Economics
Second half-yearly monetary policy faces challenges
Five months have passed since the interim government took office, but there has been little sign of success in the economic sphere during this period. The interim government has been focusing more on addressing political crises rather than economic issues. The formulation of the new monetary policy is nearing completion. The Bangladesh Bank has started discussions on the proposed monetary policy with stakeholders. If everything goes as planned, this policy will be approved in the Bangladesh Bank board meeting on January 22, and then it will be published. This will be the second monetary policy of the current fiscal year and the first of the interim government. This will also be the first monetary policy under the new governor of Bangladesh Bank, Dr. Ahsan H Monsur. Since taking office, the new governor has taken several practical steps, including initiatives to make the foreign exchange rate and bank lending interest rates market-based. However, these steps should have been taken earlier. The previous governor failed to take effective actions in these areas, which led to a sluggish and downward-moving economy. Among all the recent monetary policies issued by Bangladesh Bank, none has been as challenging as the proposed policy.
Excessive foreign debt erodes financial independence
In the 1970s, an American development economist visited Bangladesh. At one point, he gave a speech to the faculty members of Dhaka University. The economics department’s professors were notably present at this event. During his address, the American economist presented his views on why Bangladesh’s economic development was not progressing to the desired level. The professors in attendance listened intently to his words. At that moment, a young economics professor from Dhaka University stood up and said to the American economist, "The reason we are unable to achieve the desired level of development is because you are intervening in our economy in various ways." After a brief pause, the American economist replied to the young professor, saying, "If 80 percent of the funds for your country's development activities come from us, whose economy is it? If you were able to finance your development from domestic sources, we would not need to offer any advice." Hearing this, the young professor remained silent and sat down.
Professor Anisur Rahman was my teacher and guide
Any death is painful, but when it is the death of someone like Professor Anisur Rahman, it becomes incredibly hard to bear. Professor Anisur Rahman was my direct teacher. He had been suffering from various age-related complications for a long time. While he was ill, Professor Anisur Rahman was admitted to the United Hospital in the capital, where he passed away on January 5. Professor Anisur Rahman was born in 1933 in Brahmanbaria, although his ancestral home was in Kendua, Netrokona. He was one of the key organizers of the Bangladesh Liberation War. In the 1960s, he assisted in the formulation of the Six-Point Movement led by Sheikh Mujibur Rahman. After independence, he became one of the members of the first Planning Commission of Bangladesh formed under the leadership of Sheikh Mujib. His death is an irreparable loss to the nation. Every person must taste death, but it is very difficult to accept the passing of someone like Professor Anisur Rahman.
Limited progress on people's economic hopes
After assuming office, the interim government formed a committee to prepare a white paper to understand the real state of the country's economy. The committee has already officially handed over its report to the chief advisor. The information about corruption and irregularities revealed in the white paper will alarm any conscientious person. It is undeniable that the country's economic condition is far from good. On August 5, following the student movement, former Prime Minister Sheikh Hasina resigned and left the country, and on August 8, the interim government assumed power.
How was 2024, and how will 2025 be?
As the cycle of the year turns, we step into a new calendar year. The eventful year of 2024 has now bid us farewell. Among the most significant years in the political history of Bangladesh, 2024 stands out as unique in every way. The events of this year serve as a vivid example of how attempts to cling to state power in disregard of public opinion never succeed in the long term. The student movement, which was supported by various local and foreign groups, eventually evolved into a government-toppling movement, something no one could foresee. The government did not take this seriously. They may have thought they could suppress the student movement with force, just like previous protests. However, the government failed to realize that this student struggle was not a scattered event like past movements. It was a long-planned movement, and the government lacked the power to suppress it.
Prioritizing inflation control for economic resilience
According to the data from the Bangladesh Bureau of Statistics (BBS), the overall inflation rate in the country reached 11.38 per cent in November. This is the highest inflation rate in the past four months. Inflation is rising across both urban and rural areas. Among this, the food inflation rate was 13.80 per cent, the second highest in the last 13 and a half years. In July, the food inflation rate had reached 14.10 per cent. The goal of the monetary policy announced by the Bangladesh Bank is to control high inflation by reducing the money supply in the economy; however, no measures have been successful in controlling high inflation so far. There are no visible signs of inflation coming under control, and inflation continues to rise steadily.
Emphasizing loan recovery over redefining defaulted loans
Emphasizing loan recovery over redefining defaulted loans
Are borrowers or bankers more to blame for default loans?
According to the latest statistics from Bangladesh Bank, the total amount of default loans in the country's banking sector has reached 2,84,977 crore taka. This constitutes 16.93 per cent of the total loans disbursed by banks. In July, the amount of default loans was 2,11,391 crore taka. Therefore, in just three months, the amount of default loans in the banking sector has increased by 73,586 crore taka. During this period, the amount of default loans in state-owned banks has increased by 23,628 crore taka, while in private banks, the increase was 49,885 crore taka.
Is dominance of US dollar in global economy about to decline?
Recently, the BRICS summit was held in Kazan, Russia. Initially, BRICS was formed by four countries: Brazil, Russia, India, and China. Later, South Africa joined, giving it its current name, BRICS. Last year, five more countries were admitted, raising the membership to ten, although the group retained its original name. In this recent summit in Kazan, in addition to the 10 full BRICS members, 25 countries joined as observers, many of which may soon gain full membership. BRICS is fundamentally an economic cooperation bloc, whose member states represent 57% of the world's population and account for 47% of global GDP.
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