to $8 billion by the end of this year. As such, the economist requested the government to secure $5 to $6 billion from multilateral lenders by June to stabilise forex reserves.

Reaz also advocated a stable and sufficient energy supply.

Sayera Younus, executive director (research) of Bangladesh Bank, said inflation would decline to around 6 percent by the end of the current fiscal year.

She hoped that the foreign exchange reserves would increase by at least $5 billion by the end of June, driven by growing exports and remittance inflows.

Mohammad Abu Eusuf, a professor of development studies at the University of Dhaka, said financing a deficit by borrowing from the banking sector would hurt private sector credit flow.

Mohammad Yunus, research director at the Bangladesh Institute of Development Studies, highlighted the potential for FDI and joint ventures, especially in the leather and pharmaceutical sectors.

Md Abdur Rahim Khan, additional secretary (export) of the commerce ministry, said export diversification remains a significant challenge, with garments accounting for more than 85 percent of export earnings.

Khan, who is currently the secretary of the commerce ministry, said the local light engineering sector holds immense potential, though exports in this sector declined in the last fiscal year.

Regarding Bangladesh's graduation from least developed country (LDC) status, which is scheduled in 2026, he said that despite the phasing out of subsidies and incentives, reducing business costs by 10–15 percent could enhance global competitiveness.

However, he pointed out that access to financing poses a challenge for entrepreneurs. Besides, it is important to attract foreign investment to build a diversified economy.

Referring to the current tax-to-GDP ratio of 8 percent, Khan said, "$40 billion in revenue collection for a $450 billion economy is completely unacceptable."

He also expressed concerns over the lack of full automation of government services and the inadequate implementation of the National Single Window system.​

 

[Saif]

Bangladesh on the path to recovery, says Finance Adviser

Finance Adviser Dr Salehuddin Ahmed on Saturday stressed collective efforts to move Bangladesh forward, aiming to provide a better and more dignified life for all citizens. "We want to ensure a quality life for all," he said at an event unveiling the second edition cover of his book, "Go

thefinancialexpress.com.bd

Bangladesh on the path to recovery, says Finance Adviser
UNB
Published :
Feb 22, 2025 22:02
Updated :
Feb 22, 2025 22:02

Finance Adviser Dr Salehuddin Ahmed

Finance Adviser Dr Salehuddin Ahmed on Saturday stressed collective efforts to move Bangladesh forward, aiming to provide a better and more dignified life for all citizens.

"We want to ensure a quality life for all," he said at an event unveiling the second edition cover of his book, "Govornorer Smritikotha", followed by a discussion meeting at the Institute of Chartered Accountants of Bangladesh (ICAB) Auditorium in Dhaka. The book's first edition was published in 2019.

Dr Salehuddin recalled that the country had nearly plunged into a severe crisis during the previous regime. "Bangladesh was almost on the brink of falling into a ditch," he noted, "but now it's turning around, thanks to the sincere efforts of the government and support from all stakeholders."

Emphasising responsibility over mere power acquisition, Dr. Salehuddin remarked, "We did not just assume power; we took responsibility. You cannot imagine the state Bangladesh was in previously; only those involved closely knew the depth of our troubles."

Reflecting on his experiences, the Finance Adviser described the background behind writing his memoir, which sheds light on critical periods in Bangladesh's banking sector and economy. He emphasized that he never compromised his principles during his tenure as Governor of Bangladesh Bank and earlier as a public servant.

Dr Salehuddin called for enhanced honesty, integrity, and skill development among human resources to drive the nation forward. "Now more than ever, we need honesty, integrity, and competent human resources," he urged.

He added that Bangladesh enjoys a positive impression internationally. "We should all strive to uphold our country's dignity and self-respect."

Encouraging constructive criticism, Dr Salehuddin cautioned citizens to remain vigilant against forces that may exploit criticism to harm national interests.

Highlighting the importance of balanced growth, the Finance Adviser emphasized, "We hope to rapidly move the country forward by ensuring quality life. High growth and income alone won't suffice; quality education and health care are equally crucial. We are relentlessly trying in this direction."

Dr Salehuddin further called upon everyone, irrespective of class or creed, to support the interim government in swiftly addressing the nation's pressing challenges.

Speaking at the event, distinguished guests, including Editor and Publisher of the daily Bonik Barta Dewan Hanif Mahmud, CPD Distinguished Fellow Dr Mustafizur Rahman, Dhaka University Professors Dr Kazi Marufur Rahman and Dr Rashed Al Mahmud Titumir, former NBR Chairman Abdul Majid, Professor Dr Mahbubullah, and writer Faruk Saifuddin, emphasized the need for the interim government to guide the economy towards recovery from near collapse.

They expressed cautious optimism, saying it would be unrealistic to expect full recovery within six months but emphasised the current leaders' potential to pave the way forward. They also underscored the pressing need to establish a society rooted in non-discrimination, equality, and justice.

Dr Salehuddin hinted that his forthcoming third edition would expand beyond his memoirs as the former Governor. "I want to write about diverse contemporary experiences. Since I have taken an oath, I cannot divulge much now," he said.​

 

[Saif]

Growth to remain sluggish for a while

Bangladesh's economy is likely to witness another year of low growth and high inflation, thanks to the revolutionary change in the political arena half a year ago. The student-led mass uprising, which forced the autocratic regime of Sheikh Hasina to fall on August 5 last year, led to a critical tra

thefinancialexpress.com.bd

Growth to remain sluggish for a while
Asjadul Kibria
Published :
Feb 22, 2025 22:43
Updated :
Feb 22, 2025 22:43

Bangladesh's economy is likely to witness another year of low growth and high inflation, thanks to the revolutionary change in the political arena half a year ago. The student-led mass uprising, which forced the autocratic regime of Sheikh Hasina to fall on August 5 last year, led to a critical transition in the country's power structure. This mass movement also significantly disrupted economic activities, leading to a bearish quarterly growth of 1.81 per cent against 3.91 per cent in the last quarter of FY24. However, economic activities rebounded modestly in the second quarter of the current fiscal year, as reflected in several proxy indicators.

Nevertheless, there is little scope to be optimistic that the economic growth in the second half of the current fiscal year would see a mighty comeback. The latest half-yearly Monetary Policy Statement (MPS), released by Bangladesh Bank in the third week of last month, made it clear. "The growth outlook for the second half of FY25 for Bangladesh does not appear optimistic due to the existing challenges," said the central bank in the MPS announced for the January-June period of 2025. "It will be hard to regain growth momentum in the near term since the government is focusing on improving fiscal discipline, and the central bank is working to control inflation," it added.

The central bank projected that economic growth might remain sluggish at around the 4.0-5.0 per cent range in the current fiscal year. In other words, the growth in FY25 will be similar to FY24, when output expanded by 4.22 per cent in the final count. The growth rate was 5.78 per cent in FY23.

Looking back, the country's annual economic growth came down to the lowest level in FY20 due to the Covid-19 pandemic-driven contraction of economic activities. GDP registered a modest 3.45 per cent in FY20, which was lowest in the last decade. In the later years, GDP bounced back, registering 6.94 per cent and 7.10 per cent in FY21 and FY22, respectively. The robust pace of growth could not be sustained in the later years. The previous regime blamed external factors, such as the negative fallout of the Russia-Ukraine war, to be precise.

Though the external factors played a role, economic mismanagement and extensive corruption of the Hasina regime, coupled with the manipulation of growth statistics, made things worse. During the last decade, several economists and experts raised some questions about the growth figures, but the autocratic regime did not pay any heed. Instead, it became gradually difficult to question the authenticity of growth, and anyone who expressed apprehension was at risk of backlash. Constructive debate on growth, as well as different economic indicators, was not welcomed. The fallen regime and its loyalists rather used to tag any such debate or discussion as a move to undermine the country's persistent development. The regime became unaccountable and set a trend of not responding to questions raised by experts and media. So, getting access to information from national statistical agency or the central bank was complex. It also continued its manipulative effort to manufacture economic growth to show that the country is moving ahead at a rapid rate. Nevertheless, growth started to fall, and the downward trend continued for three consecutive years, showing the systematic weakness of the economy.

Against the backdrop, it is clear that the size of Bangladesh's economy has not grown as high as recorded in the last decade. The expansion or the growth rate of the economy, as estimated by the Bangladesh Bureau of Statistics (BBS), requires careful examination and should not be taken at face value. For instance, in FY21, GDP at the current market price was recorded at US$416 billion, which increased to $450 billion in FY24. Economists and experts who have tried to estimate the GDP alternatively observed that the official figure is around $50 billion more than the real GDP. The previous regime used the inflated GDP figure to create an artificially colourful picture of development and push the country's graduation from the Least Developed Country (LDC) status without adequate preparation.

It is crucial to re-estimate or re-calculate the GDP figures to determine the actual size of Bangladesh's formal economy. This task, though daunting, is necessary for the national statistical agency. Nevertheless, BBS needs to do so for at least two or three years and provide a more authentic picture of GDP, as some corrective steps have already been taken. The modest growth in FY24 reflects that.

In the current year, the central bank's projection of GDP growth rate between 4 to 5 per cent range seems realistic. After a significant disruption in economic activities, followed by a slow pace of recovery, there is no scope of registering a high growth of 6 per cent or more. That's why the MPS said: "Despite the modest slowdown in economic activity, the projected growth should be viewed as remarkable, given the numerous challenges facing the economy."

The major challenges include curbing inflation, stabilising the exchange rate, rebuilding the foreign exchange reserves, and most importantly, restoring public confidence in the banking system. Due to a series of irregularities patronised by the ousted regime, the country's banking sector became vulnerable, which is reflected in the high amount of default loans. Depletion of foreign exchange reserves was driven by higher payments of imports and debt servicing against lower earnings in exports and a modest inflow of foreign investment. Again, despite some manipulation to keep the inflation rate low, it was impossible to suppress the real situation at one stage. Double-digit inflation continues to erode real income, and the central bank has been struggling to bring it down for the last six months.

In the latest MPS, the central bank rightly stressed containment of inflation without worrying much about growth. Keeping the higher policy rates unchanged is a step in that direction.

Sacrificing growth may not be desirable, though it is necessary for the time being to tame the excessive pressure of inflation.​

 

[Saif]

Beza developing 3-phase plan for economic zones

The Bangladesh Economic Zones Authority (Beza) is developing a comprehensive three-phase implementation plan to develop economic zones across the country, ensuring balanced industrialisation, employment generation, and sustainable infrastructure development.

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Beza developing 3-phase plan for economic zones

The Bangladesh Economic Zones Authority (Beza) is developing a comprehensive three-phase implementation plan to develop economic zones across the country, ensuring balanced industrialisation, employment generation, and sustainable infrastructure development.

As part of a draft "National Master Plan of Economic Zones", Beza is prioritising establishing 20 economic zones by 2046, strategically phasing the implementation for resource optimisation and to attract local and foreign investment.

Beza disclosed this during a workshop on "Economic zone prioritisation and phasing, offsite infrastructure planning and development mechanism" at its office in Biniyog Bhaban at the capital's Agargaon yesterday.

According to the master plan, which is currently being formulated through financing from World Bank, the phased approach helps mitigate challenges related to land acquisition, infrastructure readiness, and investor confidence.

The first phase, spanning from FY25 to FY30, will prioritise economic zones that are already under development or at an advanced planning stage

This in turn ensures that economic zones develop in a structured and sustainable manner, states the master plan.

Only 10 economic zones have become operational since Beza rolled out a massive industrialisation plan in 2015.

Of the 10 economic zones, two – the National Economic Zone in Chattogram and Sreehatta Economic Zone in Sylhet -- are government-run while eight are under private management.

The private ones are City Economic Zone, Meghna Industrial Economic Zone, Meghna Economic Zone, Hoshendi Economic Zone, Abdul Monem Economic Zone, Bay Economic Zone, Aman Economic Zone, and East West Economic Zone.

According to a Beza report, the 10 economic zones employ around 60,000 people. Some 7,000 people are working in government-run zones and 53,000 in the private zones.

Products worth $14.47 billion were produced in the 10 economic zones in the last fiscal year of 2022-23, it said.

Addressing the workshop, Ashik Chowdhury, executive chairman of Beza, reaffirmed his commitment to turning the master plan into a blueprint for success, driving growth, innovation, and sustainable industrialisation.

"Whenever I am given a big project, I know it is a huge responsibility. There are many challenges, but I see them as chances to learn and grow," he said.

"Beza has grown because of hard work, good planning, and always aiming for the best."

Speaking about Bangladesh's economic growth, Chowdhury said, "A long time ago, we chose Narayanganj as an important place for development. We made that decision after careful study, and now we see the results.

"We are creating a space where businesses can succeed, new ideas can grow, and young people can dream big," he added.

Beza is not just building economic zones, it is shaping the future of Bangladesh, he said.

"We must create more jobs, grow our economy, and make Bangladesh even stronger. Let us work together for a better future," Chowdhury said.

Gayle Martin, country director of World Bank, emphasised the importance of rationalising economic policies to foster sustainable growth.

From the international financial institution's perspective, a well-functioning private sector is crucial for innovation, entrepreneurship, job creation, and sustainable management of natural resources, she said.

World Bank has been supporting Bangladesh in its economic progress, analysing growth trends, and enhancing policy frameworks, she said.

In collaboration with the International Finance Corporation, World Bank is preparing a private sector diagnostic, set to launch in the coming weeks, Martin informed.

According to her, another critical area is tax policy and administration. Bangladesh has one of the lowest tax-to-GDP ratios in the world and tax exemptions account for 6 percent to 7 percent of the GDP.

Rationalising these policies is essential for fiscal sustainability, she emphasised.

While the strong growth trend of the past has lost steam, strategic private sector investment can revitalise the momentum, said Martin, adding, "The World Bank remains committed to supporting structural reforms that maximise economic zones' impact."

According to a presentation on the master plan, the first phase, spanning from FY25 to FY30, will prioritise economic zones that are already under development or at an advanced planning stage.

Beza is focusing on the construction of roads, power supply, water management, and telecommunications to attract investors.

It is also offering incentives and ensuring a "favourable" business environment by focusing on select industrial sectors such as agro-processing, textiles, and light engineering due to their low capital requirement and high employment potential.

These zones being prioritised have already been provided land, face minimal legal disputes, and have high investor interest, making them ideal for early implementation.

By 2030, these zones are projected to generate over 300,000 jobs and contribute significantly to export earnings, thereby strengthening Bangladesh's position in global trade.

The second phase, running from FY31 to FY35, will focus on introducing large-scale industries such as automobile manufacturing, pharmaceuticals, and heavy engineering.

In this phase, railway and expressway connectivity will be strengthened, and more public-private partnerships (PPP) and government-to-government (G2G) collaborations will be promoted.

Work is currently underway for the issuance of legal and environmental clearances for the land of these economic zones, and by 2035, these are expected to house large-scale industrial parks that will contribute to Bangladesh's growing manufacturing and export sectors.

The final phase, extending from FY36 to FY46, aims to transform Bangladesh into a global industrial hub by introducing AI-driven logistics, automated factories, and IoT-based infrastructure.

It will set up green economic zones with eco-friendly policies, renewable energy, and circular economies.

In this stage, specialised clusters will be created to compete with global industrial zones in Vietnam, India, and China.

The master plan states that despite efforts toward structured rollouts, land acquisition issues, environmental regulations, and policy inconsistencies remain key challenges.

Through successful implementation, the master plan seeks to transform Bangladesh into a regional industrial powerhouse, creating millions of jobs and boosting economic diversification beyond Dhaka and Chattogram.​

 

[Saif]

Country’s economy in positive trend: BIDA chief

Bangladesh Investment Development Authority executive chairman Chowdhury Ashik Mahmud Bin Harun said that there was a positive trend in the country’s economy in the past six months...

www.newagebd.net

Country’s economy in positive trend: BIDA chief
Staff Correspondent 23 February, 2025, 22:21

Bangladesh Investment Development Authority and Bangladesh Economic Zones Authority executive chairman Chowdhury Ashik Mahmud Bin Harun and National Board of Revenue chairman Abdur Rahman Khan, among others, are present at the launch event of Authorised Economic Operator at the NBR premises in the capital Dhaka on Sunday. | Press release

Bangladesh Investment Development Authority executive chairman Chowdhury Ashik Mahmud Bin Harun said that there was a positive trend in the country’s economy in the past six months.

‘Exports have increased by 13 per cent in the last 6 months, where the container handling also increased by 7 per cent in January. We need to address all the negative factors and move forward,’ he added.

He was speaking as the chief guest at the launching event of the Authorized Economic Operator at the National Board of Revenue on Sunday.

The NBR launched the AEO in aiming to make export-import business easier and risk-free along with providing customs and tariff-related information from a single platform.

BIDA executive chairman also said that if the AEO is fully operational, the pressure will be reduced on both the NBR and the business community. He also said that it should have launched earlier but it took 12 years.

He also said that a new chapter in trade facilitation has begun in Bangladesh with the issuance and implementation of the AEO certificate.

‘Compliant importers and exporters will benefit greatly by reducing lead time and costs through the proper implementation of AEO,’ he added saying that in placing import orders, the buyers first consider its Vietnam operations before allocating the remaining orders to its Bangladesh unit as Vietnam is far ahead in terms of lead time. He also said that the country needs to address these.

The NBR launched the Authorised Economic Operator to facilitate and eliminate risk in export-import business and provide customs and tariff-related information from a single platform.

Businesses and individuals can access essential trade-related details, including general information, compliance requirements, product-specific documentation, tariff rates, duty and tax benefits, an approximate tax calculator and preferential tax benefits, through dedicated websites, according to a NBR presentation.

The NBR also introduced ‘Customs Strategic Plan 2024-28’ and ‘Export-Import Hub’ at the event.

The AEO module is within the Automated System for Customs Data (ASYCUDA) World, which is designed to facilitate faster consignment clearance at ports, the revenue authority said.

NBR chairman Abdur Rahman Khan acknowledged that the revenue authority had lagged behind in automation efforts, as it had failed to implement the AEO system on time.

He said that some businesses tried to comply with the system in all areas, but some evaded it everywhere.

‘This cannot continue and through the AEO, compliant businesses will get special benefits. We want to see them compete to achieve this facility,’ he added.

He also said that the Mongla and Pangaon ports were still less busy and since cargo pressure was low at these two ports, all goods were tested there properly.

However, he said, due to high pressure, several goods are released without proper testing at the Chattogram port.

‘Introduction of the AEO facility will gradually reduce pressure on the Chattogram port as testing will be easier. If the importers get the same facilities at Mongla and Pangaon ports, they will also use those,’ he added.

NBR first secretary (customs) Amimul Ehsan Khan showcased the presentation on AEO and said that the exporters and importers registering companies under the AEO system would receive unique benefits in the expedited clearance of imported goods and customs clearance of exported goods.

AEO-licenced companies will be able to automatically self-assess 20-50 per cent of their product shipments through green lane facilities. They will also be able to use the AEO logo, pre-arrival declaration, less documentary requirements, priority in scanning and physical examination, regular audit, etc.

Moreover, the companies will be able to temporarily clear customs without chemical testing of the products they require. In cases where a bank guarantee is required, they will get the benefit of clearing goods by providing a 75 per cent bank guarantee and 25 per cent commitment.

Nine companies have received AEO certificates till date.

Zaved Akhter, chairman of Unilever Bangladesh Limited, among other businesses, also spoke at the event.​

 

[Saif]

BANGLADESH ECONOMY: Turning demographic challenges into opportunities

SPEAKING at the recent annual conference of the Bangladesh Administrative Service Association, Chief Adviser Dr Muhammad Yunus has emphasised the need to create opportunities for young people, asserting that Bangladesh’s large population is not a burden but a valuable resource...

www.newagebd.net

BANGLADESH ECONOMY: Turning demographic challenges into opportunities
Anis Chowdhury and Khalid Saifullah 24 February, 2025, 00:00

SPEAKING at the recent annual conference of the Bangladesh Administrative Service Association, Chief Adviser Dr Muhammad Yunus has emphasised the need to create opportunities for young people, asserting that Bangladesh’s large population is not a burden but a valuable resource.

A day later, deputy commissioners proposed the introduction of universal military training for youths, aiming to involve them in the country’s defence efforts.

Of course, this is a political decision, and it requires serious examinations of the proposed programme’s budgetary implications.

We have done some preliminary budget estimates. The good news is that we can introduce the programme progressively over 5-8 years, say beginning with 10 per cent of those turning 18 years as a pilot and then gradually covering the entire cohort of 18-20-year-olds who are able to serve.

The context: seismic demographic shift

IN 50 years since independence, Bangladesh’s population more than doubled from around 70 million (7 crore) to around 174 million (17 crore), turning Bangladesh into one of the most densely populated countries in the world. Despite a rapid fall in fertility, Bangladesh’s population will continue to grow largely due to the momentum effect. The UN Population Division projects that Bangladesh’s total population will reach its peak in 2071 with a population of 226 million.

Bangladesh is well into the third phase of demographic transition, having shifted from a high mortality-high fertility regime to a low mortality-low fertility one. As shown in the population pyramid (Figure 1), there is a youth bulge comprising about 28 per cent of the population in the age bracket 15-29.

The UN projects that by 2030, the proportion of youth in the age bracket 15-29 years will decline to around 25 per cent and by 2050 to around 20 per cent. So, this is our demographic moment that comes only once (see Figure 2).

As professor Yunus stressed, the young population is a blessing — a source of strength, energy, and vigour. A country with a large number of young people not only has a large pool of workforce but also a large pool of potential future leaders — often referred to as a ‘demographic dividend’.

However, demographic dividend is not prearranged. It is an opportunity provided by the age structural transition. This window of opportunity opens for a population only once. If missed, it may become a ‘demographic curse’.

A country can “become old before becoming developed,” as we see in the case of Sri Lanka, characterised by a large proportion of elderly population (non-working age) while the nation still struggles with poverty and infrastructure issues. Thus, the country not only has fewer working-age people (i.e., a smaller workforce), but also has to support a large number of people in their older age. Such a demographic situation potentially hinders a country’s economic progress and creates challenges for its social welfare systems.

Thus, an increase in the proportion of young people in a country’s population structure can bring a huge dividend provided this raw power is converted into highly skilled human resources, absorbed in productive employment, and turned into entrepreneurs.

This can be shown by decomposing the neo-classical production function as follows: Y/P = Y/SE x SE/E x E/LF x LF/WP x WP/P, where Y = GDP, P = population, E = employment, SE = skilled employment, LF = labour force, WP = working-age population.

Thus, GDP per capita (Y/P) is the product of: a) productivity gains due to skilled employment (Y/SE), b) proportion of skilled employment (SE/E), c) employment rate (E/LF), d) labour force participation rate (LF/WP) and e) demography, i.e., proportion of working age population (WP/P).

Bangladesh’s demographic dividend may become a mirage. The recent student/youth unrest, which began with a demand for quota reform and ultimately toppled the Hasina regime, is a clear indication of the economy’s inability to absorb these youthful people in productive employment or turn them into entrepreneurs. The official unemployment figure of about 3-4 per cent based on outdated labour force survey methodology does not reflect the reality.

National service: a feasible urgent solution

OUR most critical challenge is preventing the demographic curse and reaping the demographic dividend. Mandatory national service, comprising some basic defence training, IT and general literacy-numeracy, and vocational skills, will not only bring enormous economic benefits but also prepare the country for disaster management, especially due to the climate crisis. It will also act as an effective deterrent against possible threats to our national sovereignty.

Currently, we have around 1.6 crore (15.9 million) youths in the age bracket 20-24, roughly 87 lakh females and 73 lakh males. Of the youth turning 18 years, about 29 lakh are able to serve, excluding child-bearing females (around 25 per cent) and those with various disabilities.

If 10 per cent of the youth turning 18 years are included in the programme in the first year, and Tk 12,000 per month (equivalent to the current minimum wage) is used for each participant, then 5.8 per cent of the total 2024-25 budget proposed by the fallen regime would be required for defence. This is marginally higher than the 5.3 per cent allocated in the proposed 2024-25 budget. This figure rises to 5.9 per cent and 6.2 per cent if training each participant requires Tk15,000 and Tk20,000, respectively.

The above rough and ready estimates assume no change in the existing allocation for other defence expenses. Nor does the exercise consider efficiency gains.

Obviously, budgeting cannot be done in isolation. The first place to find money is reallocation as required by reprioritisation. It should be mentioned here that the fallen regime in its last budget proposed for 2024-25 in June 2024, increased defence budget by 11 per cent over the revised defence budget for 2023–24. Therefore, this has to be examined seriously; the priorities of the ‘new Bangladesh’ cannot be the same as the fallen regimes.

Money can also come from the savings that might result in other sectors, e.g., education, as there will be reduced pressure to expand post-secondary education. If necessary, the costs of such programmes have to be shared through higher taxes for the sake of securing a prosperous future for this country.

Empowering the youth

TRAINING and skill development through mandatory national service is just one element in the supply side of the equation. The pool of available talent needs to be empowered and deployed to yield a demographic dividend. Otherwise, it will be wasted and may even turn into a disruptive force.

Our most critical challenge is preventing the demographic curse. Not only do we have to reap the demographic dividend, but we also have to ensure what is referred to in the literature as the ‘second demographic dividend’. While the ‘first demographic dividend’ due to the rise in the proportion of working-age population is transitory, the ‘second demographic dividend’ can be perpetual.

For this to happen, countries need to invest in skill upgrading, support entrepreneurial initiatives, and create innovative/flexible work environments to allow working even in older age and asset accumulation by workers.

Especially given the advancement in technology, and particularly artificial intelligence, we urgently need to rethink skill development for our youth. Many university degrees may soon become obsolete because the skills they offer are prone to automation.

Ironically, many blue-collar, hands-on jobs are likely to survive because they require mental and motor skills humans have developed over millennia and are really difficult to automate. We consider them low-skill because we take those skills for granted. On the other hand, jobs that require high-level critical thinking will also survive. We need urgent actions to prevent our youth from falling into the ‘middle’.

Act now

PROFESSOR Yunus has rightly understood the key message of youth revolt: the youth should be placed at the heart of strategies, as they are committed to creating a new world that is inclusive, fair, and just. Therefore, it is logical that his government initiates the measures when the aspirations of the revolution are still fresh in the minds.

Anis Chowdhury is an emeritus professor at Western Sydney University in Australia and held senior UN positions in Bangkok and New York in economic & social affairs, and Khalid Saifullah is a statistician with years of experience working in international organisations.​

 

[Saif]

Expatriates send $1.93 billion in remittances in 22 days of February

Bangladeshi expatriates sent $1.93 billion in remittances in the first 22 days of February, according to Bangladesh Bank data. In the past seven months, since July, remittance inflows have exceeded $2 billion per month for six consecutive months. February is also expected to surpass this mark. Du

thefinancialexpress.com.bd

Expatriates send $1.93 billion in remittances in 22 days of February
UNB
Published :
Feb 23, 2025 21:13
Updated :
Feb 23, 2025 21:13

Bangladeshi expatriates sent $1.93 billion in remittances in the first 22 days of February, according to Bangladesh Bank data.

In the past seven months, since July, remittance inflows have exceeded $2 billion per month for six consecutive months. February is also expected to surpass this mark.

During January, expatriates sent $2.19 billion in total remittances.

Of the $1.93 billion received so far in February, $686.98 million came through state-owned banks, $144.38 million through one of the two specialised banks (Krishi Bank), $1,094.29 million through private banks, and approximately $4.29 million through foreign banks.

However, nine banks did not receive any remittances during this period.

These include the state-owned Bangladesh Development Bank (BDBL) and the specialised Rajshahi Krishi Unnayan Bank. Among private banks, Community Bank, ICB Islami Bank, and Padma Bank failed to receive remittances, while in the foreign sector, Habib Bank, National Bank of Pakistan and State Bank of India recorded no inflows.

In December 2024, expatriates sent a record-breaking $2.64 billion in remittances, the highest-ever in Bangladesh's history.​

 

[Saif]

We won’t hesitate to take decisions for benefit of nation: NBR chief

National Board of Revenue (NBR) chairman Md Abdur Rahman Khan on Sunday categorically said his organisation will not hesitate to take any decision for the benefit of the country. “We are moving towards that direction,” he said while holding a pre-budget discussion with the Newspapers O

thefinancialexpress.com.bd

We won’t hesitate to take decisions for benefit of nation: NBR chief
UNB
Published :
Feb 23, 2025 19:32
Updated :
Feb 23, 2025 19:32

National Board of Revenue (NBR) chairman Md Abdur Rahman Khan on Sunday categorically said his organisation will not hesitate to take any decision for the benefit of the country.

“We are moving towards that direction,” he said while holding a pre-budget discussion with the Newspapers Owners’ Association of Bangladesh (NOAB) at the NBR office in Dhaka.

He mentioned that there are three reasons behind the lower tax-GDP ratio in the country. These are: huge number of tax exemptions and their misuse, short tax net for income tax and value-added tax (VAT) and operational inefficiency.

The NBR chief said that due to the tax exemption culture, the NBR gives away the same amount of money that it collects by taxation.

"We do not want to incur tax expenditure freshly,” he said.

Abdur Rahman Khan said that if anyone makes a small profit, then that person will pay a lower tax, which is the main ethos of the tax administration. He also said that due to the lack of automation, the NBR is still doing many of its duties manually.

While placing a budget proposal for the NOAB, its president AK Azad demanded reducing import duty on newsprint to two per cent, imposing VAT at 5 per cent instead of 15 per cent and writing off corporate tax or making it nominal in the newspaper industry, considering it a service industry.

Prothom Alo Editor Matiur Rahman and The Financial Express Editor Shamsul Huq Zahid also spoke.​

 

[Saif]

Forex reserve nears $21b amid high remittance

Bangladesh’s gross foreign exchange reserves, calculated under International Monetary Fund guidelines, neared $21 billion again, driven by strong remittance inflows...

www.newagebd.net

Forex reserve nears $21b amid high remittance
Staff Correspondent 24 February, 2025, 23:09

A file photo shows a man counting dollar notes in the capital Dhaka. | New Age photo

Bangladesh’s gross foreign exchange reserves, calculated under International Monetary Fund guidelines, neared $21 billion again, driven by strong remittance inflows.

According to Bangladesh Bank data, reserves stood at $20.9 billion on February 20 compared with that of 19.96 billion on January 30.

Bankers said that high remittance inflow and export earnings contributed most to the surge in reserve balance.

According to BB data, remittance inflow was $15.96 billion in July-January period in FY25 compared with that of $12.91 billion in the same period in FY24.

Besides, export earnings soared by 11.58 per cent to $28.96 billion in July-January period in FY25 compared with that of $25.96 billion in the same period in FY24.

In addition, according to conventional valuation by the Bangladesh Bank, the foreign exchange reserve increased to $26.1 billion on February 20 from $25.30 billion on January 30.

The reserve level had previously declined from $21.6 billion on January 7 to $20 billion the next day following a $1.67-billion payment to the Asian Clearing Union (ACU) for November–December import bills.

Additionally, the BB repaid $3.3 billion, or nearly 90 per cent, of foreign overdue payments between August 5, 2024, and December 30, 2024, following a political change.

The BB follows the IMF’s Balance of Payments and International Investment Position Manual, 6th edition (BPM6), for calculating gross and net international reserves.

Meanwhile, the Bangladeshi taka has continued to weaken against the US dollar, reaching Tk 122 per dollar due to a dollar shortage and pressure on banks to settle import payments.

The trade deficit stood at $9.76 billion during July–December of FY25, down from $10.87 billion in the same period of FY24.

However, import payments rose by 3.5 per cent year-on-year to $32 billion, reflecting growing demand for dollars.​

 

[Saif]

BANGLADESH ECONOMY: Turning demographic challenges into opportunities

SPEAKING at the recent annual conference of the Bangladesh Administrative Service Association, Chief Adviser Dr Muhammad Yunus has emphasised the need to create opportunities for young people, asserting that Bangladesh’s large population is not a burden but a valuable resource...

www.newagebd.net

BANGLADESH ECONOMY: Turning demographic challenges into opportunities
Anis Chowdhury and Khalid Saifullah 24 February, 2025, 00:00

SPEAKING at the recent annual conference of the Bangladesh Administrative Service Association, Chief Adviser Dr Muhammad Yunus has emphasised the need to create opportunities for young people, asserting that Bangladesh’s large population is not a burden but a valuable resource.

A day later, deputy commissioners proposed the introduction of universal military training for youths, aiming to involve them in the country’s defence efforts.

Of course, this is a political decision, and it requires serious examinations of the proposed programme’s budgetary implications.

We have done some preliminary budget estimates. The good news is that we can introduce the programme progressively over 5-8 years, say beginning with 10 per cent of those turning 18 years as a pilot and then gradually covering the entire cohort of 18-20-year-olds who are able to serve.

The context: seismic demographic shift

IN 50 years since independence, Bangladesh’s population more than doubled from around 70 million (7 crore) to around 174 million (17 crore), turning Bangladesh into one of the most densely populated countries in the world. Despite a rapid fall in fertility, Bangladesh’s population will continue to grow largely due to the momentum effect. The UN Population Division projects that Bangladesh’s total population will reach its peak in 2071 with a population of 226 million.

Bangladesh is well into the third phase of demographic transition, having shifted from a high mortality-high fertility regime to a low mortality-low fertility one. As shown in the population pyramid (Figure 1), there is a youth bulge comprising about 28 per cent of the population in the age bracket 15-29.

The UN projects that by 2030, the proportion of youth in the age bracket 15-29 years will decline to around 25 per cent and by 2050 to around 20 per cent. So, this is our demographic moment that comes only once (see Figure 2).

As professor Yunus stressed, the young population is a blessing — a source of strength, energy, and vigour. A country with a large number of young people not only has a large pool of workforce but also a large pool of potential future leaders — often referred to as a ‘demographic dividend’.

However, demographic dividend is not prearranged. It is an opportunity provided by the age structural transition. This window of opportunity opens for a population only once. If missed, it may become a ‘demographic curse’.

A country can “become old before becoming developed,” as we see in the case of Sri Lanka, characterised by a large proportion of elderly population (non-working age) while the nation still struggles with poverty and infrastructure issues. Thus, the country not only has fewer working-age people (i.e., a smaller workforce), but also has to support a large number of people in their older age. Such a demographic situation potentially hinders a country’s economic progress and creates challenges for its social welfare systems.

Thus, an increase in the proportion of young people in a country’s population structure can bring a huge dividend provided this raw power is converted into highly skilled human resources, absorbed in productive employment, and turned into entrepreneurs.

This can be shown by decomposing the neo-classical production function as follows: Y/P = Y/SE x SE/E x E/LF x LF/WP x WP/P, where Y = GDP, P = population, E = employment, SE = skilled employment, LF = labour force, WP = working-age population.

Thus, GDP per capita (Y/P) is the product of: a) productivity gains due to skilled employment (Y/SE), b) proportion of skilled employment (SE/E), c) employment rate (E/LF), d) labour force participation rate (LF/WP) and e) demography, i.e., proportion of working age population (WP/P).

Bangladesh’s demographic dividend may become a mirage. The recent student/youth unrest, which began with a demand for quota reform and ultimately toppled the Hasina regime, is a clear indication of the economy’s inability to absorb these youthful people in productive employment or turn them into entrepreneurs. The official unemployment figure of about 3-4 per cent based on outdated labour force survey methodology does not reflect the reality.

National service: a feasible urgent solution

OUR most critical challenge is preventing the demographic curse and reaping the demographic dividend. Mandatory national service, comprising some basic defence training, IT and general literacy-numeracy, and vocational skills, will not only bring enormous economic benefits but also prepare the country for disaster management, especially due to the climate crisis. It will also act as an effective deterrent against possible threats to our national sovereignty.

Currently, we have around 1.6 crore (15.9 million) youths in the age bracket 20-24, roughly 87 lakh females and 73 lakh males. Of the youth turning 18 years, about 29 lakh are able to serve, excluding child-bearing females (around 25 per cent) and those with various disabilities.

If 10 per cent of the youth turning 18 years are included in the programme in the first year, and Tk 12,000 per month (equivalent to the current minimum wage) is used for each participant, then 5.8 per cent of the total 2024-25 budget proposed by the fallen regime would be required for defence. This is marginally higher than the 5.3 per cent allocated in the proposed 2024-25 budget. This figure rises to 5.9 per cent and 6.2 per cent if training each participant requires Tk15,000 and Tk20,000, respectively.

The above rough and ready estimates assume no change in the existing allocation for other defence expenses. Nor does the exercise consider efficiency gains.

Obviously, budgeting cannot be done in isolation. The first place to find money is reallocation as required by reprioritisation. It should be mentioned here that the fallen regime in its last budget proposed for 2024-25 in June 2024, increased defence budget by 11 per cent over the revised defence budget for 2023–24. Therefore, this has to be examined seriously; the priorities of the ‘new Bangladesh’ cannot be the same as the fallen regimes.

Money can also come from the savings that might result in other sectors, e.g., education, as there will be reduced pressure to expand post-secondary education. If necessary, the costs of such programmes have to be shared through higher taxes for the sake of securing a prosperous future for this country.

Empowering the youth

TRAINING and skill development through mandatory national service is just one element in the supply side of the equation. The pool of available talent needs to be empowered and deployed to yield a demographic dividend. Otherwise, it will be wasted and may even turn into a disruptive force.

Our most critical challenge is preventing the demographic curse. Not only do we have to reap the demographic dividend, but we also have to ensure what is referred to in the literature as the ‘second demographic dividend’. While the ‘first demographic dividend’ due to the rise in the proportion of working-age population is transitory, the ‘second demographic dividend’ can be perpetual.

For this to happen, countries need to invest in skill upgrading, support entrepreneurial initiatives, and create innovative/flexible work environments to allow working even in older age and asset accumulation by workers.

Especially given the advancement in technology, and particularly artificial intelligence, we urgently need to rethink skill development for our youth. Many university degrees may soon become obsolete because the skills they offer are prone to automation.

Ironically, many blue-collar, hands-on jobs are likely to survive because they require mental and motor skills humans have developed over millennia and are really difficult to automate. We consider them low-skill because we take those skills for granted. On the other hand, jobs that require high-level critical thinking will also survive. We need urgent actions to prevent our youth from falling into the ‘middle’.

Act now

PROFESSOR Yunus has rightly understood the key message of youth revolt: the youth should be placed at the heart of strategies, as they are committed to creating a new world that is inclusive, fair, and just. Therefore, it is logical that his government initiates the measures when the aspirations of the revolution are still fresh in the minds.

Anis Chowdhury is an emeritus professor at Western Sydney University in Australia and held senior UN positions in Bangkok and New York in economic & social affairs, and Khalid Saifullah is a statistician with years of experience working in international organisations.​

 

[Saif]

Economy shows signs of recovery but faces substantial hurdles

Bangladesh’s economy exhibited a gradual recovery in the second quarter of fiscal year 2024-25, but it faces substantial hurdles, including inflationary pressures, a shortfall in revenue collection, slow public spending, diminished job opportunities and a sluggish investment climate.

www.thedailystar.net

Economy shows signs of recovery but faces substantial hurdles

Bangladesh's economy exhibited a gradual recovery in the second quarter of fiscal year 2024-25, but it faces substantial hurdles, including inflationary pressures, a shortfall in revenue collection, slow public spending, diminished job opportunities and a sluggish investment climate.

In addition, there is a need to rebuild public confidence in the banking system, the Metropolitan Chamber of Commerce and Industry (MCCI) said in its quarterly review of Bangladesh's economic situation for the October-December quarter of FY25.

"Restoring law and order is indeed a critical priority to create a stable environment for economic activities," the MCCI said in the review released yesterday.

The leading chamber said key economic indicators such as exports and remittances demonstrated positive trends.

"The economy has been recovering gradually from political instability that began in the first week of July 2024.

"The slide experienced by the foreign exchange reserves was halted, and the exchange rate of Bangladeshi taka against major currencies stabilised, although some volatility in the reserve position continues to persist.

"Improved trade and current account balance, and the overall balance of payments situation, allowed for some de-restriction of import activities," the trade body added.

However, high inflation and slow revenue collection remain major concerns.

Bangladesh has been grappling with over 9 percent inflation since March of 2023. In January, the consumer price index, a measure of changes in the price of a basket of goods and services, stood at 9.94 percent.

Despite improvements in foreign trade and remittances, inflation remains a critical concern, the MCCI said, adding that the country's central bank has maintained a tight monetary policy stance to curb inflation and stabilise the exchange rate.

The chamber projects that inflation, which eased for the second consecutive month in January, may decline to 9.85 percent this month and 9.7 percent in March.

It said the Bangladesh Bank's efforts, along with the positive trends in exports and remittances, are expected to support broader economic recovery in the coming months.

The chamber said Bangladesh's exports rose 12.8 percent year-on-year to $24.54 billion, primarily driven by the ready-made garments sector.

It said buoyancy in exports might continue in the third quarter with shipments gradually rising. Exporters may ship products worth $4.9 billion in March, up from a projected $4.5 billion in February, the chamber added.

Similarly, Bangladeshi migrants working and living abroad are expected to send a good amount of remittance next month ahead of Eid-ul-Fitr, the biggest religious festival for Muslims and a time when the overall economy gets a big boost because of a shopping bonanza to celebrate the festival.

Remittance inflows, which saw a 27.56 percent uptick in the first half of the current fiscal year, are likely to be around $2.5 billion next month. Better remittance inflow has been attributed to improved banking governance and foreign exchange stability, boosting expatriate confidence.

Consequently, Bangladesh's foreign exchange reserves, which have been strained for nearly three years, are expected to go up.

The MCCI said gross forex reserves might cross $26 billion in March.

The chamber said the country's trade deficit narrowed and the pressure on the balance of payments, which shows a country's transactions with the rest of the world, improved in the first half of FY25.

The trade deficit narrowed year-on-year to $9.76 billion in the July-December period of this fiscal year from $10.88 billion.

However, the industry and services sectors showed a mixed performance.

The MCCI said the industrial sector registered lower growth in the first quarter of FY25 compared to the previous quarter as it suffered due to a sharp slowdown in manufacturing growth. The services sector also witnessed weaker growth.

Foreign investment also fell amid economic uncertainties, infrastructure constraints and regulatory inconsistencies.

The MCCI said Bangladesh's economy is gradually overcoming the difficulties brought on by the present political uncertainty and conflicting world scenario.

"Therefore, the performances of the selected economic indicators are mixed."​

 

[Saif]

Economy rebounding: press secretary

Bangladesh’s economy has been rebounding in the last six months on reaching the verge of collapse, Chief Adviser’s Press Secretary Shafiqul Alam said yesterday.

www.thedailystar.net

Economy rebounding: press secretary

Shafiqul Alam

Bangladesh's economy has been rebounding in the last six months on reaching the verge of collapse, Chief Adviser's Press Secretary Shafiqul Alam said yesterday.

"It's just a miracle," he said at a discussion organised by the Development Journalist Forum of Bangladesh (DJFB) at the Planning Commission in Dhaka.

Right before the interim government took over, the economy was in such a fragile state that it could have fallen apart at any moment, Alam said.

"However, in the last six months, we have witnessed remarkable improvements," he said.

Consumer prices have been declining over the past two months and inflation is expected to drop to 7 percent by June, he added.

"The priority now is to restore confidence and stability among the public," he said, reassuring savers that their deposits were safe under the current administration.

"Had the previous government remained in power, no one would have dared to keep even a single taka in the banks," he claimed.

Alam alleged that a significant portion of the nation's wealth was laundered abroad instead of being invested in the country, which could have created jobs.

"Money from Bangladesh was smuggled out to build 'Begum Para' in Canada and buy entire blocks in London," he added.

He accused the previous government of turning the energy sector into a "factory of theft" by allowing large-scale corruption through capacity charge, which is a fee for ensuring the availability of electricity when needed.

"This organised looting was carried out with state support," he said.

Alam also spoke on the Karnaphuli tunnel project in Chattogram, which connects Patenga on the river's west bank to Anwara on the east.

Built at a cost of Tk 10,689 crore, the 3.32-kilometre tunnel was opened to traffic on October 28, 2023.

He said the tunnel was not necessary under present circumstances and the expenditure was "wasteful".

There is barely any economic activity on the other side of the river and the burden of this "wasteful" expenditure has now fallen on all citizens, he said.

"To cover it, our taxes are increasing. We have no option but to bear the burden of this," he stated.

"Perhaps it will take 10 years from now. Look at the situation today—we can't even generate enough revenue to cover the maintenance costs," he said.

He alleged that it was the former land minister who initiated the tunnel project solely for his own interests.

"(the land minister's) residence is in Chattogram's Anwara upazila, which is an underdeveloped area. He pushed for the Karnaphuli tunnel project mainly for his own convenience and ease of travel," Alam alleged.

He said a seven-star hotel was built there at a cost of Tk 450 crore. "Who will stay in that hotel?" he questioned.

"(The land minister) built it for himself. He assumed that he would remain in power until 2041," Alam alleged.

The event was chaired by DJFB President Hamid Uz Zaman and moderated by DJFB General Secretary Abu Hena Muhib.​

 

[Saif]

REDUCING INCOME DISPARITY: Rural development for balanced economic growth

New Age, a Dhaka-based leading English language daily newspaper, is a major source of news of Bangladesh and international affairs

www.newagebd.net

REDUCING INCOME DISPARITY: Rural development for balanced economic growth
Imran Hossain 27 February, 2025, 00:00

OVER the past few decades, Bangladesh has achieved tremendous progress in reducing poverty and economic progress with consistent gross domestic product growth and improvements in human development indicators, scoring 0.67 according to a report of UNDP in 2022, positioning it at 129 out of 193 countries and territories in the world. However, not everyone has benefitted from this expansion, with rural areas frequently falling behind urban centres in terms of economic possibilities, amenities, and service accessibility. Promoting rural development must be a top priority if balanced and sustained economic growth is to be attained.

State of income inequality

INCOME inequality in Bangladesh is apparent, with a Gini coefficient of 0.5 in 2022, indicating a substantial level of income disparities. The Gini coefficient, a measure of income inequality where 0 denotes perfect equality and 1 per fect inequality, has demonstrated persistently high levels in Bangladesh. While urban areas have benefitted from industrialisation, export-oriented manufacturing and service sector growth, rural areas remain over-reliant on agriculture, which employs 40 per cent of the labour force but only contributes roughly 13 per cent of GDP. This disparity is intensified by restrained access to education, healthcare and financial services in rural regions, perpetuating a cycle of poverty and inequality. According to the Bangladesh Bureau of Statistics report on the households income and expenditure survey in 2022, the richest 10 per cent of the population hold 41 per cent of the nation’s total income, while the poorest 10 per cent hold just 1.31 per cent. Consequently, this income disparity caused wealth inequality which denotes 0.84 in 2022 from 0.82 in 2016.

The World Bank reports that per capita income in rural areas is nearly half that of metropolitan areas, meaning that rural households make much less than their urban counterparts. Additionally, rural people are disproportionately impacted by environmental degradation and climate change, which increases their vulnerability and widens the income disparity.

Impression of rural development

RURAL development is one of the main forces for balanced economic growth and poverty alleviation. Rural areas are home to nearly 65 per cent of Bangladesh’s population, and agriculture remains the backbone of the rural economy, employing around 40 per cent of the rural labour force. Bangladesh can create a fairer society by addressing the structural barriers that hinder rural prosperity. Rural development not only improves the livelihoods of rural populations but also contributes to national economic growth and long-term economic sustainability by unlocking the agricultural sector’s potential, fostering entrepreneurship, and generating new markets.

Drawbacks

DESPITE some positive initials on rural development to foster balanced economic growth, our nation has some drawbacks to implementing economic sustainability in rural areas. Bangladesh’s agriculture is mostly dependent on traditional practices, with little use of contemporary technologies. Low yields result from smallholder farmers’ frequent lack of access to high-quality seeds, fertiliser, and irrigation equipment. Food security is also at risk from regular floods, cyclones and salinity intrusions, making the sector extremely vulnerable to climate change.

Flawed road networks, restricted access to energy and a lack of storage and processing facilities are just a few of the problems that rural communities face due to their inadequate infrastructure. These shortcomings restrict rural producers’ access to markets, raise production costs and impede the effective flow of goods and services.

Institutional financial services are frequently unavailable to small enterprises and people in rural areas. The Bangladesh Bureau of Statistics reports that only 34 per cent of rural adults have access to formal banking services, compared to 52 per cent in urban areas.

There are also notable differences in education and skill development between rural and urban communities. There are fewer options for non-farm work and income diversification in rural Bangladesh due to the lower literacy rate of 64 per cent compared to 74 per cent in metropolitan areas. On the other hand, climate vulnerability is a curse for rural farmers in Bangladesh. Rising sea levels, unpredictable rainfall and extreme weather events endanger livelihoods and food security, disproportionately affecting rural areas.

Initiatives

THE government and private sector should make investments in cutting-edge farming technologies including precision agriculture, high-yield crop types and effective irrigation systems for agricultural modernisation and diversification. To give farmers the information and resources they need to implement new technologies, extension services should be improved.

Diversifying into high-value livestock, fisheries and crops can also increase rural earnings. Rural infrastructures such as roads, bridges, electrification, and digital connectivity — must be expanded to lower production costs and increase market accessibility. When it comes to funding and carrying out these projects, public-private partnerships projects can be quite important. For example, the ‘rural electrification and renewable energy development project’ has improved the quality of life and enabled economic activity by bringing electricity to more than 20 million rural households.

To foster entrepreneurship and investment, rural families and small companies must have greater access to credit and financial services. Digital financial services, mobile banking and microfinance organizations like Grameen Bank and BRAC can all aid in closing the gap, especially for women and underrepresented populations.

Developing efficient value chains and market linkages can help rural producers access larger markets and obtain better prices for their goods. E-commerce platforms and farmer cooperatives can play a significant role in connecting rural producers with urban and international markets. For example, the ‘digital initiative’ has enabled farmers to access market information and sell their produce online.

Rural communities can better adapt to climate change by investing in climate-resilient infrastructure, such as saline-tolerant crops and flood-resistant houses. Crop rotation, organic farming and agroforestry are examples of sustainable agricultural methods that can be promoted to improve livelihoods and the environment. A framework for incorporating climate resilience into projects aimed at rural development is offered by the ‘Bangladesh Climate Change Strategy and Action Plan.’

To guarantee that development projects are in line with the requirements of rural communities, local governance and community involvement in decision-making processes should be strengthened. Decentralisation of resources and authority can enhance the effectiveness of rural development programs. The ‘union parishad governance project’ has empowered local governments to deliver better services and promote inclusive development.

Role of technology

INNOVATION and technology have the power to revolutionize Bangladesh’s rural development. Rural communities can benefit from affordable and sustainable power from renewable energy technology, while digital platforms can enhance access to information, markets and financial services. Farmers have benefited from mobile-based agricultural advising services, such as the ‘agriculture information service,’ which have assisted them in making well-informed choices on pest management, irrigation and planting.

Rural development must be promoted to foster equitable and balanced economic growth. The nation can realise the full potential of its rural economy by tackling the issues that rural areas face and taking advantage of the opportunities that technology and innovation bring. A coordinated effort from the government and corporate sectors as well as civil society is required to guarantee that rural development becomes a pillar of Bangladesh’s development plan. Only then can the nation achieve its vision of becoming a prosperous and equitable society.

Imran Hossain is a lecturer in business administration at the Rabindra Maitree University, Kushtia.​

 

[Saif]

Govt faces challenges not to default on foreign debts

The government is facing multiple challenges to maintain the country’s non-defaulting status in the current financial year after it had to struggle to pay $6.07 billion in overseas debts in the past financial year (2023-24).

www.newagebd.net

Govt faces challenges not to default on foreign debts
Shakhawat Hossain 27 February, 2025, 23:47

Country struggled to clear $6b foreign loans in FY24

The government is facing multiple challenges to maintain the country’s non-defaulting status in the current financial year after it had to struggle to pay $6.07 billion in overseas debts in the past financial year (2023-24).

Economists blamed wrong economic management by the Awami League government, which was ousted on August 5, 2024 amid a mass uprising, for the sharp rise in overseas debt payments in the past several financial years, including FY24.

The interim government that assumed power on August 8, 2024, has inherited the challenges like the fallout of a persistent devaluation of the local currency taka against the US dollar from the previous political regime.

Until the July-January period of FY25, the government’s debt payments rose by 33 per cent over the same period of FY24, according to the ERD update released on Thursday.

The financial year 2023-24 was the most inauspicious one as the government had to incur additional $1 billion in debt because of a sharp devaluation of the taka against the dollar, according to the Flow of External Resources into Bangladesh 2023-2024, a publication of the Economic Relations Division.

The chronic shortage of dollars caused the devaluation of the taka by about 35 per cent in the FY2022-23 and the FY 2023-24 with about 26 per cent alone in the FY 2022-23, the sharpest in 46 years.

The taka had suffered about 71 per cent devaluation in the FY 1974–75.

Former World Bank Dhaka office chief economist Zahid Hussain said that the devaluation of the local currency would continue to impact the overall debts in the coming years.

The interim government needs to take a more pragmatic approach to the challenge management, he said.

The annual ERD publication released this month said that the elevated global commodity prices due to the war in Ukraine and the synchronised global monetary policy tightening were the first two challenges making the external borrowing costly.

The publication mentioned borrowing from bilateral sources on non-concessional terms as the third challenge despite the fact that additional amount of budget support and project support was essential to address the finance recovery-related and regular projects.

The adverse situation deepened because of a phenomenal increase in external debts, still the government became able to conduct servicing its debts, said the publication.

In the FY 2023-24, external resources amounting to $10.74 billion were mobilised and the disbursement crossed the $10 billion mark for the third consecutive year.

However, the total amount for debt servicing jumped to $6.07 billion in the FY 2023-24 from $4.7 billion in the FY 2022-23, said the ERD publication.

Of the overall amount paid in the past financial year, $4.1 billion was paid for servicing the principal amount and the rest $1.9 billion for servicing the interest payment.

The ERD publication identified the devaluation of the taka against the dollar by about 35 per cent in the FY 2023-24 as the major factor causing the government to incur extra $1 billion in debts.

Liquidity risk, solvency risk and re-setting and interest rate risk have remained as major concerns for the government in the upcoming financial year, said the economists.

They said megaprojects implemented mostly with foreign loans by the Awami League regime had left the nation with concerns over the debt trap amid the questionable expected returns.

The views have also been expressed in the recently released ‘White paper on the state of Bangladesh economy’.

M Masrur Reaz, chairman of the Policy Exchange Bangladesh, said that the interim government needed to start negotiation over debt restructuring with it main creditors.

It is good to see that the interim government has already convinced China, the country’s third biggest bilateral creditor after Japan and Russia, to increase the repayment period of loan to 30 years from 20 years, he added.​

 

[Saif]

Forex reserves rebound to $21b, propelled by export, remittance

Rising inflow of remittances and export receipts largely prop up Bangladesh's foreign-exchange reserves with the figure crossing the US$21-billion mark set in IMF arithmetic on the country's macroeconomic parameter. A sustained growth in export earnings also helped out. The country's expor

thefinancialexpress.com.bd

Forex reserves rebound to $21b, propelled by export, remittance
Remittances from expats growing, export earnings also help in reserves upturn over IMF-set mark
JUBAIR HASAN
Published :
Feb 28, 2025 00:23
Updated :
Feb 28, 2025 00:23

Rising inflow of remittances and export receipts largely prop up Bangladesh's foreign-exchange reserves with the figure crossing the US$21-billion mark set in IMF arithmetic on the country's macroeconomic parameter.

A sustained growth in export earnings also helped out. The country's export earnings in the first seven months (July-January) of the fiscal year (FY'25) increased by 11.68 per cent to $28.97billion, according to the data of the Export Promotion Bureau (EPB). Exports fetched $25.94 billion during the same period of time last fiscal (FY'24).

Apart from increased remittance netting, the central bank's current decision not to sell foreign currencies, the American greenback in particular, from its stock to commercial banks to facilitate the lenders to meet their overseas payments against imports helps in stopping forex bleeding, officials and bankers said.

According to the data with Bangladesh Bank (BB), the central bank, the country received remittances worth around $2.38 billion in the first 26 days of this February, nearly $200 million higher from the remittance receipts in the 31-day-long month of January 2025.

On the other hand, the banking regulator as part of its reserve-boosting move skipped selling the US dollar on the market. The BB in the last fiscal year (FY'24) sold $12.80 billion on the market but it sold only $1.10 billion until February 26th of this current financial year (FY'25).

The prudence pays off: the volume in the country's forex reverses continues rising to reach $21.08 billion in BPM6 calculation prescribed by the International Monetary Fund or IMF and $26.26 billion in BB count as on February 26, 2025, according to the data.

Even three days ago, the cumulative reserves size was below $21 billion in accordance with the calculation by the Bretton Woods institution.

Seeking anonymity, a BB official says they have been observing a significant rise in inward-remittance flow in recent weeks, bolstering the reserves stock.

"The way it (remittance flow) is growing, it could cross $2.50 billion this month. We're expecting more remittance in next month ahead of Eid-ul-Fitr," the official says.

Not only the remittance uptrend, the central banker says, the BB's decision not to sell dollars from the reserve contributes to preventing the forex depletion as the central bank did not sell anything from the reserves so far this month.

While briefing reporters to share latest data of classified loans in banks on Wednesday, BB Governor Dr Ahsan H. Mansur said the forex reserves kept rising gradually in recent times.

In accordance with the BPM6 calculation, he said, the reserves reached close to four months' import costs of the country, which was the target of the IMF. In terms of BB calculation, the reserves size is equivalent to over four months' import expenses.

Former lead economist of World Bank's Dhaka office Dr Zahid Hossain says the reserves dropped every two months after ACU (Asian Clearing Union) payment and that they have been observing some types of stability in the low level of the reserves for the last few months, which is good.

"But the puzzling matter is there are some allegations in the market that the regulatory policy is being tilted to state-owned commercial banks as far as exchange rates are concerned," he said.

"If the central bank is really in comfortable position, then why the dual policy is in place?" the noted economist questioned.​