Finance & Development, IMF (June 2012)

IMF publishes its June 2012 edition of Finance & Development with some wonderful articles.

Link of the publication.

Qatar's investment plan with BB

The government of Qatar proposed to invest its currency worth of $1.8 billion in the Bangladesh Bank (BB). If the proposal is accepted, it would be another milestone in the area of financial management of BB.

Link of the news.

Certain issues need to be considered before any decision:

• Though it is going to increase BB's foreign reserves level, however it should be considered as the liability of the central bank (debt burden);
• The agreement should include guaranteed clause for pay-back and repatriation clause should be clearly defined;
• Interest rate, if any, should be market based and internationally comparable;
• Profit-sharing (or, loss-sharing) clauses should be clearly defined;
• Long-run investment should be considered for using this amount, no short-run (like Quick-rental power plant) 

IMF support and its impact

Rejaul Karim Byron from the Daily Star writes on the possible impact of IMF conditionalities on the next budget, especially in the area of reducing subsidy and increasing tax-revenue target (and thus fiscal deficit). It's a good article to read with expert comments.

Link of the article. 

Time to change the path of monetary policy

Dr. Farashuddin Ahmed, Former BB Governor rightly pointed out that is the on-going contractionary monetary policy continues for a longer period, it will not support growth process of the country. Meaning? It's the time to change the path of monetary policy...

Though he said a number of good things on BB's performance which are logical, he was critical on some issues including lack of BB's monitoring system, especially in regards to Destiny-type issues (the same applies to stock market crash related issues too). He rightly talked on NBR's failure in checking under-invoicing of imported goods, income equality and narrow economic base.

Link of the report.

Stagnant GDP growth

During the last few years (nearly a decade), the GDP growth of Bangladesh has been centered around 6.0%. Though on several occasions, the government tried to touch or cross 7.0% growth target, it failed to achieve due mostly to perennial gas and power crises, poor infrastructure and political instability. Despite an estimated 6.3% GDP growth in the current fiscal year, the government set a target of 7.2% growth for FY13, though economists are skeptical about such target.

Link for an article on the issue.

Trade deficit widens

Country's overall trade deficit widens by 13.0% to $6.6 billion during the first three quarters of FY12.

Link of the news.

Exports keep falling !!

On year-to-year basis, export earnings keep falling in a two consecutive months until April 2012. In March and April, exports fell by 7.2% and 7.1%, respectively. Also, during July-April FY12, exports rose by only 8.4% over the corresponding period of FY11 against the government's annual target for FY12 of 15.6% over the actual export earnings in FY11.

EU debt crisis is the prime reason at this moment, though slow economic recovery in the US is another important area of concern. As the following article rightly points out that international buyers are not offering higher prices for goods as well because they have the information that global raw material prices are no longer expensive. So, one can guess the future of GDP growth target (7.0%) in FY12, which is mostly dependent on the export sector (or, output produced by export-based industries).

Link on the news.

True Lessons of the Recession

Raghuram Rajan writes on the reasons of the recent recessions and what are the lessons that we may take from the outcome of the recession. A noteworthy one to read.

Link of the article published in Foreign Affairs.

BD EIU Country Report: April'12

The Economist Intelligence Unit (EIU) publishes the Bangladesh Country Report, April 2012 edition. Some of you may find this useful to read. :-)

Link of the report.

Remittance growth slowed in April

Growth in remittance inflow slowed by 2.4% in April 2012 against the realization in March, though the overall growth of remittance inflows during the first 10 months of FY12 was 10.4%. The target remittance growth of Bangladesh Bank was 11.6% in FY12 against the actual growth of 6.0% in FY11.

Link for the news.

Remembering Milton

Allen Sanderson from the University of Chicago writes on Professor Milton Friedman on his 100th birth anniversary and the 50th anniversary of the publication of Capitalism and Freedom.

"Milton met Rose (Friedman's wife) in a class taught by the great Jacob Viner, who has trouble remembering names or perhaps just had a streak of OCD, sat student in alphabetical order. With no one in the class between Rose and Friedman, the rest is history - or at least economics."

Link of the article. (noticed from Mankiw's blog)

IMF conditionalities and the Bangladesh economy

Professor M.A. Taslim writes on the position of the Finance Minister (FM) on various issues of macroeconomic development and the actual situation of the economy. He also briefly describes the impact (and likely impact) of conditionalities put by the IMF. There are really some valid points that he made to argue on the position of FM and the connection of those with IMF's ECF fund release. You may like to read this.

Link of the article published in the Finance Express.