Macroeconomists and policy analysts have listed paying deferred dues, the tendency of FDI profits taken abroad by investors, declining inward remittance flow, capital flight, and money laundering as reasons behind Bangladesh's foreign exchange reserves slipping to US$ 21.15 billion. Bangladesh’s foreign exchange reserves stood at $21.15 billion on Tuesday in line with the IMF reserve calculation method, Bangladesh Bank shared the information on Wednesday. According to the central bank, a week ago on September 21, the reserve was $21.45 billion. The forex reserves dipped by $300 million to $21.15 billion within a few days. Dr Debapriya Bhattacharya, a macroeconomist and public policy analyst, told UNB that this happened due to deferred payments of fuel import and FDI profits of the western investors being taken abroad. He said Bangladesh’s imports, particularly fuel, in some cases may close unless deferred dues are cleared. Foreign investors are also under pressure to take their profits abroad considering political uncertainty. Economist Dr Ahsan H Mansur told UNB that the declining inward remittance flow and rise in money laundering are contributing to depleting reserves. India's foreign exchange reserves dip to 4-month low He said the situation would not improve before the next national election as there is uncertainty. If a stable government is formed through a credible election, then the economy will recover fast due to improved confidence level, he pointed out. According to the central bank, the gross reserves (which include EDF funds and loans from reserves) of the country at the beginning of September were $29.23 billion. JS passes bill doubling security deposit for women’s reserved seats’ candidates At the beginning of Wednesday (September 27), it decreased to $27.06 billion. Currently, the average monthly import expenditure is $6 billion. According to this, $18 billion will be required to meet three months of import demand. That is, with the current reserves, the import expenses of little over three months can be met under the Bangladesh Bank policy of a controlled spending system. A further reduction in imports will cover four months of import expenses. Bill incorporating changes to reserved women's seat elections placed in JS According to sources, the inflow of dollars in the market has decreased due to a decrease in export earnings and remittance flow. Meanwhile, new LC has to be opened and the debt of the previous LC has to be paid. Apart from this, foreign loans and other debts also have to be paid. The Asian Clearing Union (ACU) dues for the months of September and October have to be paid in early November. Then the reserves could fall further. The second installment of the IMF loan could be waived by $480 million in November. In addition, some loans from the World Bank and Asian Development Bank may also be exempted at that time. Then the foreign exchange reserve may increase slightly. By the end of the year, Bangladesh’s export earnings are expected to increase.  

Trade union leaders and economists on Thursday (December 29, 2022) urged the tannery owners to implement social and environmental compliances for the welfare of the industry and the workers. They said the European Union (EU) and the US are not buying leather from Bangladesh as most of the tanneries are yet to obtain certificates from Leather Working Group, an organisation of foreign leather buyers, for which the prices of leather are decreasing day by day. The trade body leaders were speaking at the programme Dissemination workshop on "institutional policy framework in the Tannery Workers Union" in a capital hotel Thursday. Read more: Tannery workers demand environment-friendly industry To obtain the certificates, the tanneries will have to implement social and environmental compliance programmes, the speakers at the programme said. Only so far three tanneries have got the certificates, they added. "And buyers of the EU and the US are buying leather from them." Social compliance relates to the health, safety and rights of the workers; environmental compliance means conforming to environmental laws, regulations and standards. Read more: Tanners demand 50-bed hospital in Savar tannery hub for workers’ treatment Professor MM Akash, chairman of the economics department of Dhaka University, spoke as the chief guest of the programme. General Secretary of Bangladesh Trade Union Kendra Wahedul Islam Khan, President of Workers Resource Centre Anwar Hossain; President of Tannery Workers Union Abul Kalam Azad and General Secretary Abdul Malek also spoke.

Economists, during a discussion today, said the country’s banking sector is under threat due to lack of trust and good governance in banks. Certain groups are influencing Bangladesh Bank’s regulatory decision-making, which is alarming for the economy, the economists added. They made the observations at a discussion on ‘Managing the Economic Crisis’, organised by the Centre for Policy Dialogue (CPD), at a Dhaka hotel on Saturday. Minister Abdul Mannan attended the event as chief guest while Professor Dr Rehman Sobhan presided over the function. Former governor of Bangladesh Bank Dr Salahuddin Ahmed; economist Dr Ahsan H. Manur; former Chief Economist of World Bank’s Dhaka Office Dr. Zahid Hossain; Professor Abu Ahmed; Barrister Shamim Haider Patwari, Member of Standing Committee on Ministry of Law, Justice and Parliamentary Affairs; Rupali Haque Chowdhury, Managing Director, Berger Paints; Kamrul Islam, secretary of Bangladesh Garment Workers Solidarity, also spoke at the function. Dr Salehuddin said, “If Bangladesh Bank can handle policy implementation rigorously, including defaulted loan collection, I believe the situation will improve.” “But the central bank has to take the right policy independently, not look at anyone's face, as the current economic situation demands it,” he added. Read more: Stick to global lending sources for long-term, low-interest loan, CPD tells govt Any delayed decision of Bangladesh Bank, and the situation will worsen, he said. Citing an example, he said the total volume of non-performing loans (NPLs) has increased by more than three times in the last 10 years since 2012. The NPLs increased over Tk 1.34 lakh crore in the first quarter of the fiscal year 2023 from Tk 42725 crore in the fourth quarter of FY2012, as per a report of the central bank, he said. He said the economy is standing at a point where it has to have proper reforms or be ready to see its collapse. Executive Director of Policy Research Institute, Dr Ahsan H. Mansur, said deposits in the Brac Bank grew 27 percent in the last month as people are looking for good banks for the safety of their money. “So, trust and good governance can save a bank.” He said that rigorous and exemplary punishment for loan scams is needed to gain people’s trust, appointing an observer is not enough. Dr Zahid said the inflation is not created by external effects, domestic demand and GDP is growing, it does not match with the economy. CPD Executive Director Dr Fahmida Khatun placed a report titled "Managing the Economic Crisis: CPD's Policy Recommendation" at the event. "Actual NPLs will be much higher if loans in special mention accounts, loans with court injunctions, and rescheduled loans are included," the report said. Read more: No need to hike fuel price if BPC’s corruption and mismanagement end: CPD  The CPD mentioned that appointments of bank directors based on political connections, loans sanctioned on political grounds, rescheduling of loans despite poor record of repayment, and writing off loans to reduce the tax burden and clean balance sheets of banks are among the reasons behind the high volume of NPLs in the country. Besides, the weak internal control and compliance risk management of banks, lack of independence of Bangladesh Bank, dual regulation by the Financial Institutions Division and the central bank, and flexibilities given to defaulters by the central bank are also responsible for the high volume of the NPLs, it said.

Bangladesh’s foreign debt in both public and private sectors has increased by 2.65 billion to $95.85 billion in April-June quarter, raising concern over external debt repayment obligations, economists say. They say such an increase had never happened earlier and it would have a severe impact on the forex reserves of Bangladesh, which is already under pressure from deteriorating global economic situation. The economists say careful austerity measures and their proper implementation in spending money from foreign reserves should have been in place for at least next two years as an acute recession looms large in the Western world. Read: Bangladesh has one of the lowest debt-to-GDP ratios: Finance Minister tells ADB According to Bangladesh Bank (BB) data, the external debt, both in public and private sectors, reached $95.85 billion in June 2022. This includes $59.9 billion in long-term debt in general (government) sector, but no short-term debt. But short-term debt in other government sectors climbed to $2.89 billion and has a higher interest rate, BB data revealed. The external debt in the private sector is $25.95 billion, where the short-term debt is $17.75 billion and the short-term trade credit is $11.96 billion. Dr Debapriya Bhattacharya, economic analyst and distinguished fellow of Centre for Policy Dialogue (CPD), told UNB that external debt increased alarmingly by $2.65 billion in the last quarter of the fiscal year 2021-22, which has never happened before. This has also led to an increase in total debt as a share of GDP. For example, total debt-to-GDP ratio increased from 15.5% in FY20 to 16.9% in FY21, according to Economic Relations Division data. Dr Debapriya pointed out that there are two distinctive features of the said increase. He said the increase in debt obligation is comparatively more driven by public-sector borrowing while external borrowing has been accruing on account of short-term borrowing. “One wonders for which public sector projects such costly foreign loans were accessed,” he said. Dr Debapriya underscored that the exchange rate risks associated with these external loans is increasing rapidly. He said the taka depreciated by around 20 percent against the US dollar in the last three months (July-September 2022) in the country, increasing the external debt repayment burden in terms of Taka. The interest risk may also increase in the coming months as global financial market is raising the interest rate in the face of increasing inflation, he said adding that the next two years are very crucial for the domestic economy in the context of the global turmoil. “So, the government should refrain from costly borrowing by withholding new development projects requiring such funding,” he said. Read: Bangladesh’s foreign debt flow down by 24.38% in July-Aug: ERD report Dr Debapriya said notwithstanding certain level of export revenue and remittance inflow growth, the deficits in trade balance and in the current account are widening. “In such a situation increasing external debt servicing liability will further aggravate the challenges of the domestic economy,” he said. Economist Abu Ahmed, a former professor of economics at the University of Dhaka, said the domestic economy of different countries, including Sri Lanka, Pakistan, and Argentina collapsed due to the impact of external debt. The experts of the government policymakers are driving policy toward the wrong paths, their projection on export growth is not realistic, considering the global economic situation, he said. “If the government is not aware as a precaution, terrible economic turmoil may hit Bangladesh, while the trade gap is becoming wider, the balance of payment and current accounts are also in disfavour,” Prof Abu said. According to data from the Economic Relations Division (ERD) Bangladesh's external debt repayment obligation will double in the next three years. The country repaid over $2 billion in external debt in FY 2021-22 and the amount is projected to double and cross the $4 billion by FY2024-25. The ERD, however, said the external debt has been rising in absolute terms, but it has been declining as percentage of the gross domestic product (GDP). The ERD's debt sustainability analysis said Bangladesh's external debt stood at 12.94 percent of the GDP in the 2020-21 fiscal year, down from 13.36 percent in FY20 and 14.71 percent in FY19. The ERD officials also said the government should be cautious while choosing the loan currency and payment currency.

The beginning of October means Nobel Prize season. Six days, six prizes, new faces from around the globe added to the world’s most elite roster of scientists, writers, economists and human rights leaders. This year’s Nobel season kicks off Monday with the medicine award, followed by daily announcements: physics on Tuesday, chemistry on Wednesday and literature on Thursday. The 2022 Nobel Peace Prize will be announced on Friday and the economics award on Oct. 10. Here are five other things to know about the coveted prizes: WHO CREATED THE NOBEL PRIZES? The prizes in medicine, physics, chemistry, literature and peace were established by the will of Alfred Nobel, a wealthy Swedish industrialist and the inventor of dynamite. The first awards were handed out in 1901, five years after Nobel’s death. Each prize is worth 10 million kronor (nearly $900,000) and will be handed out with a diploma and gold medal on Dec. 10 -- the date of Nobel’s death in 1896. The economics award — officially known as the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel — wasn’t created by Nobel, but by Sweden’s central bank in 1968. Between 1901 and 2021, the Nobel Prizes and the prize in economic sciences have been awarded 609 times. WHO KNOWS WHO WILL WIN AND WHY? The Nobel statutes prohibit the judges from discussing their deliberations for 50 years. So it’s probably going to be a while before we know for sure how judges made their picks for 2022 and who was on their short lists. The judges try hard to avoid dropping hints about the winners before the announcements, but sometimes word gets out. Bookies in Europe sometimes offer odds on possible peace prize and literature Nobel winners. WHO CAN NOMINATE A CANDIDATE? Thousands of people around the world are eligible to submit nominations for the Nobel Prizes. They include university professors, lawmakers, previous Nobel laureates and the committee members themselves. Although the nominations are kept secret for 50 years, those who submit them sometimes announce their suggestions publicly, particularly for the Nobel Peace Prize. WHAT ABOUT THE NORWEGIAN CONNECTION? The Nobel Peace Prize is presented in Norway while the other awards are handed out in Sweden. That’s how Alfred Nobel wanted it. His exact reasons are unclear but during his lifetime Sweden and Norway were joined in a union, which was dissolved in 1905. Sometimes relations have been tense between the Nobel Foundation in Stockholm, which manages the prize money, and the fiercely independent peace prize committee in Oslo. WHAT DOES IT TAKE TO WIN A NOBEL? Patience, for one. Scientists often have to wait decades to have their work recognized by the Nobel judges, who want to make sure that any breakthrough withstands the test of time. That’s a departure from Nobel’s will, which states that the awards should endow “those who, during the preceding year, shall have conferred the greatest benefit to mankind.” The peace prize committee is the only one that regularly rewards achievements made in the previous year. According to Nobel’s wishes, that prize should go to “the person who shall have done the most or the best work for fraternity between nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses.”

The U.S. economy has contracted for two straight quarters, intensifying fears that the nation is on the cusp of a recession — if not already in one — barely two years after the pandemic recession officially ended. Six months of contraction is a long-held informal definition of a recession. Yet nothing is simple in the post-pandemic economy. Its direction has confounded Federal Reserve policymakers and many private economists since growth screeched to a halt in March 2020 as COVID-19 struck and 20 million Americans were suddenly thrown out of work. One sector of the economy that has remained defiantly buoyant is the jobs market and on Friday, the Labor Department will release monthly employment data that most economists believe will show that hiring, too, has begun to cool. That would be a sizeable shift in an era that may be remembered for having so many unfilled jobs that there were two available for every American who didn’t have one. Even as the economy shrank over the first half of this year, employers added 2.7 million jobs — more than in most entire years before the pandemic struck. And the unemployment rate has sunk to 3.6%, near a half-century low. Robust hiring and exceedingly low unemployment aren’t consistent with a recession. While most economists — and Fed Chair Jerome Powell — have said they don’t think the economy is in recession, many increasingly expect an economic downturn to begin later this year or next. Either way, with inflation raging at its highest level in four decades, Americans’ purchasing power is eroding. The pain is being felt disproportionately by lower-income and Black and Hispanic households, many of whom are struggling to pay for higher-cost essentials like food, gas and rent. Compounding those pressures, the Fed is jacking up interest rates at the fastest pace since the early 1980s, thereby magnifying borrowing costs for homes and cars and credit card purchases. Read: Inflation hits record 8.9% in euro area, but economy grows As a result, regardless of whether a recession has officially begun, Americans have increasingly soured on the economy, So how, exactly, do we know when an economy is in recession? Here are some answers to such questions: WHO DECIDES WHEN A RECESSION HAS STARTED? Recessions are officially declared by the obscure-sounding National Bureau of Economic Research, a group of economists whose Business Cycle Dating Committee defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” The committee considers trends in hiring as a key measure in determining recessions. It also assesses many other data points, including gauges of income, employment, inflation-adjusted spending, retail sales and factory output. It puts heavy weight on jobs and a gauge of inflation-adjusted income that excludes government support payments such as Social Security. Yet the NBER typically doesn’t declare a recession until well after one has begun, sometimes for up to a year. Economists consider a half-point rise in the unemployment rate, averaged over several months, as the most historically reliable sign of a downturn. DO TWO STRAIGHT QUARTERS OF ECONOMIC CONTRACTION EQUAL A RECESSION? That’s a common rule of thumb, but it isn’t an official definition. Still, in the past, it has been a useful measure. Michael Strain, an economist at the right-leaning American Enterprise Institute, notes that in each of the past 10 times that the economy shrank for two consecutive quarters, a recession has resulted. Still, even Strain isn’t sure we’re in recession now. Like many economists, he notes that the underlying drivers of the economy — consumer spending, business investment, home purchases — all grew in the first quarter. Overall gross domestic product — the broadest measure of the nation’s output — declined at a 1.6% annual rate from January through March because of one-off factors, including a sharp jump in imports and a post-holiday season drop in businesses’ inventories. Many economists expect that when GDP is revised later this year, the first quarter may even turn out to be positive. “The basic story is that the economy is growing but still slowing, and that slowdown really accelerated in the second quarter,” Strain said. DON’T A LOT OF PEOPLE THINK A RECESSION IS COMING? Yes, because many people now feel more financially burdened. With wage gains trailing inflation for most people, higher prices for such essentials as gas, food, and rent have eroded Americans’ spending power, This week, Walmart reported that higher gas and food costs have forced its shoppers to reduce their purchases of discretionary spending such as new clothing, a clear sign that consumer spending, a key driver of the economy, is weakening. The nation’s largest retailer, Walmart reduced its profit outlook and said it will have to discount more items like furniture and electronics. Read: India's Mukesh Ambani kickstarts dynastic succession And the Fed’s rate hikes have caused average mortgage rates to double from a year ago, to 5.5%, causing a sharp fall in home sales and construction. Higher rates will also likely weigh on businesses’ willingness to invest in new buildings, machinery and other equipment. If companies reduce spending and investment, they’ll also start to slow hiring. Rising caution among companies about spending freely could lead eventually to layoffs. If the economy were to lose jobs and the public were to grow more fearful, consumers would further reduce spending. The Fed’s rapid rate hikes have raised the likelihood of recession in the next two years to nearly 50%, Goldman Sachs economists have said. And Bank of America economists now forecast a “mild” recession later this year, while Deutsche Bank expects a recession early next year. WHAT ARE SOME SIGNS OF AN IMPENDING RECESSION? The clearest signal that a recession is under way, economists say, would be a steady rise in job losses and a surge in unemployment. In the past, an increase in the unemployment rate of three-tenths of a percentage point, on average over the previous three months, has meant that a recession will soon follow. Many economists monitor the number of people who seek unemployment benefits each week, which indicates whether layoffs are worsening. Weekly applications for jobless aid, averaged over the past four weeks, have risen for eight straight weeks to nearly 250,000, the highest level since last November. While that is a potentially concerning sign, it is still a low level historically. ANY OTHER SIGNALS TO WATCH FOR? Many economists also monitor changes in the interest payments, or yields, on different bonds for a recession signal known as an “inverted yield curve.” This occurs when the yield on the 10-year Treasury falls below the yield on a short-term Treasury, such as the 3-month T-bill. That is unusual. Normally, longer-term bonds pay investors a richer yield in exchange for tying up their money for a longer period. Inverted yield curves generally mean that investors foresee a recession that will compel the Fed to slash rates. Inverted curves often predate recessions. Still, it can take 18 to 24 months for a downturn to arrive after the yield curve inverts. For the past two weeks, the yield on the two-year Treasury has exceeded the 10-year yield, suggesting that markets expect a recession soon. Many analysts say, though, that comparing the 3-month yield to the 10-year has a better recession-forecasting track record. Those rates are not inverted now. WILL THE FED KEEP RAISING RATES EVEN AS THE ECONOMY SLOWS? The economy’s flashing signals — slowing growth with strong hiring — have put the Fed in a tough spot. Chair Jerome Powell is aiming for a “soft landing,” in which the economy weakens enough to slow hiring and wage growth without causing a recession and brings inflation back to the Fed’s 2% target. But Powell has acknowledged that such an outcome has grown more difficult to achieve. Russia’s invasion of Ukraine and China’s COVID-19 lockdowns have driven up prices for energy food, and many manufactured parts in the U.S. Powell has also indicated that if necessary, the Fed will keep raising rates even amid a weak economy if that’s what’s needed to tame inflation. “Is there a risk that we would go too far?” Powell asked last month. “Certainly there’s a risk, but I wouldn’t agree that’s the biggest risk to the economy. The biggest mistake to make…would be to fail to restore price stability.”

Economists have expressed concern just after Bangladesh’s foreign exchange reserves slipped below $40 billion, even though that should be capable of meeting three months import payments, based on imports for the immediate past fiscal.  Such concern was not seen 12 years ago, when Bangladesh’s forex reserves were only $10.60 billion in the FY2010 (2009-10 fiscal). That is roughly the same level, since imports back then were also lower, at around $23 billion, meaning the reserve was enough to cover 4-5 months.    What is worrying now is a surge in imports driven by both demand for raw materials by export-oriented industries and growing consumption among the domestic consumers.  That, allied to an energy crisis caused by both domestic and international factors, is causing significant downward pressure on the forex reserve. Bangladeshis were used to hearing about the reserve rising gradually, reaching a peak of $48 billion a year ago.  But now, these two factors have combined to bring the reserve down quite rapidly below $40 billion, and it is likely even lower, given that exporters have started defaulting on dollar loans taken out of the Export Development Fund, which is funded out of the reserve.   Many economists now believe that foreign exchange reserves in Bangladesh have gone to dangerous levels. Read: Forex reserves drop below $40 billion for the first time since 2020 They say, now that the reserves have fallen below $40 billion dollars, it is not possible to cover more than three months of import expenses. Talking with UNB, Dr Debapriya Bhattacharya of CPD said how much in foreign exchange reserve is secure for a country depends on the price of energy and commodities in the global markets, dollars required in a month to meet import payments, and whether the demand for import will go up in the coming months or not. Though the Bangladesh Bank (BB) is showing forex reserves near $40 billion, unencumbered reserves is actually around $31 or $32 billion after excluding dollar support to the export sector (the Export Development Fund is worth $7 billion), he said. Dr Debapriya said the government is taking the right measures to face the situation, but it is not enough considering the global and domestic situation. He suggested taking a loan of $1.5 or $2 billion from the IMF as a cautionary step to avert any worsening situation. Debapriya also pointed out that the current situation (depreciation of taka) would create some opportunities to boost exports and encourage expatriates to send remittances. But the overall macroeconomic stability has undoubtedly weakened. There is a danger of slowing down the ongoing development activities in the country. However, the government does not consider the situation to be critical yet. To reduce the pressure on reserves, several cost-effective measures, including load shedding in the power sector, have been taken so that the cost of fuel imports can be kept under control. The central bank is also dismissing economists' concerns about current forex reserves. Md Serajul Islam, executive director and spokesperson of BB, said that if the reserves are enough meet the import expenses for three months, there is no danger. "The reserves we have now will cover more than three months of import expenses. Now we have increased the import duty on all luxury goods. Hopefully, we will reap the benefits," he added.  Bangladesh’s import expenses grew to $80 billion in the immediate past fiscal, but even then, $40 billion should be enough to meet the Bangladesh Bank benchmark of 3 months, and possibly up to six months (half a year). The inward remittance flow also slipped to $21 billion in FY 22 from $24.77 billion in FY 21. The real concern stems from the fact that there are now issues beyond the government’s control at play. With gas reserves dwindling fast, Bangladesh has suddenly become highly dependent on energy imports, and their prices have been rising to record levels in the international market, with a pandemic-ending rally exacerbated by the war in Ukraine. Bangladesh was forced to sit out two rounds of purchasing LNG on the international market recently due to exceptionally high price, and that directly led to the country’s energy crisis, as production of gas from the country’s own gasfields is nowhere near enough these days to meet demand. That led to the return of load shedding.  There is also the issue of export income not being fully repatriated to the country. Besides, the garment sector also imports 60 percent of its export volume. In the face of all this, the government’s steps to cut imports of luxury goods is also a step in the right direction. But whether they will be enough, only time will tell. 

Economists and energy experts on Sunday urged the government to take sustainable measures for a stable macro economy of the country considering the current economic problems are going to stay longer. They observed that such crisis is not short-term in nature. So it will not be easy to get rid of the crisis soon. The current government’s measures are mostly short-term in nature. An effective and innovative long-term action plan is to be required to tackle the situation. The remarks came at discussion meeting titled ‘Recent Economic Challenges: How Risky It is’ organized by Center for Policy Dialogue (CPD), a private think tank held in its office at Dhanmondi. Dr Fahmida Khatun, executive director of CPD gave a presentation on the present economic situation. Former advisers of caretaker government Dr AB Mirza Azizul Islam and Dr Hossain Zillur Rahman, ex-governor of Bangladesh Bank Dr Salehuddin Ahmed,  professor of BUET and former energy adviser of the caretaker government M Tamim, CPD distinguished fellow professor Mustfizur Rahman and vice-president FBCCI Mostafa Azad Chowdhury spoke on the present economic situation. Dr. Khondaker Golam Moazzem, research director of CPD, moderated the discussion meeting. Mirza Aziz said incentive is not enough to increase inflow of remittance. It needs manpower export market diversification and focused skilled manpower export to recover from foreign exchange deficit. Read: Capacity payment to private sector power plants goes up to Tk 26,505 crore in FY2022: CPD He also called for looking into the import order along with strengthening the monitoring to stop money laundering through over-invoicing and check that goods are really imported or not. He said a proper list of poor people is required as the rate of poverty may have increased to 30 per cent from 20 per cent in 2019 due to the pandemic, Mirza Aziz said. Dr. Salehuddin said loan re-scheduling without proper monitoring and deferreed loan repayment would create a liquidity crisis and discrimination in the business sector. The small entrepreneurs have been deprived of stimulus packages, and loans re-scheduled and deferred repayment facilities, he said. He also warned about the bad impact on the macroeconomics due to the central bank’s policy influenced by the vested group. Salehuddin said dollar selling by the central bank is not a solution to forex crisis. Cautionary measures on luxury goods import and limit cut to keep money in the Nostro Account is needed to overcome forex crisis. M Tamim said the government had deals with oil-based power plants for 3 to 5 years, but even after 12 years 3500 MW electricity is being purchased from oil-run power plants which have created an economic burden now. He asked why the government failed to set up gas-based power plants instead of the existing oil-run ones. Tamim favoured foreign investment for gas exploration in the long-term plan and reform old gas wells for boosting gas extraction for short-run solution. Hossain Zillur said the government should take effective measures to curb the growing inflation before social instability at grassroots is created. He said in many countries social discrimination and food inflation created instability and famine. Early and long-term measures are required to avert any such untoward situation in Bangladesh.

Bangladesh remains a compelling growth story, despite the global pandemic, said Standard Chartered’s leading economists. The bank’s global research team was speaking at a media session held following the 2021 Bangladesh session of the Bank’s Global Research Briefing series. Planning Minister MA Mannan attended the event held recently as the chief guest while around 300 of the Bank’s clients joined via video conferencing, said a media release on Thursday. Eric Robertsen, Global Head of Research and Chief Strategist, Standard Chartered, said while the pace and distribution of global recovery remains highly uneven, Bangladesh has made a strong comeback with one of the highest GDP growths in the world in 2020. Read: Economists urge government to present pro-poor budget “A robust vaccination program and implementation of strategic infrastructure projects are expected to further increase momentum towards the nation’s LDC graduation”. Saurav Anand, Economist, South Asia, Standard Chartered said Bangladesh’s economy is set to accelerate after a speed bump, with GDP growth forecast at 5.5% in FY21 and 7.2% in FY22. “The momentum will be driven by an export demand recovery, strong remittance inflows and public investment. Policy support is a prerequisite for a smooth transition to middle-income status, with per capita GDP set to reach USD 3,000 by FY26.” Naser Ezaz Bijoy, Chief Executive Officer, Standard Chartered Bangladesh said the government of Bangladesh has navigated the internal and external challenges of the pandemic remarkably well. “The resilience of Bangladesh economy gives us cause for optimism. As the vaccination drive continues, the economy is set to accelerate, while lower debt levels compared to its peers provide medium term fiscal runway for growth,” Bijoy said. Read: Economists emphasise agro-based infrastructure He said there are significant opportunities for productivity gains through technology adoption, technology inclusiveness through mobile-based solutions and the ITES sector, while growth-supportive policies focus sectors will continue to spur private investment and FDI. Minister Mannan said the people of Bangladesh, the government and the business community have once again demonstrated tremendous resilience to ensure that while the shared development journey might have slowed, it has not been halted. “We remain as committed as ever in fostering a business-friendly climate, so that we can continue on our journey of inclusive progress and prosperity,” he said.

Economists at a webinar on Sunday urged the government to focus on policy reforms to boost private sector investment which is essential to stimulate the post-COVID recovery process. They also remarked that in the absence of comprehensive data collected by national statistical agencies such as Bangladesh Bureau of Statistics (BBS), it is extremely challenging for policymakers to identify, target or design effective policies to help the worst affected groups of the populations. The observations came up with the webinar organized by South Asian Network on Economic Modeling (SANEM) titled “Budget 2021-22: Reality and Expectations” to discuss the importance of the national budget in addressing the challenges of the ongoing pandemic. READ: 68% of businesses yet to receive any stimulus: SANEM   Dr Selim Raihan, Professor of Economics Department at Dhaka University and Executive Director of SANEM said since the budget for FY 2021-22 is going to be the second budget announced during the pandemic, policymakers should primarily focus on addressing the urgent needs that have emerged due to the ongoing crisis. “It is extremely important for the policymakers to come to terms with the reality of the current situation and acknowledge the gravity of the socioeconomic crisis that the country is currently facing," he said, stressing upon the importance of COVID-19 management related budget allocations to salvage the health sector through ensuring timely vaccination drives, border controls and building capacity of the medical workforce. One of the key issues that he highlighted is the lack of proper data collection and monitoring since the beginning of the pandemic. He also referred to the findings of SANEM’s ongoing quarterly Business Confidence Survey which reveal that micro, small and medium enterprises (MSMEs) have been most negatively impacted due to the pandemic. Despite the severity of the impact, government stimulus packages for MSMEs have been inadequate, making it even more difficult for them to survive through this unprecedented crisis. As these MSMEs play a vital role in the supply chain and also create employment opportunities for the majority of the workers working in the informal sector, recovery of the MSMEs is a major contributing factor to the recovery of the economy as a whole. Dr Raihan mentioned that, although GDP growth rate is an important measure to assess the advancement of the economy, it is high time for policymakers to come out of the obsession of repeatedly using GDP and instead focus on socioeconomic indicators such as poverty, inequality and employment to assess the wellbeing of the nation. “The government needs to properly define the corporate social responsibility of the various business associations. Business associations have an important role to play in this time of crisis. But unfortunately we have seen that at this time they are more occupied with their own demands,” the economist added. Dr Sayema Haque Bidisha, Professor of Economics Department at Dhaka University and Research Director of SANEM delivered the keynote presentation. Dr Sayema acknowledged that the budget for the next fiscal year would have to consider both pre-COVID as well as post-COVID challenges. She pointed out that the existing budget structure suffers from low revenue generation and slow implementation of ADP. Furthermore, despite the consistently high growth in GDP, the pace of employment generation has not been impressive and there has been low spending in human resource development. “In addition, the pandemic has now impacted the livelihoods of millions due to job losses, business closures and reduction in income. A digital divide has become evident in the education sector and rise in dropout rates and early marriages have emerged as major concerns. In this context, the upcoming fiscal budget will play a critical role in dealing with the pandemic fallouts,” she added. The presentation highlighted a declining trend in revenue collection in the recent budgets: 83% of the actual revenue target was met in the fiscal year 2016-17 which decreased to 75% in 2017-18 and 74% in 2018-19. A closer analysis of the composition of the NBR tax revenue reveals that the proportion of income tax in the overall revenue has also declined over the past 5 years. In the fiscal year 2016-17, income tax made up 35.4% of the total tax revenue while in 2021, it declined to only 31.5%. READ: SANEM finds 70% wage-earners in 4 dists. worse off in a year  The government’s Annual Development Programme (ADP) implementation rate has also been staggeringly low in the current fiscal year. ADP implementation progress over July 2020-April 2021 has been below 50% across several key ministries and divisions including Health Services Division, MoPME, MoHPW, Ministry of Industries, Medical Education and Family Welfare Division, MoWCA, MoSW, Food, Labor and Employment, Planning Division. Furthermore, government domestic borrowing in financing the national budget has also increased from 14.8% in FY 2019-20 to 19.4% in FY 2020-21. Dr Sayema stressed that the prime objective of the upcoming fiscal budget should be to ensure better health management while restoring the income level of people through employment generation. To attain this objective, she mentioned four key areas of priority: Health, Education, Social Safety Net and Agriculture.