Economies across the Middle East and Central Asia will likely slow this year as persistently high inflation and rising interest rates bite into their post-pandemic gains, the International Monetary Fund said Wednesday. The IMF's Regional Economic Outlook blamed in part rising energy costs, as well as elevated food prices, for the estimated slower growth. The report said that while oil-dependent economies of the Gulf Arab states and others in the region have reaped the benefits of elevated crude prices, other countries — such as Pakistan — have seen growth collapse after an unprecedented flooding last summer or as economic woes worsened. The regional slowdown also comes as an explosion of fighting in Sudan between two top rival generals — who only a year ago as allies orchestrated a military coup that upended the African country's transition to democracy — threatens a nation where IMF and World Bank debt relief remains on hold. Rising interest rates, used by central banks worldwide to try to stem inflation's rise, increase the costs of borrowing money. That will affect nations carrying heavier debts, the IMF warned. Also Read: IMF satisfied with progress of BBS’ GDP and inflation data updated under new method “This year we’re seeing inflation again being the most challenging issue for most of the countries," Jihad Azour, the director of the Middle East and Central Asia Department at the IMF, told The Associated Press. "For those who have high level of debt, the challenge of increase in interest rate globally, as well as also the tightening of monetary policy, is affecting them.” The IMF forecast predicts regional growth will drop from 5.3% last year to 3.1% this year. Overall, regional inflation is expected to be at 14.8%, unchanged from last year, as Russia's war on Ukraine continues to pressure global food supplies and affect energy markets. It will be even worse in Pakistan, where the IMF projected inflation to more than double, to about 27%. Pakistan and IMF officials have held repeated talks over the release of a stalled key tranche of a $6 billion bailout package loan to Islamabad. The IMF warned that financial conditions worldwide will tighten this year, brought on in part by two bank failures in the United States in March. The sudden collapse of Credit Suisse before it was purchased by UBS also strained markets. For Sudan, Azour acknowledged the challenge as the country faces a humanitarian crisis brought on by the weeks of fighting there. The violence has also worsened a debt crisis that has gripped the country for decades as it faced Western sanctions. “We have worked with the government of Sudan, for the Sudanese people, in order to help them by achieving a debt operation that would allow Sudan to have a debt relief of more than $50 billion," Azour said. "But unfortunately, the recent developments ... put in a halt to all of of those efforts,” he added.
The Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) has said regaining customer trust is a must for the insurance sector to boost its growth. At a meeting of its standing committee on insurance Thursday in the capital, FBCCI President Md Jashim Uddin said: "Insurance is one of the important sectors of the country's economy. However, a big challenge for this sector is a lack of confidence in it." "We have to find a way out of this situation. All the stakeholders of this sector should play an active role to change customers' negative perceptions of it," he added. "Also, we have not been able to use the potential of this sector; there is no alternative to developing a skilled workforce for future growth of the sector," the FBCCI president said. FBCCI Vice-President MA Momen said, "It is very important now to go for the modernisation of the insurance sector as the time has changed." Mohammad Mahfuzul Hoque, secretary general of FBCCI and former managing director of Life Insurance Corporation, said it is important to have actuaries for the development of the insurance sector. "If the sector comes under automation, many of the existing problems will be solved." Read more: Experts for inclusive insurance, risk financing for all
As Bangladesh enters the new phase of its development, it must deal with the twin challenges of sustaining economic growth and managing the changes that come with it, said CRI Trustee Radwan Mujib. In the editorial note of WhiteBoard, the first policy-based magazine in the country, Editor-in-chief Radwan Mujib reflected on the economic structural transformation Bangladesh is undergoing and how the country can better cope with it. "Bangladesh is one of the emerging Asian countries experiencing economic structural transformation. Industrialisation and urbanisation are core to this process. To avoid growing pains, policymakers must act fast and decisively to make sure an environment exists in which cities and commerce can flourish," Radwan, a strategy consultant and youth advocate, observed in his article titled 'Let’s use the springboard we have created'. A young, tech-savvy population, with higher levels of education than the previous generations is entering the workforce. READ: Next generation has to be better than last: Radwan Mujib The country’s ready-made garments sector is a world leader, and there are signs that other industries are ready to follow suit. Infrastructure mega-projects are removing bottlenecks for economic transformation. The country is ready for take-off – but how can policymakers ensure it has a secure launching pad is what Radwan Mujib stressed on. In the eighth issue of the quarterly WhiteBoard, some crucial issues regarding the country's economic transformation and policymaking were highlighted. Drawing on his decades-long experience of macroeconomic policymaking in Asia, Gustav Papanek remarked that diversification in manufacturing is a must. In his interview, he outlines how industry-focused job creation can lead to poverty elimination in populous countries like Bangladesh.
The United Nations Development Programme (UNDP) and BRAC have partnered and signed a Memorandum of Understanding (MoU) to enhance the effectiveness of poverty eradication and make these efforts more impactful to ensure inclusive growth for Bangladesh.Sudipto Mukerjee, Resident Representative, UNDP Bangladesh, and Asif Saleh, Executive Director, BRAC, signed the MoU on Sunday on behalf of their respective organizations at UNDP office in the city.Under this partnership, both organizations will work together to enhance the effectiveness of the poverty eradication effort for fostering inclusive growth in Bangladesh.Evidence-based policies and programmes will be designed, and a platform will be created to further strengthen the social protection systems in Bangladesh to make sure no one is left behind, according to UNDP. Also read: UNDP, BWJA seal deal to address, redress violence against women Signing the ceremony, Sudipto Mukerjee said the partnership will assist the government of Bangladesh to effectively identify and transfer social protection benefits to people living in extreme poverty."It will also pilot and develop holistic livelihood programmes collaboratively with different ministries of Bangladesh to ensure access to social safety net programmes and help the government in attaining the Sustainable Development Goals by 2030," he said. “A timely and much-required partnership to assist the Government of Bangladesh in bridging the gaps to achieve poverty eradication and sustainable livelihoods for people living in extreme poverty by 2030”, said Asif Saleh. Also read: Norway, UNDP continue to work together for tolerant, inclusive BangladeshHe further emphasized that this partnership will help strengthen ongoing efforts and design new joint initiatives for social protection and resilience-building as we recover and try to build back better from COVID related shocks. BRAC and UNDP have a long history of successful partnerships at both the national and global levels in poverty eradication and human development and are committed to supporting the Bangladesh government in its effort to ensure inclusive growth.
Finance Minister AHM Mustafa Kamal has said that there is no sector of the economy that has negative growth. He made the claim while briefing reporters on the outcomes of the two consecutive meetings of the Cabinet Committee on Economic Affairs and the Cabinet Committee on Public Purchase. He presided over the two meetings held virtually on Thursday. “You can easily find a calculation of the economy. There is no inflation while our exchange rates remain stable. When globally remittance was facing tough times, our (inward) remittance achieved 15 per cent growth”, he said defending his claim. Also read: Bangladesh’s economy to grow by 6.4% in 2021-22 FY: WB He also said that the country’s revenue generation obtained 30 percent growth while the import and IT sector witnessed growth too. Kamal said though remittance is not considered while calculating the GDP growth, it comes to the per capita income’s calculation. “These are the areas of the economy...If there is any negative growth, it will be reflected into the economy”, he said. Referring to his budget speech, the finance minister said his prediction in the previous fiscal year 2020-21 proved correct in the economic growth. The predictions were close to the World Bank’s projections. He said it was possible because of the people's participation and efficient leadership of Prime Minister Sheikh Hasina. Also read: Govt favours circular economy for sustainable growth: Minister “Our expansionary monetary policy has played a role in this regard. We followed this policy when many countries in the world didn’t dare to take this path”, he said adding, these were reasons for the economic growth. He said that whatever the way you calculate the economic growth, finally you find the same result. “We have given the clarifications.” Kamal said somebody may say that it was not a correct calculation, but you can yourself see our achievements. “Nobody can show this achievement anywhere”, he said.
The government is aiming to take up the economy’s revenue-GDP ratio to 11.5 per cent by 2023-24 fiscal through modernisation of revenue administration, broadening the tax base, higher tax compliance, reform of laws and simplification of process. "This is expected to significantly impact revenue mobilisation, and hence, over the medium term, total revenue-GDP ratio is projected to increase at 11.5 per cent in 2023-24 fiscal," an official document stated. READ: Poland praises Bangladesh’s economic growth The projection for 2022-23 fiscal is 11.3 per cent while target for the current 2021-22 fiscal is 11.3 per cent. It said that in the recent years the government has taken several significant stringent measures to reinforce domestic resource mobilisation. Revenue income elasticity with respect to GDP is low in Bangladesh. "The current revenue-GDP ratio is very low compared to the neighbouring and other developing countries," said the document. It mentioned that to recover the economy from shocks of the COVID-19 pandemic, the government has maintained an expansionary fiscal policy stance. In the context of COVID-19, revenue earning has declined significantly. On the other hand, higher spending due to government's adoption of countercyclical measurers as responses to the economic impact of COVID-19 is creating budgetary pressure. Several reform initiatives have been taken by the government to reinforce domestic resource mobilisation as well as to improve revenue-GDP ratio. In this connection, the document stated that automation of the VAT collection and bonded warehousing system are ongoing. Enactment of the new Customs Act, 2020 is at the final stage. In 2019-20 fiscal the revenue-GDP ratio was 9.5 per cent while target for 2020-21 fiscal was 11.9 per cent, but it was revised to 11.4 per cent. The document said that the fundamental objective of public expenditure policy is to enhance and improve the emergency healthcare facilities, stimulate both private and public investment, creating employment opportunities, expansion of social safety net programmes and ensure efficient redistribution of wealth through pro-poor, inclusive development. In addition, it said the government is pursuing to keep budget deficit within the sustainable range so that the debt to GDP ratio does not increase at a higher pace. "Due to outbreak of the pandemic, implementation of development projects has been slower, but the expenditure on social protection programmes and stimulus packages to address the COVID-19 crisis is rising substantially," the document added. The size of public expenditure is historically low relative to GDP. It was only 14.9 per cent to GDP in 2019-20 fiscal, while it stands at 17.5 per cent in the revised budget of 2020-21 fiscal year from 17.9 per cent. The document mentioned that public spending is targeted to be elevated to around 17 per cent of GDP over the medium term. For the current 2021-22 fiscal it has been set at 17.5 per cent while for 2022-23 and 2023-34 fiscals it has been projected at 17 per cent. READ: WB lauds Bangladesh's economic growth despite downturn As per the document, the government has already initiated public financial management (PFM) reforms. The PFM Reform Strategy 2016-21 along with other reform programmes have been implementing with a view to improving overall public service delivery, financial control of budget allocation, real time monitoring of budget execution, and integration of recurrent and capital spending. The PFM Action Plan 2018-23 has been prepared and implementation is going on. Under the PFM reforms, the official document said, E-chalan system and a new budget and accounting system (Ibas++) have been introduced, new accounting BACS has been completed, and automation of national savings certificate sales has been introduced. It also mentioned that the government to person (G2P) payment is being rolled out for social safety net programmes. READ: ADB lowers its economic growth forecast for developing Asia The document hoped that simplification of fund release process, disbursement of government employees' salaries and pensions through electronic fund transfer (EFT) will increase the efficiency of expenditures.
The government is focusing on bigger investment, both local and foreign, to generate jobs and fast-track development to help the economy offset the advese impact of Covid-19 pandemic. "The government will take effective steps to build infrastructures and provide other policy supports to improve the investment-friendly environment,” according ti an official document obtained by UNB. To increase investment and generate employment, it said, steps have been taken to establish 100 Economic Zones across the country, which will provide employment opportunity of an estimated one crore people. Approval has already been issued for the establishment of 97 Economic Zones. It said that production has already been begun in 9 Economic Zones and the development work in 28 Economic Zones is in progress, which can offer employment to around 40,000 employment seekers. “In addition, employment opportunities for another 8 lakh people will be created,” the document added. Also read: Govt to provide training to 10,000 top executives to boost IT sector Till date, investment proposal worth US$ 27.07 billion from a total of 210 investors has been received in these Economic Zones. “Of the total amount about US$ 1.60 billion is foreign investment.”