[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

ADB to review $13b projects next week

The Asian Development Bank (ADB) will review its nearly $13 billion projects in Bangladesh next week as many are struggling for implementation delays, officials said on Tuesday. The Manila-based lender would sit with all the project implementers in the Bangladesh government for analysing the proje

thefinancialexpress.com.bd

ADB to review $13b projects next week
FHM HUMAYAN KABIR
Published :
Jul 17, 2024 00:36
Updated :
Jul 17, 2024 00:36

The Asian Development Bank (ADB) will review its nearly $13 billion projects in Bangladesh next week as many are struggling for implementation delays, officials said on Tuesday.

The Manila-based lender would sit with all the project implementers in the Bangladesh government for analysing the project execution status, they added.

"All the ongoing ADB-funded projects will be reviewed at the tripartite meeting next week. Any problems are expected to be resolved at the meeting," said a senior official at the Economic Relations Division (ERD).

According to the ERD, the meeting between the ADB, the ERD and the projects implementers will be held in Dhaka from July 22 to 24.

Currently, the ADB has made a commitment of nearly $13 billion funds for 79 ongoing projects in the public sector.

The moneylender is the second largest multilateral development partner of Bangladesh in terms of its amount of foreign aid for implementing different projects and programmes after its independence.

"Some ADB-funded projects are struggling for implementation delays due to different reasons. We are hopeful of resolving the problems in the next tripartite review meeting (TPRM)," said the ERD official.

A senior official at the finance ministry said: "Some delays are taken place due to the under-performance of the implementing agencies and some are for the complex procurement approval process of the ADB side. So, we'll discuss all the problems in the next meeting for reducing the delays."

The ADB is bankrolling some mega projects in Bangladesh, including the Dohazari-Ramu-Cox's Bazar railway line, Dhaka Mass Rapid Transit Development Investment Project (Line 5, Southern Route), and South Asia Sub-regional Economic Cooperation Dhaka-Northwest Corridor Road Project, Phase 2 (Tranche 3).

The official said the bank will review the projects it is bankrolling in Bangladesh next week as some of them are 'slow-moving' and 'problematic'.

It is an important meeting from the perspective of the Bangladesh government side as this would remove many obstacles which are not resolved through writing letters on the way to the implementation, he said.

The ADB in the last TPRM called the government agencies for streamlining the implementation of slow-moving projects or it would divert funds to other schemes, another government official told the FE.

The last review also prepared an action plan for the ongoing ADB-funded projects which would be discussed at the next week's review meeting, he added.

In the July-April period of the fiscal year 2023-24, the ADB disbursed $1.499 billion worth of assistance and $1.787 billion in FY2023 to Bangladesh, ERD data showed.​

 

[Saif]

Meeting post-graduation challenges facing the country

As Bangladesh is all set for LDC graduation, it is imperative that it accelerated its efforts to meet the post-graduation challenges such as continued access to the various trade benefits including duty-free ones against its exports to the markets of advanced economies, especially the European Unio

thefinancialexpress.com.bd

Meeting post-graduation challenges facing the country
Published :
Jul 16, 2024 21:53
Updated :
Jul 16, 2024 21:53
As Bangladesh is all set for LDC graduation, it is imperative that it accelerated its efforts to meet the post-graduation challenges such as continued access to the various trade benefits including duty-free ones against its exports to the markets of advanced economies, especially the European Union (EU). Notably, as an LDC, the country has been the beneficiary of an arrangement called the Generalised System of Preference (GSP) under which it enjoys exemption of import (customs) duties on two thirds of the EU's tariff lines. But once Bangladesh joins the group of developing countries after graduation in 2026, it will lose much of these trade facilities after three years' grace period.

However, there is a special incentive arrangement called GSP+ available for vulnerable low-and-lower middle-income economies. In that case, Bangladesh will have to implement 27 international conventions related to labour and human rights, environmental and climate protection and good governance. This special incentive is for sustainable development and good governance. Naturally, following graduation, the government will be required to qualify for these facilities under GSP+ if it fulfils the conditions. Now, implementation of the labour sector reforms through revision of the country's labour laws under the proposed National Action Plan (NAP) is an important step in this direction. In this connection, outgoing head of European delegation in Dhaka, Charles Whiteley, during a recent interview with journalists, following his farewell call on Bangladesh's foreign minister, Dr Hasan Mahmud, reiterated the urgency of the issue.

The required labour law reforms under the proposed NAP involves issues including framing the country's labour law so that it is compliant with the standards of the International Labour Organization (ILO). Needless to say, those standards include freedom of association and collective bargaining right of workers and elimination of all forms of child labour by 2025. Notably, Bangladesh has been under pressure on these issues since long from different international quarters. Now, those issues have assumed a renewed importance when the country is on the verge of upgrading its status as a developing economy. Evidently, issues like ridding the country of child labour, for instance, and that too by not a distant deadline has indeed been a tall order in a populous and unequal society. Yet successive governments have been working relentlessly to address the issue to the satisfaction of the international community whose support is vital for Bangladesh's continued economic progress. Facing the prospect of Bangladesh's post-graduation loss of trade facilities it benefited from so far thanks to its longstanding trade relations with the EU under the Everything but Arms (EBA) trade regime, it has to redouble efforts to comply with their conditions. This is required to access the next most generous post-EBA arrangement, the GSP plus incentives. As the timelines for meeting the conditions of the different international conventions are drawing to a close, the government needs to expedite its work to fulfil its commitments to that effect.

The amendment to the Bangladesh's labour act is critical in this connection. Repeated reminders from the EU envoy on this subject at different discussion events arranged from time to time in the past only stress the point. Not surprisingly, a high-level European Commission monitoring mission will reportedly be visiting Bangladesh in November this year to review work progress in this regard. Since 58 per cent of Bangladesh's total export and 64 per cent of its apparel export are dependent on EU market, the government would, hopefully, be well-equipped to meet the EU GSP+ challenges.​

 

[Saif]

Economy with deep scars limps along

Business and industrial activities resumed yesterday amid a semblance of normalcy after a spasm of violence, internet outage and a curfew that left deep wounds in almost all corners of the economy.

www.thedailystar.net

Economy with deep scars limps along
Businesses, factories reopen amid curfew break

People queue up at a bank counter as services resumed after days. The photo was taken at the Sonali Bank in Motijheel yesterday. Photo: Palash Khan

Business and industrial activities resumed yesterday amid a semblance of normalcy after a spasm of violence, internet outage and a curfew that left deep wounds in almost all corners of the economy.

Violent clashes, stemming from the quota reform demonstrations, shuttered garment factories and shops and choked port activities when the country was grappling with the toughest economic challenges in decades: high inflation, falling exports and a persistent dollar crisis.

Economists predict that the impact of the widespread unrest and internet blackouts will be much greater than the fallout of the Covid-19 pandemic. By one estimate, the economy bled out about $1 billion a day for a stretch of five brutal days that saw deaths and destructions of a scale never before seen in independent Bangladesh.

Amid economic gloom, garment factories restarted production yesterday to meet the tight deadline for delivery. Shipments of export containers and delivery of imported items gained pace, and trucks began to roll as the broadband internet was restored.

However, factories faced a scarcity of raw materials due to supply chain disruptions, according to Mohammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association.

"Had the government given importance to resolving the quota issue through dialogues, the situation would not be so dire," he added.

Banks reopened their gates to provide services to customers, who lined up for cash withdrawal, encashment of inward remittances and payment of utility bills after a three-day general holiday announced in the wake of the unrest.

Despite the pressure, most banks were able to provide services by and large, said Selim RF Hussain, chairman of the Association of Bankers Bangladesh.

The moribund stock market nervously resumed trade at 11:00am yesterday, but the key index of Dhaka Stock Exchange sank 1.76 percent, the steepest decline in almost two years.

Retail shops in Dhaka, the main hub of trade, reopened but salespeople were disappointed by the thin presence of customers.

Alam Sheikh, a salesman at a clothing store at Nurjahan Supermarket, opposite to Dhaka College, was one of them.

"Customers seems to be afraid of the risk of violence," he said.

Between 10:30am and 1:30pm, Alam Sheikh's sales stood at Tk 3,000, a third of his sales revenue on a regular business day.

All these bleak data point to Bangladesh's plunge into an economic stasis, however short-lived. Save for agricultural activity, trade, manufacturing and all other economic activities were almost suspended for a week.

In the months to come, consumer prices may go further up. New investments will be on hold and jobs will evaporate. Bangladesh also runs the risk of losing export orders and many companies will struggle to pay their employees on time.

"This is a huge loss for Bangladesh when the country is already facing an economic crisis. The latest unrest has a significant impact on the economy," said Ahsan H Mansur, executive director of the Policy Research Institute, sharing his estimate that the country lost around $1 billion a day over the last few days.

"Supply chain disruptions will fuel inflation, which is already high," he said.

His grim prediction has a basis as annual inflation rose to 9.73 percent in fiscal 2023-24, the highest in 12 years, overshooting the government's target of containing it to 7.5 percent.

Ahsan Mansur, a former economist at the International Monetary Fund, warned that export orders might be diverted to other countries in the wake of the recent crisis in Bangladesh.

Zahid Hussain, another noted economist, described the crisis as the nation's double jeopardy: a real-life lockdown and a virtual lockdown.

"Its impact will be more severe than the Covid-19 pandemic, as people could run businesses at the time. During the pandemic, online payments were unhindered. But this week, everything was closed due to internet outage," he said.

The unrest killed at least 154 people, according to The Daily Star's count based solely on hospital sources, although it could be higher as this newspaper could not reach all the hospitals where many critically injured patients were taken for treatment. Also, many friends and families reportedly collected the bodies of their loved-ones from the scenes, and this newspaper could not contact them. Additionally, many hospitals did not even record the deaths, and asked the relatives to take them away.

All these will hit the confidence of foreign buyers and dent the image of the country which registered about 6 percent GDP growth over the last one and a half decades thanks to the political calm, Hussain said.

"The internet blackout was suicidal for the economy. How deep the injury is and how long it will stay remains to be seen," he said. "But we cannot count the loss of lives, which is countless."

With additional reporting from Sukanta Halder​

 

[Saif]

ADB lowers growth forecast for Bangladesh

Asian Development Bank (ADB) has revised down the economic growth projection for Bangladesh but said inflation might creep up further during the current fiscal year of 2024-25.

www.thedailystar.net

ADB lowers growth forecast for Bangladesh
Inflation to creep up further, it says

Asian Development Bank (ADB) has revised down the economic growth projection for Bangladesh but said inflation might creep up further during the current fiscal year of 2024-25.

According to Asian Development Outlook July 2024 published last week, Bangladesh's economy might grow 6.5 percent in this fiscal year, which is lower than its forecast in April of 6.6 percent, owing to sluggish growth of the industrial sector.

The Manila-based lender's projection is lower than the government's 6.75 percent growth target for the economy.

The ADB's forecast came just before the country witnessed five days of severe disruptions in economic activities amidst an internet outage, violence centring a movement for reforming quota at public jobs and subsequent curfew to control the situation.

The multilateral lender said monthly inflation rates in Bangladesh continued to be near double digits in the first 11 months of FY2024 and may persist due to high domestic food prices.​

 

[Saif]

National revenue collection takes a hit

With the internet blackout and nationwide shutdown comes a host of problems for internal revenue generation. According to a report published in this newspaper on July 22: "State exchequer counts an estimated domestic revenue loss of Tk 8.73 billion daily as production, trade and services falter for

thefinancialexpress.com.bd

National revenue collection takes a hit
SYED MANSUR HASHIM
Published :
Jul 24, 2024 11:17
Updated :
Jul 24, 2024 11:17

With the internet blackout and nationwide shutdown comes a host of problems for internal revenue generation. According to a report published in this newspaper on July 22: "State exchequer counts an estimated domestic revenue loss of Tk 8.73 billion daily as production, trade and services falter for the ongoing nationwide quota-protest shutdown coupled with internet blackout." The domino effect on production, trade and services due to the cumulative loss of internet access, production and distribution of products and the halting of digital services is contributing to this loss in revenue.

The stakes could not be higher for the economy right now. The volatility on city streets and in various districts around the country will hopefully see some respite as the Appellate Division has delivered its verdict on the quota situation. The gazette publication of the same should take place as soon as possible, and then the question will come whether this will lead to a negotiated settlement with protesters.

Leaving that aside, the current situation has brought economic activity down to a trickle. As stated by revenue officials, a large portion of revenue generation comes from value-added-tax (VAT) on products and services. The internet blackout has hit revenue hard since millions of people use digital services, both on cell phones and broadband. Financial institutions have by and large gone online with their services, as have utility services (gas, water, electricity). Hence, there are serious financial implications to shutting down internet services in the country.

Since VAT collection forms a cornerstone of direct revenue for the National Board of Revenue (NBR), there is simply no way to take this matter lightly. The hospitality industry with its thousands of restaurants, hotels and inns, vacation resorts all depends on daily sales of services. These have taken a serious hit because an increasing percentage of consumers depend on credit / debit card facilities to make payment. With the onset of curfews, few people are venturing out and most commercial establishments have shuttered their shops, not simply due to the fact that there are few people coming, but there are serious security concerns. The relative security enjoyed by the diplomatic enclave is not enjoyed by the rest of Dhaka residents, and why on earth would establishment owners bother to keep their respective shops open when there is serious supply chain disruption?

Moving on, Chattogram Customs House (CCH) ordinarily collects Tk 1.86 billion per day. Indeed, CCH's annual revenue collection in the just-concluded financial year was Tk 680 billion. According to an analysis by this newspaper, the revenue board may suffer a loss up to Tk 3.19 trillion - a mammoth loss! Of course this is not the final tally. With disruption of digital services, customs officials have instructed stations across the country to accept any bank document on releasing perishable items and this makes sense.

It is essential at this time to keep the supply chain for foodstuffs flowing because the main wholesale markets in the city, including Kawran Bazaar which serve as a hub for other retail markets in the city, have been suffering from intermittent supply of various items including vegetables. Indeed, price per kilogram of green chilli (a wholly domestically produced essential food) has shot up to Tk 600/kg. Better it is to forget about revenue loss and keep the goods flowing. This is a national priority. Stock taking on the revenue part can be done later. Imports of raw materials (including food and industrial inputs) need to clear customs on a war-footing so that essentials can get to people and factories can keep operating.​