M A Khaleque
Despite disproving the Malthusian population theory, why is Bangladesh still considered a food-insecure country?
Renowned sociologist and demographer, Robert Malthus, stated in his famous population theory that "the population of a country increases geometrically," meaning it multiplies by factors like 1, 2, 4, 8, 16, and so on. Conversely, food production increases arithmetically, following a progression like 1, 2, 3, 4, 5. Industrial production also increases at a geometric rate similar to population growth. Therefore, for effective and sustainable economic development in any country, emphasis must be placed on industrial production first. If a country achieves self-sufficiency in industrial production, the demand for food by the population can be met through imports.
Legal reforms are crucial for bank consolidation and identification of willful defaulters
At this moment, the most discussed issue in the banking sector is weak bank consolidation and willful defaulters being identified and brought under strict penalties. For a long time, the country's economists and bankers have been suggesting reforms for the banking sector, but the authorities have not heeded them. Recently, somewhat unexpectedly, Bangladesh Bank has instructed weak banks to merge with stronger ones in order to consolidate the banking sector. Simultaneously, there have been indications of adopting stringent measures against willful defaulters, who are considered as a 'menace' to the banking sector due to their significant influence and notoriety. Many have raised questions about why Bangladesh Bank has become vigilant regarding willful defaulters of loans and why it is initiating efforts for the consolidation of weak banks. Bangladesh Bank has not taken consistent or self-motivated initiatives to enforce stringent legal measures to address weak bank consolidation and identify willful defaulters of loans.
Simple discussion on some theories of banking and economics
In words, it is said, 'Not knowing something is not wrong, unwillingness to learn is wrong. And the biggest crime or injustice is pretending to know without knowing. Many among us are reluctant to show interest in learning about unfamiliar subjects. They behave as if they already know everything. Many try to display expertise in a subject they don't actually know well themselves. It's impossible for a person to know everything. However, continuous efforts to learn are necessary so that one doesn't get trapped or humiliated in the net of ignorance. Mutual exchange of ideas can be considered the best way to acquire knowledge on a subject. Those of us who work with or discuss banking and economics often need to familiarize ourselves with various new terms or concepts. Without having basic or fundamental knowledge about these, one tends to become embarrassed. Therefore, let's discuss some terms or concepts related to banking and economics that we come across almost daily. It's worth mentioning that the discussion here will be very general and not from the perspective of an expert. Therefore, misunderstandings or misconceptions are natural.
Bank mergers, acquisitions, or dissolutions?
Bangladesh has recently received approval for a loan of 470 million US dollars from the International Monetary Fund (IMF). The first installment of the approved loan has already been disbursed in favor of Bangladesh. Former Finance Minister A.H. Mustafa Kamal, after the approval of the IMF loan for Bangladesh, had stated in an interaction with journalists that Bangladesh has received the loan approval from the IMF just as it had requested. However, the former finance minister's statement was not entirely accurate because the IMF does not provide loans to any country without conditions. Perhaps the conditions for the loan might vary from country to country, being somewhat stringent or lenient.
We need to be more cautious about borrowing foreign loans
After gaining independence, an American development economist visited Bangladesh and delivered a speech to Dhaka University's faculty, addressing the sluggish pace of the country's economic development. In the midst of his presentation, a young professor from Dhaka University boldly asserted, "Our development is stymied by unnecessary interference in our economy from external sources like yours." Upon hearing this critique, the American professor paused before responding with a stark observation: "Consider that 80 percent of your nation's economy relies on debt from countries like ours." This revelation left the young professor speechless for the remainder of the discussion, underscoring the harsh reality of Bangladesh's economic dependency.
Is it possible to identify 'willful defaulter'?
Bangladesh Bank's March 12 circular aimed at identifying 'willful defaulters' has sparked significant attention within the banking sector. Economists and bankers are closely monitoring the situation, with many hopeful that it will lead to the apprehension of those deliberately defaulting on loans. Economists have persistently advocated for two key measures to tackle the escalating Non-Performing Loan (NPL) crisis: stringent action against willful defaulters and comprehensive reforms to reduce overall NPL levels to a sustainable threshold.
PM Hasina portrays Bangladesh as proactive in development
Prime Minister Sheikh Hasina's participation in the 60th Munich Security Conference was of utmost importance in the current global context. Held in Germany, one of Europe's most powerful nations for the past 60 years, this conference has been a significant fixture. The journey of this conference began in 1963, with its early editions largely focused on the Western world, especially amidst the backdrop of the Cold War. The issues of security between the United States and the Soviet Union were paramount in the initial years of the conference. Following the conclusion of the Cold War, the Munich Security Conference saw an increase in participation from various countries. Security issues from different nations were discussed extensively. Russian President Vladimir Putin has participated in this conference multiple times, emphasizing the development of relations between Russia and the European Union as a crucial agenda.
Let "Insurance for All" be the pledge for the National Insurance Day
Today, March 1, is the fourth National Insurance Day. It is very significant in Bangladesh's economy for many reasons. National Insurance Day was observed for the first time in 2020. It was not celebrated for one year due to Covid-19. The initiative to celebrate National Insurance Day highlights the importance of the insurance industry in national life and creates public awareness about how insurance can contribute to economic development. There is a historical event behind the celebration of National Insurance Day on March 1. Father of the Nation Bangabandhu Sheikh Mujibur Rahman started working in the insurance industry on March 1, 1960, by joining the Pakistan Alpha Insurance Company. It was originally decided to celebrate National Insurance Day on March 1 to commemorate Bangabandhu's involvement in the insurance industry.
Checking inflation with contractionary policy a tough job
Currently, the country's economy is experiencing high inflation, posing several challenges in macroeconomic terms. Among these challenges, high inflation stands out as the most significant. To address this inflationary pressure, various initiatives have been undertaken, with notable emphasis on monetary policy. However, the recent announcement of monetary policy by the Bangladesh Bank appears to be conservative in nature. The Bangladesh Bank believes that a conservative monetary policy will play a supportive role in controlling high inflation. However, this initiative has been delayed. Furthermore, it is uncertain to what extent conservatism will be sufficient in controlling high inflation because inflation is not solely caused by one factor. There are many other factors contributing to inflation. Therefore, controlling high inflation through conservative monetary policy alone will be challenging.
EU interested in strengthening partnership with Bangladesh
The European Union (EU) expressed interest in strengthening partnership with Bangladesh in the coming days.
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