New index for Dhaka bourse!

Designed by Standard and Poor's (S&P), the Dhaka Stock Exchange (DSE) is going to introduce a new index based on free float system (market cap of an index's underlying companies is calculated by taking the equity's price and multiplying it by the number of shares available for trading). After so many years, DSE found its existing index flawed! It will be interesting to observe how the new index incorporates the recent stock market debacle and hope, it will reflect in the new index too.  

News on the issue.  

Interview of YV Reddy !

Asjadul Kibria takes an interview of YV Reddy, the ex-Governor of Reserve Bank of India, where Mr. Reddy talks on diverse issue such as the need for globalized expertise for the central bank, the success of Bangladesh in various social indicators, and the need for close regional integration. He also talks on the role of monetary policy (the central bank) and its relation with fiscal policy (the finance ministry). A worth reading one! 

Link of the interview.  

Moody's Review of BD economy...

Global rating agency, Moody's Credit Outlook assesses Bangladesh financial sector while considering its link with real and external sectors.

A news report on the issue. 

American Tariffs, Bangladeshi Deaths!

Sanchita B Saxena, associate director of the Center for South Asia Studies at the University of California, Berkeley, writes on the link between tariffs imposed by US government on Bangladeshi RMG products and the final prices of those goods in the US market and tries to argue that low tariffs on imports from Bangladesh could play an encouraging inputs to Bangladeshi RMG producers to improve labor standards without losing its competitive advantage. She suggested this because US government has been urging the Bangladeshi government to raise wages and improve working conditions. I think, this is a right message. 

Link of the article.   

Profile of Jeffrey Sachs

In 'People in Economics' section in Finance and Development, a quarterly publication of IMF, Prakash Loungani writes the profile of Jeffrey Sachs, a leading development economist.

Link of the article. 

Mankiw reads Obama's mind!

Professor Gregory Mankiw reads, in his own way, President Obama's confused mind (one is the Moderate Obama and the other is the Liberal Obama) on fiscal cliff related issues! Interesting...

Here is the link. 

Growth Report on Bangladesh, WB

World Bank, Dhaka office publishes its growth report 'Towards Accelerated, Inclusive and Sustainable Growth in Bangladesh'. The main points of the reports are as follows:

• In spite of global shocks and natural crises, Bangladesh’s economy has maintained a healthy 6%-plus plus growth rate in past years and significantly reduced the number of absolute poor. 
• Bangladesh now needs to accelerate GDP growth to 7.5% to 8% and sustain 8% remittance growth to reach its aspiration of middle-income country status by next decade. 
• The distribution of economic opportunities across all population groups, and particularly those at the bottom, needs to improve in order to make middle-income country status meaningful.

World Bank link on the report.

State of Governance in the banking sector

Centre for Policy Dialogue (CPD) published a paper 'State of Governance in the Banking Sector: Dealing with the Recent Shocks', focusing on the challenges confronting by the banking sector of Bangladesh, especially by the State-owned commercial banks (SCBs) in view of the recent Hall Mark scandal. The paper also judges the credibility of SCBs and provides relevant recommendations.

Here is the link of the paper.
Link of the seminar news on the paper. 

Chief Economist, BB

Bangladesh Bank has appointed Dr. Hassan Zaman as the Chief Economist, who was Economic Adviser to the Governor since August 2011 and later promoted to Senior Economic Adviser to the Governor.

A short profile of the Chief Economist.

BD Economic Update, WB (October 2012)

The World Bank, Dhaka Office publishes its Bangladesh Economic Update, October 2012 edition, where it predicts that the Bangladesh economy will grow at around 6.0% in FY13, far less than 7.2% that the government expects.

Here is the link for the summary of the report.

Profile of Justin Yifu Lin

Finance and Development, IMF in its 'People in Economics' section profiles Justin Yifu Lin, the first World Bank Chief Economist from a developing and Emerging economy during June 2008 - June 2012.

Link of the profile.  

IMF on Bangladesh

Naoyuki Shinohara, Deputy Managing Director of IMF gives an interview with Rejaul Karim Byron of the Daily Star and talks on the challenges and prospects of the Bangladesh economy.

Main points:
1. Bangladesh economy will expand by 5.8% in FY2013, BUT it will need to grow by 7.0% to 8.0% a year to achieve development objectives for the next decade. Generating more tax revenues from internal sources and better prioritizing expenditure will be crucial in reducing poverty and achieving the medium-term growth objectives.  
2. IMF is with the government in its fight against poverty by designing policies that help strengthen governance, reduce waster and excesses, and channel resources to growth-critical areas and there are two-prolonged approaches to do so: higher income through higher growth and targeted benefits for those most vulnerable to adjustment.
3. A major challenge for the government will be to keep subsidy-related costs under control and to ensure safety nets are in place to cushion the impact of administered prices increases on the most vulnerable.

Here is the link of the interview. 

What is the Fiscal Cliff?

The ''Fiscal Cliff'' is a new term used in the policy discussions of the U.S., and given its probable impact, multilateral organizations like the World Bank and IMF started using this term in their various policy papers and forecast measures.

Concept: In a nutshell, ''Fiscal Cliff'' is used to describe a bundle of momentous tax increases and spending cuts that are due to take effect in the US economy at the end of 2012 and early 2013. In total, the measures are set to automatically slash the federal budget deficit by $607 billion (or, about 4.0% of GDP) between FY2012 and FY2013.

Here is a conceptual article on the issue, published in the Council on Foreign Relations.   

ADO 2012 Update, ADB

Asian Development Bank (ADB) publishes its half-yearly flagship publication 'Asian Development Outlook 2012 Update' with latest economic updates on major economies of Asia. ADO 2012 Update also has a theme focus on service-sector-based growth process for developing Asia's economies. It also has a chapter on the Bangladesh economy. 

Here is the link of ADO 2012 Update. 

Status of IMF conditions

An International Monetary Fund (IMF) will visit Bangladesh from today for two weeks to review the implementation status of its conditions before releasing the second installment ($141 million) by November of its three-year Extended Credit Facility (ECF) program.

Rejaul Karim Byron writes on this issue. It seems that the government is trying to come out from some of the conditions that IMF previously set (or, the government will request IMF to relax those conditions); on the other hand, IMF is trying to set new conditions (e.g., no hard-term borrowing beyond $1.0 billion). Among the government requests, increasing the exposure limit of commercial banks in the stock market to 40.0% of bank's total capital instead of current limit of 25.0%.

What does it indicate? Without resolving the prevailing capital constraints in the banking system, the government is again going to allow commercial banks into stock market business. Or, the government is trying to help banks to take back their significant amount of capital that were invested in the stock market and had to leave as it is before stock market crash in December 2010. Is the government trying to help banks to resolve their accounting crisis, or trying to revive the stock markets through involving commercial banks into its daily activities? What's the implication for future stock market activities of such decision?