[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Govt not using full strength to restore macroeconomic stability

The government is not moving at full throttle in bringing discipline to the banking sector, implementing reforms wholeheartedly, taking measures against syndication, and bringing money launderers under the rule of law, said a top economist.

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Govt not using full strength to restore macroeconomic stability

Mustafizur Rahman, distinguished fellow of CPD

The government is not moving at full throttle in bringing discipline to the banking sector, implementing reforms wholeheartedly, taking measures against syndication, and bringing money launderers under the rule of law, said a top economist.

Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), said the government is taking various steps and embracing reforms to mitigate challenges in the economy and lower inflation.

"My concern is that they are not going at full strength. They are going one step forward, two steps backward," he added.

"I see half-hearted initiatives, but taking the steps to its logical conclusion is not there because that will hurt a number of people. Whether it will harm those people is at the end of the day a political decision."

According to Rahman, macroeconomic management, good governance, reforms, and zero tolerance to all forms of anomalies will be required if the upcoming budget is to achieve its objective of macroeconomic stability and bringing down inflation.

The former professor of accounting said the budget should look at the pressure heaped on marginalised groups, fixed-income groups and low-income people, and how they can be helped through budgetary allocations, fiscal policies and fiscal incentives.

He requested the government go a bit slow on transport infrastructure. However, the priority should be to complete ongoing projects rather than taking up new ones.

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[Saif]

Power, agriculture to drive up subsidies

The subsidies and incentive expenditures in the upcoming budget are going to be more than that of the current fiscal year.

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Power, agriculture to drive up subsidies

The subsidies and incentive expenditures in the upcoming budget are going to be more than that of the current fiscal year.

The subsidies are mainly increasing in the power, energy, and the agriculture sectors.

Even though the government plans to raise power tariffs four to five times a year, the highest subsidy allocation is likely to go towards the electricity sector.

Finance ministry officials said the increased subsidy allocation was largely due to the arrears in the power and agriculture sectors.

In the upcoming fiscal year, which begins on July 1, the subsidy allocation is likely to be Tk 1,12,000 crore, up from Tk 1,00,174 crore in the outgoing fiscal year.

Of the sum to be set aside for 2024-25, the power sector is likely to get Tk 42,000 crore. The government has earmarked Tk 35,000 crore for 2023-24.

Before 2021-22, the subsidy allocation for the power sector was between Tk 7,000 crore and Tk 9,000 crore.

Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue, said the main reason behind the rising subsidy allocation in FY25 is the higher energy prices in the international market and elevated capacity payments.

He said the government has planned to increase power tariffs several times, but the sector will require more subsidies as more power plants, including Rooppur nuclear plant, are ready to produce electricity.

"If the old and inefficient power plants are not phased out, the overall capacity charges will increase, which will deepen the subsidy burden," he told The Daily Star.

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[Saif]

Trade-off between macro-economic stability and growth

Is there a paradox between growth and macro-economic stability? In normal circumstances they are considered complementary-one reinforcing the other; but asking which comes as the foremost priority may lead to answers that would tend to vary from place to place reflecting the various dimension

thefinancialexpress.com.bd

Trade-off between macro-economic stability and growth
WASI AHMED
Published :
Jun 04, 2024 23:16
Updated :
Jun 04, 2024 23:16

Is there a paradox between growth and macro-economic stability? In normal circumstances they are considered complementary-one reinforcing the other; but asking which comes as the foremost priority may lead to answers that would tend to vary from place to place reflecting the various dimensions characterising economies. Is it appropriate to say that while macro-economic stability of a country is the precondition for economic growth, the latter may not necessarily be indicative of the former? The trade-off between the two is not simple enough.

Macroeconomic stability can be defined and measured in different dimensions including real, nominal and external stability. To speak of the most important one, real stability is related to sustained and stable growth in economic activity and employment, and is measured by business cycle indicators, such as the unemployment rate or the output gap. Macroeconomic stability is often considered a buffer against currency and interest fluctuations in the global market. Exposure to currency fluctuations, large debt burdens, and unmanaged inflation can cause economic crises and a collapse of GDP. It is here that macro-economic stability features as the foundation of an economy. Economists consider five variables to measure macro-economic stability. These include low and stable inflation, low long-term interest rates, low national debt relative to GDP, low deficits, and currency stability.

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[Saif]

A wounded economy, another perilous year

It’s not the best of times. It’s not the season of light. The future will tell whether it’s the period of Dickensian despair on the economic front. But this is not the moment for business as usual, for sure.

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A wounded economy, another perilous year
Abul Hassan Mahmood Ali unveils fiscal goals in his maiden budget in parliament today. Will he be able to fix the precarious state of the economy?

It's not the best of times. It's not the season of light. The future will tell whether it's the period of Dickensian despair on the economic front. But this is not the moment for business as usual, for sure.

The cycle of economic exhilaration that portrayed Bangladesh as a stellar performer in Asia for a decade is no more on the steady ground that it once was. A triad of crises is now seeping into every corner of the economy. Inflation is an index of chronic consumer pain. The exchange rate shock is hurting almost everyone. Foreign exchange reserves are still haemorrhaging -- half a billion dollars per month.

A sea of red ink appears on the horizon as almost all indicators depict a gloomy picture. GDP growth has come down from its exuberant peak. Stock prices continue to drift downward. Most banks, save for a dozen, are lurching in and out of fund shortages. The zombie banks kept alive for too long are dragging the sector down.

Is the economy becoming a chronic patient? Perhaps not. But it's grievously bruised and needs to be healed and fast.

Years of stability lulled us into believing everything was perfect. People in almost every sphere became habituated to an equilibrium of low inflation, low interest rates and low exchange rate volatility. Under this apparent calmness was a layer of stress.

Then the global crisis came more as a trigger than a cause, exposing Bangladesh's vulnerabilities. Now the tinted perception of the economy is wearing off, acceptance of which we are resisting.

The new fiscal year starting in July could be another perilous year amid a confluence of global economic headwinds and the lingering effects of the government's past misguided steps.

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[Saif]

Govt to rely more on local banks than foreign funds

The government will rely more on domestic bank borrowing than foreign financing in the next fiscal year, intensifying pressure on the economy.

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Govt to rely more on local banks than foreign funds

The government will rely more on domestic bank borrowing than foreign financing in the next fiscal year, intensifying pressure on the economy.

In the revised budget for the current fiscal year of 2023-24, the net foreign financing was cut by 25 percent due to the increasing debt servicing cost and low utilisation of foreign funds.

Net foreign financing is calculated after excluding the expenditure on debt servicing.

The net foreign financing is likely to be reduced by 12 percent in 2024-25. In the current fiscal year, Tk 1,02,490 crore was allocated as net foreign financing, which was later reduced to Tk 76,293 crore.

The amount will be Tk 90,700 crore in FY25.

In the revised budget, the allocation for debt servicing has increased by 2.7 percent to $3.82 billion, including principal amount and interest payments. The expenditure climbed 13.8 percent due to the depreciation of the taka and stood at Tk 42,200 crore.

When the budget was placed last year, an exchange rate of Tk 99.46 per dollar was used. An exchange rate of Tk 110 per dollar has been taken into consideration in the case of the revised budget of FY24 and the proposed budget for FY25.

On May 8, the central bank, however, fixed Tk 117 as the mid-rate as it looks to allow the market to set the exchange rate.

How much money Bangladesh would have to pay will ultimately depend on the exchange rate at the time of payment.

In the proposed budget to be placed today, the debt servicing cost is likely to be $5.18 billion or Tk 57,000 crore, a 35 percent increase compared to the revised budget.

The debt servicing cost is increasing, and foreign funds are not being utilised fully. As a result, the net foreign financing has reduced.

The government had set aside $13.17 billion as foreign financing in the budget for this year, but it was later revised to $9.65 billion. Of the amount, $2.92 billion was earmarked as budgetary support in the original budget, and it was revised to $1.35 billion.

The new budget is likely to allocate $12.86 billion as foreign financing and $3 billion of it could be kept as budget support.

A top finance ministry official said the government had, in most years, failed to utilise the allocated foreign funds. The low use is another reason behind the decreasing foreign financing, according to the officials.

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[Saif]

What’s in the new budget?

The FY 2024-25 budget falls short of assessing the depth of the economically challenging time.

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What's in the new budget?

VISUAL: ANWAR SOHEL

Yesterday, the new finance minister presented the proposal for the national budget for FY2024-25 at a time when Bangladesh's economy is under tremendous pressure. The finance ministry deserves credit for undertaking the humongous task of preparing a budget during an economically challenging time. However, the proposed budget falls short of fully assessing the depth of the problem and making realistic targets, and thus suggesting practical measures to solve some of the problems.

How prudent is the fiscal framework?

With a size of Tk 7,97,000 crore, the FY2024-25 budget is equivalent to 14.2 percent of the GDP, which is the same as the revised budget of the outgoing fiscal year.

The gap between expenditure and revenue is large, which is common in Bangladesh. Since the revenue target is set at Tk 5,41,000 crore, or 9.7 percent of GDP, the government has to rely on both domestic and foreign sources. However, given the high inflationary pressure over the last two years and the resource constraints the country faces, it would have been prudent to keep the budget deficit low, somewhere between three or four percent of GDP, even though traditionally it has been set around five percent in the annual budget. In FY2023-24, the budget deficit was set at 5.2 percent of GDP, which has now been revised to 4.7 percent. In the upcoming fiscal year, it has been set at 4.6 percent. Of this deficit, 2.9 percent will be financed from domestic sources, and 1.9 percent from foreign sources.

A large amount of domestic funding will come from bank loans by the government, which is set to be Tk 1,37,500 crore—2.5 percent of the budget deficit. In the revised budget of FY2023-24, the amount of bank loans has been increased to Tk 1,55,935 crore. In the outgoing fiscal year, there was low demand for bank loans by the private sector. But the government's consistent dependence on the banking sector will create the crowding out effect for the private sector at some point. Besides, the government's interest payment against the bank loans continues to increase.

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[Saif]

Govt measures will tame rising inflation

Finance Minister Abul Hassan Mahmood Ali yesterday expressed hope that the government would be able to curb high inflation on the back of budgetary measures and the central bank’s steps.

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Govt measures will tame rising inflation
Says finance minister at post-budget briefing

Finance Minister Abul Hassan Mahmood Ali yesterday expressed hope that the government would be able to curb high inflation on the back of budgetary measures and the central bank's steps.

"I would like to remind you that after we assumed power in 2009, inflation was at a high level, but we brought it under control. I want to assert that inflation will fall this time too.

"We have taken several steps to control inflation through the tax structure. For example, duties have been reduced for the import of daily necessities."

The minister was speaking at the post-budget media briefing at the Osmani Memorial Auditorium in Dhaka.

Bangladesh has been seeing more than 9 percent inflation for the past two years. Though many countries have successfully brought it down, Bangladesh is struggling to contain it owing to a lack of adequate measures at the right time.

Mahmood Ali tried to allay fears that higher bank borrowing, targeted for the upcoming fiscal year, will stoke inflation.

"There is nothing to worry about," he said, adding that the government did not go for a bigger budget with an aim to rein in inflation.

"Since controlling inflation is our top priority now, contractionary policy remains the focus for a while. However, we will keep an eye to ensure our growth does not suffer too much from this."

In the budget speech, the finance minister said the goal is to increase government spending gradually in the second half of 2024-25, and this will be possible if the revenue collection increases.

Md Khairuzzaman Mozumder, secretary of the finance division, said there is distortion in the supply chain of essentials and the government is trying to address it.

"The policy rate has been increased to 8.5 percent, and it will take a while to see its impact."

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[Saif]

Bangladesh: a breakout economy or another LDC crash landing?

What Bangladesh achieved in the last five decades, more so over the last 30 years or so, has been more than impressive. We have been stepping up our gross domestic product (GDP) growth rates every decade consistently since the independence, culminating to 6-7 per cent pre-pandemic. If we take the f

thefinancialexpress.com.bd

Bangladesh: a breakout economy or another LDC crash landing?
ZAVED AKHTAR
Published :
Jun 04, 2024 23:25
Updated :
Jun 04, 2024 23:25

What Bangladesh achieved in the last five decades, more so over the last 30 years or so, has been more than impressive. We have been stepping up our gross domestic product (GDP) growth rates every decade consistently since the independence, culminating to 6-7 per cent pre-pandemic. If we take the first 50 years since independence, we have seen massive acceleration in the last 30 years with GDP doubling every 10 years, an unmatchable feat for any least developing country (LDC). During the period, Bangladesh has also seen strong acceleration of the Human Development Index (HDI), well ahead of India, Pakistan, and Nepal (albeit lower than Sri Lanka, Maldives & Bhutan) and is currently placed as Medium Human Development Category. In this connection, a quote from The World Bank Country Economic Memorandum, Change of Fabric, may be relevant. Regarding the reforms, it states: "In the mid-1980s, markets and public investment were strengthened, including for infrastructure. Further reforms in the early 1990s allowed for more private sector participation in trade, finance, and land ownership. These reforms were accompanied by complementary reforms in agriculture ((e.g., liberalization of agricultural input markets, seed sector reforms), and in social sectors (e.g., mandatory primary school, a female stipend program for secondary schools, and family planning programs). The rise of ready-made garments exports during that period evolved from a combination of private investment and public policy support. Structural improvements provided strong impetus to inclusive growth especially between the early 1990s and mid-2000s but major reforms have not been sustained since then. Bangladesh has yet to move to the next phase of economic transformation."

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​

 

[Saif]

New budget designed for plunderers: Fakhrul

New arrangements have been made in the proposed budget for fresh looting of the nation's wealth, said BNP Secretary General Mirza Fakhrul Islam Alamgir today

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New budget designed for plunderers: Fakhrul

New arrangements have been made in the proposed budget for fresh looting of the nation's wealth, said BNP Secretary General Mirza Fakhrul Islam Alamgir today.

Speaking at a discussion, he also criticised Prime Minister Sheikh Hasina's comment where she described the provision for whitening black money as "using bait for catching fish"

"How long will you (PM) be able to deceive people by creating a smoke screen with such statements?" he asked.

"Just by looking at the budget, you can understand that arrangements have been made for another feast of big fishes," the BNP leader said.

He said the new budget will do nothing but harm the country.

Fakhrul said the growing inflation is the biggest crisis for the common people as the skyrocketing prices of commodities have made their lives unbearable.

Jatiya Samajtantrik Dal (JSD-Rob) arranged the programme at Jatiya Press Club, marking the first death anniversary of Serajul Alam Khan, one of the key organisers of the Liberation War.​

 

[Saif]

Who will actually have to pay 30 percent income tax?

What is a progressive tax system? Well, it means that the income tax rate climbs up as the income increases. But that still doesn't mean that the raised income tax rate will apply for the entirety of someone's income

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Who will actually have to pay 30 percent income tax?

In the budget proposal on Thursday, finance minister Abul Hassan Mahmood Ali proposed that the marginal tax rate for the highest income slab would be 30 percent. While 30 percent income tax is a relatively high figure, as the tax rate for the highest income slab previously was 25 percent, it is important to consider the fact that Bangladesh has a progressive tax system, which means that in practice, most people will actually not be paying their income taxes at an effective rate of 30 percent.

What is a progressive tax system? Well, it means that the income tax rate climbs up as the income increases. But that still doesn't mean that the raised income tax rate will apply for the entirety of someone's income.

In this year's budget, it has been proposed that the first Tk 3,50,000 income any individual makes will be tax free. For the next Tk 1,00,000 that they make, the tax rate will be five percent. It will be 10 percent for the next Tk 4,00,000, 15 percent for the next Tk 5,00,000, 20 percent for the next Tk 5,00,000, 25 percent for the next Tk 20,00,000, and finally, 30 percent for whatever a person makes beyond this.

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[Saif]

Widening tax net urgent to raise tax-GDP ratio: ICAB

The Institute of Chartered Accountants of Bangladesh on Saturday said that widening the tax net was the demand of time to increase the country’s tax-gross...

www.newagebd.net

Widening tax net urgent to raise tax-GDP ratio: ICAB
Staff Correspondent 08 June, 2024, 23:23

The Institute of Chartered Accountants of Bangladesh on Saturday said that widening the tax net was the demand of time to increase the country's tax-gross domestic product ratio.

In a post-budget press conference organised by ICAB in the capital Dhaka, accounting professionals said that they appreciated the reduction of tax on private companies and one person companies, essential items and making tax rates applicable for two years in the proposed budget for the 2024-25 financial year.

Finance minister Abul Hassan Mahmood Ali placed the proposed budget for the 2024-25 financial year at Jatiya Sangsad in the capital Dhaka on June 6.

The institute said that the proposed budget gave an opportunity to legalise undisclosed money with a 15-per cent tax, but did not provide a distinction between legitimate and illegitimate incomes.

Mohammed Forkan Uddin, president of ICAB, said that the institution appreciated the emphasis put on online document verification system in the proposed budget.

The ICAB president also said that borrowing from internal sources to meet the budget deficit could fuel the already rising inflation.

He also said that ICAB appreciated the changes in the VAT and supplementary duty.

ICAB chief executive officer Snehashish Barua said that if the government took more loans from banks, investment in the country could reduce and higher revenue collection target might be disrupted.

Former ICAB president Md Humayun Kabir, among others, was present in the press conference.​

 

[Saif]

Import duty cut for LDC graduation: Long way to go for readiness

The government has proposed removing and reducing import duties and supplementary duties on 282 products in fiscal year 2024-25 as it continues its efforts to prepare the nation for its graduation out of the Least Developed Country grouping.

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Import duty cut for LDC graduation: Long way to go for readiness

Visual: Biplob Chakroborty
The government has proposed removing and reducing import duties and supplementary duties on 282 products in fiscal year 2024-25 as it continues its efforts to prepare the nation for its graduation out of the Least Developed Country grouping.

Experts, however, say the moves are inadequate and the government is leaving a lot to do before the country graduates in 2026.

In the current fiscal year, it withdrew import duties on 191 products and supplementary duties on 234 products.

Next year, it wants to withdraw supplementary duties on 19 more products and reduce supplementary duties on 172 and withdrawal duties on 91 others.

Once Bangladesh graduates in November 2026, it may lose yearly $8 billion worth of exports to erosion of trade preferences.

Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said the measures for dealing with the post-graduation challenges were inadequate.

He said the government was cutting supplementary duties, regulatory duties and has recommended further duty cuts on a few products and their number was not big.

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[Saif]

What are we doing wrong in attracting FDI?

What can we do better? Why is Vietnam successful and not us?

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What are we doing wrong in attracting FDI?

Foreign Direct Investment (FDI) is the holy grail of this century. Every country seeks to draw FDI and increase its share of this rare commodity. Readers need no reminder that FDI is a limited resource and is traded in a competitive market since all countries, including the significant players—Ireland, India, China, and the USA—are contenders in this chase.

Vietnam, which broke out of the clutches of foreign control only in 1975, has emerged as an economic powerhouse thanks to the influx of FDI. We can learn a lot from the path it charted out for itself since Bangladesh is strategically located in the same region with the potential to leverage not only its domestic market potential but also its proximity to India and China to become the next hub of the international supply chain, including electronics, textiles, IT, and pharmaceuticals. Once they relocate to Bangladesh, these industries could export from here, serving global markets in pharmaceuticals, technology services, medical devices, food and beverages, and financial services.

The question on everyone's mind is whether the recent troubles in our economic front will hurt our chances of attracting FDI. The recent budget has incorporated no new measures to make FDI more attractive to investors. The Fitch ratings downgraded Bangladesh's sovereign credit rating (SCR) to B+ from BB-. That will impact FDI, in addition to driving up the cost of borrowing.

The SCR downgrade did not surprise anyone, but I wanted to know what factors caused this downgrading. Does it matter to us? And how consistent have the ratings been in identifying the potential risk to investors? I wanted to find out if these credit rating agencies have considered all the information available, including political, social, economic, environmental, and financial issues. As I was exploring, I discovered that a lot of emphasis, or weight as they call it in technical jargon, is assigned to the foreign exchange balance, financial stability, and, of course, the mood of the investors in the country itself. It is also known that building stronger FDI links with the local economy through supplier development programmes and FDI linkage initiatives help decrease information gaps for investors and boosts local business opportunities.​

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[Saif]

Economic immorality called out

Bangladesh is heading towards an economic system devoid of moral values, which is causing a breakdown in financial discipline, spoiling the business climate, and discouraging honest taxpayers, said noted economist Wahiduddin Mahmud.

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Economic immorality called out
Economists paint a grim picture for Bangladesh at discussion

Bangladesh is heading towards an economic system devoid of moral values, which is causing a breakdown in financial discipline, spoiling the business climate, and discouraging honest taxpayers, said noted economist Wahiduddin Mahmud.

He was one of the speakers who took part in a discussion on the proposed budget for the fiscal year 2024-25 at a city hotel yesterday.

The Editors' Council and the Newspaper Owners' Association of Bangladesh (Noab) organised the event.

Wahiduddin observed, "We are talking about being a Smart Bangladesh. If smart people have no values, it becomes horrifying.

"How we can restore the values in the economy should be analysed and focused on."

Citizens too have a responsibility, as many engage in corruption to evade taxes or get benefits by bypassing rules and procedures, he added.

Wahiduddin, also a former finance adviser to a caretaker government, said the main source of this economy devoid of values is the political power system. When the power illegally goes to the loyal people and vested groups, it is used for immoral activities.

In the interest of the economy, the government must keep some sectors free from corruption and irregularities, he said.

The administration lacks accountability, and corruption is deeply rooted there, which wastes public funds, said Wahiduddin, also a former professor of economics at Dhaka University.

He said the Bangladesh Financial Intelligence Unit (BFIU) has failed to play its due role in curbing money laundering. "Recently, we have seen that a former government official kept hundreds of crores of taka in banks and then withdrew it too. But nobody was caught."

He said if Tk 10 lakh is transferred via banks, the BFIU notices it and is supposed to detect the source.

"The atmosphere for confidence has not been created. We see unbridled circulation of black money in the economy and capital flight."

Wahiduddin said when the economic indicators were strong, the irregularities, mismanagement, and waste were covered up. "It [the economy] had the capacity to absorb those. At present, it has no capacity to absorb this mismanagement."

The current economic crisis is not temporary, and mid- and long-term strategies are needed, he warned.

Citing mega projects, the economist said those were built with loans. He said some of them could have been built with equity sharing. "Then, it might have eased the pressure of debt repayment."

Wahiduddin said the economy is facing the challenges of stubborn inflation; erosion of foreign exchange reserves; lower revenue collection; lukewarm growth in remittance and export earnings; capital flight; indiscipline in the banking sector; massive corruption; and waste of public funds.

"In this situation, the budget was as usual … which can be termed a sacrificial lamb that has no significant scope to do the many things that are required."

Due to lower revenue earnings, there is no scope for a budget with high expenditure, which the country requires. Considering the high inflation, the government had to contain the deficit too, he said.

In overall macroeconomic management, some basic weaknesses have been exposed.

He said low revenue collection was a big weakness, but the government has not taken any strong corrective measures.

Another weakness is the huge loans taken from internal and external sources. "If the government continues to borrow, the budget may fall into a debt trap."

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[Saif]

Bangladesh economy to grow 5.7% in FY25: WB

The World Bank's prediction is much lower than govt projection of 6.75%

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Bangladesh economy to grow 5.7% in FY25: WB
The World Bank's prediction is much lower than govt projection of 6.75%

Bangladesh's economy is likely to grow 5.7 percent in 2024-25 fiscal year, much lower than the government's projection, supported by increased private consumption for easing inflation and a pick-up in overall investment for implementation of large investment projects, the World Bank said today.

"Shortages of inputs and imported goods are expected to ease gradually. A more flexible exchange rate policy is envisaged to help increase remittance inflows and reduce balance of payments pressures," the multilateral lender said in its Global Economic Prospects released today.

The outlook by the WB comes couple of days after the government, in the budget for FY25, projected a 6.75 percent growth of the gross domestic product -- the final value of goods and services produced in an economy in a certain period -- for FY25.

The WB's forecast is roughly one percentage point lower than the government's target for the year. The Washington-based agency in April predicted 5.7 percent growth for Bangladesh's economy for next fiscal year and it kept the projections unchanged in the latest report.

The agency said overall output would expand 5.6 percent in the FY24 ending this June.

The Bangladesh Bureau of Statistics (BBS) provisionally estimates GDP growth at 5.82 percent for FY24.

The WB said industrial activity was disrupted in Bangladesh partly due to ongoing import restrictions, which have caused shortages of materials and intermediate goods.

"The government consumption and investment have supported activity, while elevated inflation has dampened real wage growth and the purchasing power of households, and weighed on private consumption," it said in its Global Economic Prospects.

"Additionally, higher borrowing costs have weighed on demand. High levels of non-performing loans in the banking sector dampened investor confidence."

The multilateral lender raised its global growth outlook on Tuesday on the back of resilient consumer spending in the United States, but warned that growth remains weak by historical standards, reports Reuters.

In updated forecasts, the Washington-based development lender said it now expects the world economy to grow by 2.6 percent this year in real terms, up 0.2 percentage points from its last update in January.​

 

[Saif]

Govt’s overreliance on banking sector will create disorder in financial sector

The government’s overdependence on the banking sector to finance its budget deficit will affect the financial sector as well as hurt private sector investment and employment generation, according to experts.

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Govt's overreliance on banking sector will create disorder in financial sector
Experts say in post-budget discussion at Dhaka University

VISUAL: SALMAN SAKIB SHAHRYAR

The government's overdependence on the banking sector to finance its budget deficit will affect the financial sector as well as hurt private sector investment and employment generation, according to experts.

"Again, like every year, the government's overdependence on the banking sector to finance the budget deficit will create chaos in the financial sector," said M Abu Yusuf, director of the Centre on Budget and Policy at the University of Dhaka.

The centre organised the event on the campus premises.

While presenting a keynote paper, titled "Review of Proposed Budget 2024-25: Macroeconomic Reintegration, Education and Employment", he said the deficit in this year's budget stood at Tk 256,000 crore, which is 4.6 percent of the GDP.

To finance the budget deficit, the government has set a domestic loan target of Tk 160,900 crore, of which Tk 127,200 crore will come from the banking sector, he said.

However, if the budget deficit is financed by money collected from savings certificates or pension schemes, it will provide financial security to the middle class and provide safe credit facilities for the government, Yusuf added.

Although inflation is above 9 percent, food inflation is about 15 percent to 18 percent, he said.

"Reducing the double-digit inflation rate will be the biggest challenge for the government. It is having a direct impact on people's lives and causing social and political instability."

Yusuf added that some more measures could have been taken to tackle inflation.

The social and financial impact of inflation could have been controlled by reducing the size of the budget and lowering the value-added tax (VAT) and import duties on various commodities as an emergency measure, he said.

Moreover, the income tax ceiling could have been increased to give some relief to people from lower and middle-income backgrounds.

He added that 14 percent of the budget would be spent on interest payments, almost equal to the total allocations for the education and health sectors.

"This is a matter of concern for us as our reserves have dwindled a lot," he observed.

Former planning minister MA Mannan, Dhaka University Vice-Chancellor Prof ASM Maksud Kamal, and Research and Policy Integration for Development Chairman MA Razzaque were among others who spoke at the event.​

 

[Saif]

Three major barriers to economy’s progress

Strategic inefficiency, institutionalisation of corruption, and a lack of accountability are the three major barriers blocking the smooth progress of the economy, said economists, entrepreneurs and politicians yesterday.

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Three major barriers to economy's progress
Speakers say strong political will needed to address inefficiency, corruption and a lack of accountability

Strategic inefficiency, institutionalization of corruption, and a lack of accountability are the three major barriers blocking the smooth progress of the economy, said economists, entrepreneurs and politicians yesterday.

"To solve the existing problems of the economy, the country needs strong political will," said Hossain Zillur Rahman, executive chairman of the Power and Participation Research Centre, a think-tank.

The political will faces barriers such as an environment of no accountability, inefficiency in taking overall strategic steps, and institutionalisation of corruption, he said.

"These barriers need to be broken down for the development of the economy."

His comments came at a dialogue on budget at the Lakeshore Hotel in Dhaka. The Centre for Policy Dialogue (CPD) organised it.

Rahman, a former caretaker government adviser, said the country has a huge deficit in ensuring governance and development strategy.

For instance, job creation has not received the expected focus in the development strategy in the last one decade. "This is an important deficit as it is creating unemployment, and the younger generation is becoming disappointed," he said.

In a survey, the government itself has found that most of the youths are pessimistic about their future, he said.

"The country needs to raise the budgetary allocation for the education and health sectors and strengthen focus on the implementation of the budgetary plans."

Rahman, also the chairman of BRAC, said Bangladesh is trapped by inefficiency. "Ministries are showing their inefficiencies in implementing their budget."

Speaking about the quality of services, the noted economist said education and health-related investments don't just refer to infrastructural development alone. "The quality of education and health services should be upgraded."

He cited hard-working entrepreneurs and economic agents as the two golden geese of Bangladesh's economy. "Do we nurture them?"

"Entrepreneurs need a favourable business climate and reduced bureaucratic red tape.

However, the reality is they are prevalent. In order to solve these problems, a strong political will is essential."

While chairing the dialogue, Syed Manzur Elahi, a noted industrialist and a former caretaker government adviser, said governance is an important issue for the country, and if it can be ensured, 90 percent of problems of the economy will be tackled.

He said there is a leakage in both income and expenditure sides. "If these can be solved, the economy will benefit."

About the inefficiency in the energy sector, Anisul Islam Mahmud, deputy leader of the opposition in Parliament, said the capacity payment is not the main problem of the electricity sector.

"Mismanagement is the main problem. For instance, around 40 percent of power generation capacity has remained unused. Why should I pay for your mismanagement?"

He mentioned the latest chaos related to sending migrant workers to Malaysia. "People have suffered because of a syndicate."

Leakages and corrupt practices should be eliminated, and syndicates should be dismantled for the greater interest of economic development, he said. "Accountability and transparency are key to ensuring good governance in all spheres of society."

Workers and farmers have been offering much-needed lifelines to the economy year after year, but they were not given due importance in the budget, said Razekuzzaman Ratan, assistant general secretary of the Bangladesher Samajtantrik Dal.

To read the rest of the news, please click on the link above.​

 

[Saif]

Forex reserves rise by $538m in a week

Bangladesh's foreign currency reserves have reached $19.2 billion, an increase by $538 million from a week ago

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Forex reserves rise by $538m in a week
The improvement comes a month after the central bank relinquished its control over the rate-setting mechanism and introduced a more flexible exchange rate regime.
forex reserves of Bangladesh.

Bangladesh's foreign currency reserves have reached $19.2 billion, an increase by $538 million from a week ago.

The improvement comes a month after the central bank relinquished its control over the rate-setting mechanism and introduced a more flexible exchange rate regime.

The reserves were $18.67 billion a week earlier, Bangladesh Bank data showed. It was $19.82 billion on May 8. It has been calculated on the basis of the formula of the International Monetary Fund (IMF).

Central bank officials say the forex reserves are on the rise thanks to several reasons, including the flexible exchange rate known as crawling peg.

The banking regulator on May 8 introduced the Crawling Peg Mid-Rate (CPMR) for buying and selling foreign currencies and allowed banks to buy and sell US dollars freely at around Tk 117.

On June 13, the highest inter-bank exchange rate stood at Tk 118 per dollar.

Bankers are charging importers more than Tk 118 per USD. It is also offering the same rate to remitters, industry insiders said.

The relaxed rules governing offshore banking have been another reason behind the pick-up in the reserves, they added.

In March this year, the parliament passed the Offshore Banking Act 2024 to give a much-needed boost to the country's desperate efforts to improve the US dollar supply.

The reserves have been declining sharply since the beginning of the Russia-Ukraine war as the conflict sent the prices of commodities such as oil and gas higher, hurting import-dependent nations like Bangladesh.

However, mismanagement in the forex market, frequent policy changes by the central bank, and the gap between the official exchange rate and the unofficial one are also to blame, according to bankers.

Since August 2021, forex reserves have fallen by $24 billion.​

 

[Saif]

Economist questions growth and inflation targets for FY25

It may not be possible to simultaneously achieve both high growth and ensure macroeconomic stability as outlined in the proposed budget for the upcoming fiscal year, an expert said yesterday.

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Economist questions growth and inflation targets for FY25

It may not be possible to simultaneously achieve both high growth and ensure macroeconomic stability as outlined in the proposed budget for the upcoming fiscal year, an expert said yesterday.

Economist MA Razzaque said the policy intent in the finance minister's budget speech was clear in identifying the challenges, particularly in emphasising the need to contain inflation.

"There is no denying that Bangladesh has consistently achieved robust GDP growth for a long time. However, in light of the pressing need to address macroeconomic challenges, the strategy of stimulating economic activity through increased public spending presents a complex dilemma," he said.

He was presenting the keynote paper at a seminar, titled "FY25 Budget: An Assessment", organised by Research and Policy Integration for Development (RAPID) at the Jatiya Press Club in the capital.

Razzaque, chairman of RAPID, said some of the proposed measures suggest there is an aim to balance the dual objectives of managing growth and development ambitions while reinforcing stabilisation efforts.

However, in the end, it appears that, much like in previous years, the policy approach to those problems remains insufficient and lacks the decisive action needed to address the issues effectively, he said.

Razzaque also said that the budget deficit proposed for FY25 remained largely unchanged from FY24 at 4.6 percent of GDP.

So, even though there is a renewed emphasis on addressing rising price levels, there is no policy intent to reduce the budget deficit, which is known to be an important factor in inflation management, he added.

"Then there is the fundamental question of whether it is possible to achieve the high growth rate set for FY25 at 6.75 percent with the current inflation level of 10 percent," Razzaque said, adding that the proposed budget set the target to reduce inflation to 6.5 percent.

He said restoring economic stability is intrinsically linked with the government's ability to mobilise sufficient revenue.

But despite setting ambitious tax collection targets annually, those goals often remain elusive.

Binayak Sen, director-general of the Bangladesh Institute of Development Studies, said the government has adjusted policies based on global and local conditions.

He pointed out that the foreign exchange regime has been made almost market-based, and the interest rate control has been withdrawn.

However, Sen expressed his disappointment over the universal pension scheme, saying that there was a problem from both the demand and supply sides.

"The government should think about it."

In the proposed budget for the upcoming fiscal year, an ambitious revenue collection target of Tk 541,000 crore has been set, which is 13.2 percent higher than that in the revised budget of FY24, Razzaque said.

Additionally, the National Board of Revenue (NBR) has been tasked with collecting about 89 percent of the total revenue.

But that may not be achievable, according to Razzaque, especially since the tax authority could meet only 63 percent of its revenue collection target in FY24.

Speaking about the budget deficit, he said the annual development programme (ADP) spending had been fully financed through the budget deficit in recent years, with reliance on both domestic and external borrowing.

As external borrowing has been a critical source of financiering for the fiscal deficit, outstanding external debt has surged, recently surpassing $100 billion, which would be alarming in any normal situation.

To read the rest of the news, please click on the link above.​

 

[Saif]

Forex reserves to get $2b boost

Bangladesh’s foreign currency reserves are set to receive as high as $2 billion this month, which may send the total to nearly $21 billion, handing a much-needed relief to the US dollar supply.

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Forex reserves to get $2b boost

Bangladesh's foreign currency reserves are set to receive as high as $2 billion this month, which may send the total to nearly $21 billion, handing a much-needed relief to the US dollar supply.

On Wednesday, the reserves went up by $538 million to $19.2 billion from a week ago, showed central bank figures prepared based on the formula of the International Monetary Fund (IMF). This is the highest level of forex reserve holdings in the past one month.

In a major boost, $1.65 billion is expected to be added to the reserves from the IMF and the World Bank.

The IMF may release $1.15 billion in the third instalment of its $4.7 billion loan in the last week of June, said Finance Minister Abul Hassan Mahmood Ali last month.

The WB is going to provide $500 million in budget support also by the end of June.

This means the IMF and the World Bank's support would lift the reserves to at least $20.85 billion. It was above this level two months ago and at more than $21 billion in March.

Last week's improvement comes a month after the central bank relinquished its control over the rate-setting mechanism and introduced a more flexible exchange rate regime.

Central bank officials say the forex reserves are on the rise thanks to several reasons, including the crawling peg.

On May 8, the banking regulator introduced the Crawling Peg Mid-Rate to facilitate the purchases and sales of foreign currencies, allowing banks to trade US dollars freely at around Tk 117.

On Tuesday, the highest interbank exchange rate stood at Tk 118 per dollar.

Bankers are charging importers more than Tk 118 per USD. It is also offering the same rate to remitters, industry insiders said.

The relaxed rules governing offshore banking have been another reason behind the pick-up in the reserves, they added.

In March this year, parliament passed the Offshore Banking Act 2024 to give a boost to the country's desperate efforts to improve the US dollar supply.

The reserves have been declining sharply since the beginning of the Russia-Ukraine war as the conflict sent the prices of commodities such as oil and gas higher, hurting import-dependent nations such as Bangladesh.

However, mismanagement in the forex market, frequent policy changes by the central bank, and the gap between the official exchange rate and the unofficial one are also to blame. Since August 2021, forex reserves have fallen by $24 billion.

Speaking to The Daily Star yesterday, Monzur Hossain, a research director of the Bangladesh Institute of Development Studies, described the accumulation of more than half a billion dollar to the reserves in the span of a week and the impending $1.65 billion loans from the IMF and the WB as a good piece of news for the country.

He, however, added it would be too early to say whether the current forex crisis has eased.

He explained Bangladesh's financial account has been in negative territory for long. The deficit will have to be narrowed by taking foreign loans or attracting foreign direct investments, said the economist.

"If we can reduce the financial account deficit, it will be good news for the country."

The private sector's short-term foreign debt made a turnaround for the first time in more than a year in April. However, the FDI flow dropped 14 percent year-on-year last year, central bank data showed.

Hossain said the crawling peg would narrow the US dollar rate between the formal market and the informal market and bring more foreign currencies into the official channel.

The exchange rate that has been fixed through the crawling peg is close to the actual exchange rate, the economist added.​

 

[Saif]

Export gains as taka appears 'highly competitive'

Bangladesh's currency now appears "highly competitive" as the real effective exchange rate (REER) of the taka against a 15-currency basket of global trading partners dropped below 100, particularly spurring export. Measured by the central bank of Bangladesh against the currency basket, the R

thefinancialexpress.com.bd

Export gains as taka appears 'highly competitive'
BD currency's real effective exchange rate against 15-currency basket drops below 100
JASIM UDDIN HAROON
Published :
Jun 15, 2024 23:30
Updated :
Jun 15, 2024 23:30

Bangladesh's currency now appears "highly competitive" as the real effective exchange rate (REER) of the taka against a 15-currency basket of global trading partners dropped below 100, particularly spurring export.

Measured by the central bank of Bangladesh against the currency basket, the REER stood at 99.79 in May. The exchange rate was 104.89 in April 2024.

This change is due to higher depreciation of the local currency recently against the US dollar with the relaxation of exchange-rate controls. "Such deep depreciation of the taka in one go has not been seen in many years before," says an analyst.

This gauge can be used to assess the equilibrium value of a currency. A decrease from 100 is an indication that its exports are getting competitive and its imports expensive.

The end result: its trade-competitiveness is on the rise. It is an indicator of the international competitiveness of a nation in comparison with its trade partners.

Among Bangladesh's top trading partners are mainly China, the European Union, and India. The REER considers the currencies and inflation readings of the top 15 trading partners.

Both India and the EU had 2.6-percent inflation in May last while in China it was much lower as the world's second-biggest economy was experiencing deflation.

Such valued BDT in terms of the REER will help enhance the competitiveness of Bangladeshi-made goods on the international market, bankers and economists believe.

Central bankers told the FE that such value of the BDT is due to sharp depreciation of the local currency against the greenback. The latest taka-dollar adjustment took place on May 08 under a reform drive when the taka weakened by shedding it's value by Tk 7.0 to Tk 117.

"Yes, it is impacting the export receipts as May export expanded to over $4.0 billion. It was less than $4.0 billion in April," one senior central banker told the FE.

Economists say this effective-exchange position will enhance the country's competitiveness in external trade.

"Definitely, this will enhance the competitiveness," says Dr M. Masrur Reaz, chairman of local think-tank Policy Exchange of Bangladesh.

He notes that the country's export receipt has been on the rise and it will accelerate further if the REER becomes supportive.

Dr Zahid Hussain, a former lead economist of the World Bank, feels that the "REER picture is now appears to be near-true."

He also told the FE correspondent that the inflation measurement raises many questions as to whether or not it is calculated genuinely.

He questions the representative CPI and its inflation measurement. "The REER will be more truly reflected once the inflation data of Bangladesh become more reliable," Dr Hussain says.​

 

[Saif]

Macro challenges paramount, budget measures half-hearted

Economists on Thursday criticised the proposed national budget for FY25, arguing it does not have adequate focus on restoring macroeconomic stability. Speaking at a post-budget discussion hosted by the Economic Reporters' Forum (ERF), they said the budget flagged major challenges such as rising in

thefinancialexpress.com.bd

Macro challenges paramount, budget measures half-hearted
Say economists at ERF discussion
Published :
Jun 14, 2024 09:30
Updated :
Jun 14, 2024 09:30

Economists on Thursday criticised the proposed national budget for FY25, arguing it does not have adequate focus on restoring macroeconomic stability.

Speaking at a post-budget discussion hosted by the Economic Reporters' Forum (ERF), they said the budget flagged major challenges such as rising inflation, revenue generation, foreign-currency reserves, growth and job creation. But the proposed measures were incomplete and insufficient to tackle these issues effectively.

In a keynote presentation, Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), said persistent high inflation remains a major concern for the economy, which continues hurting the livelihoods of common people.

While the central bank adopts contractionary measures to control inflation, she said, the proposed fiscal policy is expansionary -- which is "contradictory".

"Under such circumstances, bringing down inflation will be difficult," she noted.

Dr Fahmida Khatun questioned the projected GDP growth of 6.75 per cent for FY25, considering the current macroeconomic context. Achieving this ambitious target in a private sector-driven economy would require increased investment.

However, she said that the private investment-to-GDP ratio has remained stagnant at around 23-24 per cent for several years.

"It is unclear how the government plans to raise it to 27.34 per cent in the next fiscal year," the CPD executive director said during the discussion chaired by ERF President Refayet Ullah Mirdha.

The economist also talked about the consistently high revenue targets set for the National Board of Revenue (NBR) despite their history of falling short.

She said the bank borrowing target has been proposed at Tk 1.37 trillion, which is 2.50 per cent of the GDP. The gradual high dependency of the government on the bank borrowing would create a crowding-out effect that would hurt the private sector.

Former Bangladesh Bank (BB) governor Dr Salehuddin Ahmed said the budget has almost nothing that would bring smiles to the lower-income groups and businesses as the debt burden keeps rising, while the scope of employment continues squeezing. He criticised the apparent contradiction between the budget's "Smart Bangladesh" slogan and the proposed increase in mobile and internet taxes. "Such slogans should not mislead the public."

He argued that the budget should have prioritised three key issues: inflation, foreign currency reserves and energy. But the budget lacked concrete measures to address these pressing challenges. Dr Monzur Hossain, research director at the Bangladesh Institute of Development Studies (BIDS), advocated for a stronger focus on restoring macroeconomic stability, even if it meant compromising somewhat on projected growth figures.

"If the macroeconomic problems are not addressed properly, achieving the desired long-term growth trajectory will be difficult," he said.

He questioned the government's approach of reducing subsidies by simply raising energy prices. "Is this the most effective way to manage subsidies? Shouldn't alternative options, such as improving institutional capacity, be explored?"

To read the rest of the news, please click on the link above. ​

 

[Saif]

GDP output may rise 40% if women’s participation in economy widens

Bangladesh can increase its economic output by nearly 40 percent by closing the gender gap and increasing women’s participation in the economy, according to the International Monetary Fund (IMF).

www.thedailystar.net

GDP output may rise 40% if women's participation in economy widens
Two IMF economists say on Bangladesh

As women played an integral role in the development of the garment industry of Bangladesh and the country's growth success in recent decades, they should be empowered to play an active role in green transition, say economists. Photo: Star

Bangladesh can increase its economic output by nearly 40 percent by closing the gender gap and increasing women's participation in the economy, according to the International Monetary Fund (IMF).

"Sizable gaps in women's economic empowerment undermine growth and exacerbate climate vulnerability in Bangladesh," said the multilateral agency in an article last week.

Per capita incomes in Bangladesh have risen seven-fold in the past three decades while poverty has been reduced to a fraction of former levels.

"Such progress has been driven in part by greater labour force participation by women, most notably in the garment industry, and has been accompanied by other meaningful improvements in women's empowerment," said the article jointly written by Jayendu De and Genet Zinabou.

"Our recent analysis, however, shows there is still large gaps between women and men. Notably, women's labour force participation is only half the rate of men."

Jayendu De is the IMF resident representative in Bangladesh while Genet Zinabou is an economist in the fiscal affairs department.

The writeup, citing an IMF's previous research, said closing the gap could increase Bangladesh's economic output by nearly 40 percent.

"Women also remain less likely than men to obtain tertiary education, and they face greater barriers in accessing financial services. Remedying both factors could raise the entire economy's productivity."

The article said Bangladesh's extreme vulnerability to climate change and natural disasters makes the efforts to close gender gaps challenging.

"Climate shocks generally affect the already poor and vulnerable the most. This means that Bangladeshi women, who on average have fewer resources than men, are likely to be disproportionately impacted."

It highlights several factors that render women uniquely exposed to the effects of climate change and natural disasters.

Women's employment is highly concentrated in agriculture and informal work and climate change directly affects agricultural production. Informal workers are often particularly vulnerable to climate shocks as they lack access to social insurance programmes.

The article said both international and internal migration are important climate adaptation strategies. But these are availed mostly by men: men are 16 times more likely to be employed overseas than women, who tend to be primary caregivers for children and the elderly, leaving them less mobile and more likely to remain living in areas highly exposed to climate change.

Women carry the primary responsibility for collecting drinking water and cooking fuel. As warming temperatures, rising sea levels, deforestation and more frequent cyclones and droughts render these tasks more time-consuming, women's time poverty is expected to be exacerbated, the IMF warned.

Bangladesh has already recognised the need to integrate gender perspectives in its 2009 Climate Change Strategy. Following this, the government adopted the first Climate Change and Gender Action Plan 2013, which it updated in March 2024.

"Renewed efforts will be needed to ensure successful implementation of the plan and achieve simultaneous progress on climate action and gender equality," it added.

"To this end, policymakers should capitalise as much as possible on the synergies between women's empowerment, economic growth, and increased resilience to climate change."

To read the rest of the news, please click on the link above.​

 

[Saif]

State enterprises’ loan rising, so is govt guarantee

The government needs to provide guarantees against an increasing amount of loans of state-owned enterprises every fiscal year, especially for power generation, fertiliser and fuel imports, and aircraft purchases.

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State enterprises' loan rising, so is govt guarantee
Govt guarantee against loans of state enterprises

The government needs to provide guarantees against an increasing amount of loans of state-owned enterprises every fiscal year, especially for power generation, fertiliser and fuel imports, and aircraft purchases.

The government provides these "sovereign guarantees" against loans negotiated by various state-owned financial and non-financial enterprises, states the finance ministry's Medium-term Macroeconomic Policy Statement for 2024-25 to 2026-27.

Meant to aid the implementation of public policies and programmes, the sovereign guarantees are mostly issued to entities operating in commercial aviation, power and public commodity sectors, and fertiliser plants, according to the statement.

If the entities fail to repay their loans on time, the guarantees could be invoked and the liabilities would be passed on to the government, which inevitably would have future fiscal implications, it added.

As of the current fiscal year of 2023-24, sovereign guarantees were backing Tk 117,094 crore in loans, according to budget documents of the finance ministry.

In the last fiscal year of 2022-23, it was Tk 98,591 crore whereas it was Tk 92,601 crore in fiscal year 2021-22.

The amount has been increasing by around 19 percent on average every year.

State-owned power agencies now have the highest amount of loans -- Tk 53,596.26 crore.

Bangladesh Agricultural Development Corporation accounted for Tk 18,985.48 crore, all availed for importing fertilisers.

Besides, the loan against Ghorashal-Palash Urea Fertiliser Factory, which was inaugurated in Narsingdi in November last year, stands at Tk 10,113 crore.

Biman Bangladesh Airlines had loans to the tune of Tk 8,543.45 crore, the energy sector Tk 7,660.18 crore and the Trading Corporation of Bangladesh Tk 2,432.11 crore.

One of the ways in which state-owned enterprises were correlated with the government's fiscal position, as per a partial analysis, was that their loans exposed the state to potential financial loss, said the finance ministry statement.

Moreover, the government has had to inject additional capital to keep many of the enterprises afloat, it said.

Economists suggest privatising loss-making entities instead of running them by spending taxpayer money.

As of February, 30 state-owned enterprises had Tk 65,089.48 crore in debt with state-owned commercial banks, read the Bangladesh Economic Review 2024.

Of the amount, Tk 183.62 crore has been classified.

Up until now there has been no default of loans backed by sovereign guarantees, said the finance ministry statement.

However, the government plans to amend the existing guidelines to streamline the process and further strengthen the debt repayment capacity of the state-owned enterprises, it said.

Loan default of state-owned enterprises is a serious issue in terms of preserving the confidence and image of the country as it generally does not happen anywhere in the world, said M Masrur Reaz, chairman of Policy Exchange of Bangladesh.

When state-owned enterprises default on loans, the impact falls on the private sector and raises questions about the capability of the government, he said.

Most public enterprises are incurring losses, but the government does not shut those down on political grounds, said Ahsan H Mansur, executive director of the Policy Research Institute.

Instead, the government continues to run these enterprises by providing subsidies and repaying their loans by spending taxpayer money, he said.

According to him, the ultimate solution is to privatise the state-owned enterprises to avoid the liabilities of debt for years on end.​

 

[Saif]

Forex reserves increase to $24.52 billion before Eid

Foreign exchange reserves with Bangladesh Bank increased before Eid-ul-Azha as expatriate Bangladeshis sent more money home than at other times to facilitate their families celebrating the festival. According to the central bank data, the reserves rose to 24.52 billion US dollars on June 12 from 2

thefinancialexpress.com.bd

Forex reserves increase to $24.52 billion before Eid
Published :
Jun 18, 2024 15:40
Updated :
Jun 18, 2024 17:03

Foreign exchange reserves with Bangladesh Bank increased before Eid-ul-Azha as expatriate Bangladeshis sent more money home than at other times to facilitate their families celebrating the festival.

According to the central bank data, the reserves rose to 24.52 billion US dollars on June 12 from 24.21 billion dollars at the beginning of this month, representing a rise of 310 million in 12 days.

However, according to the International Monetary Fund's Balance of Payments and International Investment Position Manual (BPM6), the reserves increased by 487.3 million dollars.

According to BPM6, the reserves were 18.72 billion dollars at the beginning of this month and it increased to 19.2 billion dollars on June 12.​