[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

World Bank approves $1.16bn for three Bangladesh projects

The World Bank today approved three loans totalling $1.16 billion to help Bangladesh improve health services, boost water and sanitation services and achieve greener and climate-resilient development, it said in a statement.

www.thedailystar.net

World Bank approves $1.16bn for three Bangladesh projects

The World Bank today approved three loans totalling $1.16 billion to help Bangladesh improve health services, boost water and sanitation services and achieve greener and climate-resilient development, it said in a statement.

Of the amount, $500 million is under the second Bangladesh green and climate resilient development credit and the WB said the fund will support reforms to help the country's transition to green and climate-resilient development.

"The financing supports policy reforms to improve public planning and financing and implementation for green and climate-resilient interventions at local and national levels and promote clean and resource-efficient production and services in key sectors," it said.

The WB said as a prerequisite to the credit, the Planning Commission has adopted the Multi-Year Public Investment Program Guidelines for key sectors, integrated with the Medium-Term Budget Framework.

The financing also supports policies to reduce air pollution, improve environmental enforcement, expand access to carbon markets, enhance sustainable water and sanitation services, improve the efficiency of the Bangladesh Delta Plan 2100, and advance a climate-resilient and sustainable environment, it added.

The financing also supports sustainable public procurement incorporating environmental and social considerations, said the multilateral agency adding that the loan will further help improve the energy efficiency of buildings and appliances and incentivise the construction sector to become greener.

Besides, the WB executive board approved $379 million credit under health, nutrition, and population sector development program-for-results to improve access to quality health and nutrition services and build resilient health systems in Sylhet and Chattogram divisions.

It will provide quality health, nutrition, and population services to about 5.1 million people, said the WB.

The program will help reduce maternal and neonatal mortality by increasing the number of births, both normal delivery and Caesarian section deliveries, in public health facilities.

Alongside the WB financing, the Global Financing Facility for Women, Children and Adolescents (GFF) is providing a catalytic $25 million grant to support the government in prioritizing interventions such as child nutrition, adolescent health, quality maternal and newborn care, data use, and coordination.

The WB said it approved $280 million Chattogram water supply improvement project to provide safe water through new and rehabilitated piped water connections to over one million people in Chattogram.

It will build about 200,000 new household water connections and provide improved sanitation services to about 100,000 people in low-income communities, said the WB adding that the project is part of a World Bank South Asia regional initiative or program of programs to provide Water, Sanitation and Hygiene (WASH) services to about 100 million people across the region by 2035.

The WB said the project will also help the Chattogram Water Supply and Sewerage Authority (CWASA) improve operational efficiency and financial sustainability and address issues related to water loss such as high levels of leakage, metering inaccuracies, and illegal connections.

World Bank Country Director for Bangladesh and Bhutan Abdoulaye Seck said these new financing will bring to the people of Bangladesh essential services such as health and water and sanitation while laying the foundation for clean, climate resilient and sustainable development.

He said Bangladesh is among the most vulnerable countries to climate change and faces the greatest pollution challenges.

"Improving climate resilience in every sector and tackling the pollution scourge has become a critical development priority."

The WB has so far has committed more than $45 billion in International Development Association (IDA) financing in the form of grants, interest-free loans, and concessional credits to help the country address its development priorities following Bangladesh's independence.​

 

[Saif]

Govt expects $1.1 billion from WB, ADB in Dec

The finance ministry on Sunday said that it expected $1.1 billion in loan support from the World Bank and the Asian Development Bank would be disbursed in the current month.

www.newagebd.net

Govt expects $1.1 billion from WB, ADB in Dec
Staff Correspondent 23 December, 2024, 00:08

The finance ministry on Sunday said that it expected $1.1 billion in loan support from the World Bank and the Asian Development Bank would be disbursed in the current month.

The finance ministry led by adviser to the interim government Salehuddin Ahmed made the expectation in a press release against the backdrop of loan approvals by both the multilateral lenders recently.

On December 11, the Manila-based ADB approved $600 million as budget support while the Washington based WB approved $500 loan, also as the budget support, on December 20.

In its press release, the finance ministry said that the availability of funds would bolster the reform programme being implemented under the interim government that assumed power after the fall of the Awami League amid a mass uprising on August 5.

Earlier, the finance adviser told reporters that the interim government sought $6 billion from multilateral lenders for the current FY25 in connection with the reform programme for reviving the economic activities that came under serious stresses during the AL regime.

Besides, the International Monetary Fund announced to make $645 million available in February under the current $4.7 billion loan programme that began in 2023.

The IMF has already disbursed around $2.3 billion in two tranches including $1.1 billion as the second tranche in June 2024, assisting the country’s balance of payment.

The ADB, while approving $600 million, said that the loan aimed at bringing structural reforms to support domestic resources mobilisation, enhancing the efficiency of public investment projects, developing the private sector, reforming state-owned enterprises, and promoting transparency and good governance.

This particular loan programme of the ADB has been developed in close collaboration with the International Monetary Fund, World Bank, and other multilateral lenders following requests for extra funds.

The IMF has already lowered Bangladesh’s gross domestic product growth to 3.8 per cent for the current 2024-25 financial year from 4.5 per cent due to output losses caused by the public uprising, floods and tighter policies.

The IMF said that inflation would remain about 11 per cent on average in FY25 before declining to 5 per cent in FY26, supported by tighter policies and easing supply pressures.

It is, however, is expected to rebound to 6.7 per cent in FY26 as policies relax, it said.

The IMF said that Bangladesh’s low tax-to-GDP ratio needed to be improved with urgent reforms by rationalising exemptions, improving compliance and separating tax policy from the administration.​

 

[Saif]

Bangladesh, World Bank ink deal worth $500m loan

A financing agreement was signed on Sunday between the Bangladesh government and the International Development Association (IDA) of the World Bank Group for a loan equivalent to US$ 500 million to implement the "Second Bangladesh Green and Climate Resilient DPC Programme." The main objective of th

thefinancialexpress.com.bd

Bangladesh, World Bank ink deal worth $500m loan
Published :
Dec 22, 2024 17:27
Updated :
Dec 22, 2024 18:21

A financing agreement was signed on Sunday between the Bangladesh government and the International Development Association (IDA) of the World Bank Group for a loan equivalent to US$ 500 million to implement the "Second Bangladesh Green and Climate Resilient DPC Programme."

The main objective of the stated programme is to strengthen fiscal and financial sector policies to sustain growth and enhance resilience to future shocks, including climate change, BSS reported, citing a press release on Sunday.

The Finance Division is the main implementing agency of this programme. Other implementing ministries or divisions include the Local Government Division, Bangladesh Bank, Ministry of Planning, Ministry of Environment, Forest and Climate Change, Ministry of Power, Energy and Mineral Resources, Ministry of Science and Technology, Health Services Division, and the National Board of Revenue.

Md Shahriar Kader Siddiky, Secretary of the Economic Relations Division, and Abdoulaye Seck, Country Director of the World Bank, signed the financing agreement on behalf of their respective sides.

Of the $500 million, $250 million is being taken as a loan from the World Bank’s IDA-Regular loan. This loan is repayable over 30 years with a 5-year grace period. The interest rate is 1.25 percent, the commitment fee is 0.50 percent, and the service charge is 0.25 percent.

However, the World Bank waives the commitment fee every year.

The remaining $250 million is being taken from the IDA-Shorter Maturity Loan (SUW-SML). This loan is repayable over 12 years with a 6-year grace period.

This loan has no interest, service, or other charges. There is only a 0.50 percent commitment fee, which is typically waived by the World Bank.

The World Bank is the largest development partner of Bangladesh. The World Bank has committed more than USD 43.00 billion to Bangladesh since its independence. Currently, the World Bank is financing around $17 billion for 52 ongoing projects that cover economic and social development, institutional, health, infrastructure, power, environment, and other important sectors.​

 

[Saif]

The country facing an economic imbroglio

The country's economic growth projection measured in terms of Gross Domestic Product (GDP) in the current fiscal year has been revised downwards to 3.8 per cent by the global lender, the International Monetary Fund (IMF). A review mission of the multilateral lending agency in a statement during its

thefinancialexpress.com.bd

The country facing an economic imbroglio
SYED FATTAHUL ALIM
Published :
Dec 22, 2024 22:12
Updated :
Dec 22, 2024 22:12

The country's economic growth projection measured in terms of Gross Domestic Product (GDP) in the current fiscal year has been revised downwards to 3.8 per cent by the global lender, the International Monetary Fund (IMF). A review mission of the multilateral lending agency in a statement during its visit last week came up with the revised GDP growth projection. This is the country's lowest growth projection since FY (2019-20), the pandemic year, when the GDP growth was 3.4 per cent. Notably, in October, IMF projected that the nation's economic growth would be 4.5 per cent, which was a reduction by 2.1 percentage points from June's projection at 6.6 per cent.

The reasons cited this time for the low growth were similar to those pointed out by the IMF delegation during its October visit that include political instability, high inflation, unrest in industries, floods that struck the country in the third week of August this year, etc. However, another major contributor to the economy's lack of growth is the central bank's raised policy rate (the rate of interest at which the BB lends money to the commercial banks). In consequence, the commercial banks have increased lending rate which is impacting business negatively. The objective of the BB's increasing policy rate is to rein in inflation at the advice of the IMF which made borrowing costlier resulting in less money circulating in the market. Termed contractionary monetary policy, the measure has been taken as a condition of the loan amounting to US$4.7 billion that the multilateral lender approved for Bangladesh in January 2023.

The IMF loan aims to bring macroeconomic stability in the economy in the long run. However, in the short run, it is dampening investment and business. Understandably, the business community is blaming the IMF's various conditions against the loan it (IMF) advanced and suggestions made to the government for its woes. Especially, the multilateral lender's suggestion of adjusting gas and fuel oil prices with those in the international market, which businesses think will render business costlier. Also, they fear, the IMF's idea of leaving the exchange rate of US dollar entirely to the mercy of the market would turn it volatile as black market operators and speculators might take undue advantage of the decision. Ultimately, that would seriously affect external trade, they believe. These are definitely genuine concerns of business people. But what needs also to be taken into account is that even before receiving the IMF loan, the business activities had already been under stress due to the restrictions on import that the previous government had opted for as part of its austerity policy. Obviously, that affected the import of raw materials, capital goods and other inputs for business and the industry. One cannot be oblivious of the fact that the austerity policy was adopted to save the foreign exchange reserve from depleting faster and avoid facing the Sri Lanka syndrome. In 2022 Sri Lanka experienced an economic meltdown in which the country's foreign exchange reserve hit rock bottom for various reasons including overdependence on debt, weak export, impact of Covid-19 on tourism, a mainstay of its foreign exchange earning and so on. Definitely, that caused business to suffer immensely. Against this backdrop, the previous government sought the IMF loan to stabilise the economy, knowing full well that it would be a bitter pill to swallow, if only for the greater good of the ailing economy. One may recall that at that time the economy was in a shambles, thanks to the overall mismanagement of the economy, fragility of the financial sector due to rampant looting of the banks and other financial institutions, unrestrained rise in bad loans in the banks with the connivance of the banking regulator (the BB) and the powers that be.

So, to restore some semblance of discipline in the financial sector and assure prospective investors from abroad that it was yet not all over with Bangladesh's economy the IMF loan was asked for. It is this legacy that the deposed government has left for the interim government to grapple with. As a result, it is not only the business community, the common people, who are the overwhelming majority are suffering. Food inflation rate in November was 13.80 per cent, while the inflation at 11.38 per cent in November is a record four-month high. The international lender said the inflation would remain around 11 per cent throughout the rest of the current fiscal year with the hope that it would come down to 5.0 per cent in FY 2026. The lender believes it would be due to tight monetary policy and easing of supply pressures. But still uncertainties would remain. Clearly, Bangladesh economy is in a fix. What is the way out? Return to the earlier state of free fall or continue the IMF-prescribed policy? True, there are critiques of IMF's loan conditionalities that put restrictions on the recipient country's fiscal and monetary policies leading to shrinking of public and private investments. Decline in private investment means rise in unemployment. But when a national currency's, or for that matter, economy's, worth is measured in US dollar as reserve currency, weak economies like Bangladesh face such a dilemma. Even so, the government could still negotiate with the IMF authorities on issues like if the exchange rate of USD against Taka should be left entirely to the market or the existing limits in line with the crawling peg system should continue. Also, the IMF-prescribed classification and labelling of the Non-Performing Loan (NPL) is also an issue. Notably, now a loan will be considered a default one, if the borrower fails to clear the debt within 90 days of its last date of repayment.

The government will be required to address these urgent issues through talks with the IMF so that some stringent conditions could be, where possible, relaxed for the sake of the businesses affected by the rules.​

 

[Saif]

Bangladesh’s forex reserve surges by $1.5b in 22 days

Bangladesh’s gross foreign exchange reserves, calculated following the International Monetary Fund’s guidelines, have risen by $1.5 billion in 22 days.

www.newagebd.net

Bangladesh’s forex reserve surges by $1.5b in 22 days
Staff Correspondent 23 December, 2024, 18:25

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

Bangladesh’s gross foreign exchange reserves, calculated following the International Monetary Fund’s guidelines, have risen by $1.5 billion in 22 days.

As per Bangladesh Bank data, the reserves stood at $20.16 billion on December 22, up from $18.55 billion on December 1.

Such increase is attributed to the central bank’s strategy of refraining from selling dollars to commercial banks while purchasing dollars from them.

These measures were aimed at artificially boosting reserve balances to meet the IMF’s conditions.

However, these actions have added pressure to the exchange market, pushing the dollar price to Tk 128 from Tk 120 in just 13 days.

In response to concerns about potential exploitation of the situation, Bangladesh Bank has sought explanations from 13 banks suspected of purchasing dollars at unusually high rates.

Officials suspect some banks might have manipulated dollar prices to benefit from the volatility.

Earlier, reserves experienced a sharp decline, dropping to $18.46 billion on November 10 from over $20 billion on November 7.

This drop followed a $1.5 billion payment to the Asian Clearing Union (ACU) for import bills covering September and October, a routine settlement made bi-monthly.

With the next ACU payment for November and December due in early January, reserves could potentially dip to a similar level once again.

According to conventional valuation by the Bangladesh Bank, the foreign exchange reserve reached $24.84 billion.

The Asian Clearing Union is a payment settlement forum whereby the participants settle payments for intra-regional transactions through the participating central banks on a net multilateral basis.

Payment obligations of transactions among Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are settled through the ACU payment system.

However, high overdue and current import payments have hindered reserve growth even though remittance inflows and export earnings have risen. Banks have had to use dollars for these payments.

The BB stopped selling dollars directly from its reserve to banks and has sourced dollars from the interbank market to meet government obligations.

This means banks must cover all import payments with their own foreign currency, preventing reserve accumulation.

The Bangladesh Bank adheres to the IMF’s Balance of Payments and International Investment Position Manual, 6th edition (BPM6), for calculating both the gross international reserve and the net international reserve.

The exchange rate per dollar was Tk 84.81 in June 2021, Tk 93.45 in June 2022 and Tk 106 in June 2023.

This ongoing dollar crisis has significantly impacted banks’ ability to settle import payments and open letters of credit, creating challenges for businesses.​

 

[Saif]

Review of the White Paper on Bangladesh economy

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

thefinancialexpress.com.bd

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

Injustice anywhere is a threat to justice everywhere."

- Martin Luther King Jr.

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

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

A CASE OF DEEP-SEATED CORRUPTION

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

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

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

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

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

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

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

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

HISTORICAL COMPARISONS

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

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

Punitive Measures:

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

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

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

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

Punitive Measures:

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

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

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

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

Punitive measures:

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

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

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

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

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

IMPACT ON BANGLADESH’S ECONOMIC FUTURE

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

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

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

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

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

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

A DEFINING MOMENT FOR BANGLADESH

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

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

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

 

[Bilal9]

Elon Musk to attend Dhaka investment conference​

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


File photo.

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

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

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

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

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

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

Elon Musk: A Global Economic Force

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

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

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

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

Nobel Laureate Dr. Muhammad Yunus to Play a Key Role

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

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

Aiming for Success Amidst Past Challenges

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

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

A Promising Future

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

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

 

[Saif]

Bangladesh must boost investment to avoid economic crisis: Analysts

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

thefinancialexpress.com.bd

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

[Saif]

Economic stabilisation should be first priority

Speakers say at annual ICMAB conference

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

[Saif]

Growth obsession deepened rich-poor divide

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

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

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

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

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

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

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

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

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

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

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

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

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

WEALTH INEQUALITY A DEEPER PROBLEM

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

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

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

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

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

IS HIGHER TAXATION THE ANSWER?

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

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

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

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