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External Sector, Inflation and Standard of Living

Monthly Bangladesh Economic Update, October 2017

October 2017

Recent rise in import, particularly import of consumer goods, vis-à-vis export earnings is likely to spell trouble for low income people whose standard of living deteriorates amid frequent price hikes in the commodity market.

The Unnayan Onneshan (UO), an independent multidisciplinary think-tank, in its monthly publication of the ‘Bangladesh Economic Update’ October 2017, fears so.

Taking account of the increasing trend in inflation rate, the research organization projects that at the end of the current fiscal year, food inflation is likely to stand at 9.4 percent in the absence of immediate price stabilization measures.

Such increase in price in the commodity market coupled with reduced production of food grains, decline in real wage, and lack of employment opportunities is likely to adversely affect people’s standard of living on the one hand and threaten overall food security in the country, comments the research organization.

 

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Debt and Deficit: Trends and Challenges

Monthly Bangladesh Economic Update, September 2017

September 2017

The Unnayan Onneshan (UO), an independent multidisciplinary think-tank, in its monthly publication of the ‘Bangladesh Economic Update’ September 2017, reveals that persistently increasing outstanding debt along with high debt-service payment every year is likely to lower development finance and escalate intergenerational debt burden in the future.

The research organisation in its eighth year of this monthly publication notes that at the end of FY 2016-17, the total outstanding domestic debt has increased by 13.25 percent. According to the most recent data, the total outstanding external debt burden increased by 10.1 percent at the end of FY 2015-16. On the other hand, rate of growth in net foreign aid decreased to 2.10 percent in FY 2016-17 from 17.54 percent in FY 2015-16.

The think tank finds that the debt-gross domestic product (GDP) ratio is on the rise since FY 2013-14. Referring to the recent data published by the central bank, the UO states that the outstanding domestic debt as percentage of GDP was 15.45 percent in FY 2013-14, 15.50 percent in FY 2014-15, and 15.78 percent in FY 2015-16, and 15.83 percent in FY 2016-17.

 

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External Sector: Recent Trends and Challenges

Monthly Bangladesh Economic Update, August 2017

August 2017

The Unnayan Onneshan (UO), an independent multidisciplinary think-tank, in its monthly publication of the ‘Bangladesh Economic Update’ August 2017, reveals that monumental deficit in current account together with declining wage earner’s remittance and foreign aid disbursement exerts immense pressure on the country’s balance of payment.

Calling for a thorough reexamination of the current trade and industrial policies to address the structural bottlenecks and creation of a stable business climate to attract increased inflow of private investment including FDI, the UO urges for the adoption of new strategies to expand country’s productive capacities that enhance utilization of available resources through efficient entrepreneurial capabilities and increased production linkages.

Referring to declining rate of growth in inflows of wage earner’s remittance, the think tank shows that the inflow of remittance declined by 14.48 percent and stood at USD 12769 million in FY 2016-17 compared to the previous fiscal year. On monthly basis, the remittance inflow declined by 4.18 percent in June 2017 compared to May 2017 and stood at USD 1214.61 million, which further declined by 8.15 percent to USD 1115.57 million in July 2017.

 

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Monetary Policy Statement (July-December, FY 2017-18): A Rapid Assessment

Monthly Bangladesh Economic Update, July 2017

July 2017 MPS

The Unnayan Onneshan (UO), an independent multidisciplinary think-tank, in its rapid assessment of recently announced monetary policy statement for the first half of the FY 2017-2018 cautions that targeted private sector credit growth may fail to boost private investment in absence of a business enabling environment. Rising food inflation may further challenge the effectiveness of the policy.

The UO in its July issue of Bangladesh Economic Update 2017 fears that without increasing the quality, mere growth in private sector credit by the targeted level – 16.3 percent for July-December of the current fiscal year compared to 16.5 percent for the January-June of the previous year – may prove ineffective in facilitating investment-led employment generation and economic expansion.

The think tank points out that private investment has remained stagnant and stood at 22.07 percent of GDP in FY 2014-15, 22.99 percent in FY 2015-16, and 23.01 percent in FY 2016-17 despite significant increase in domestic savings from 22.16 percent in FY 2014-15 to 26.06 percent in FY 2016-17.

 

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Fiscal Accountability and the Parliament: The Case of Budget Making Process in Bangladesh

Monthly Bangladesh Economic Update, July 2017

July 2017

The Unnayan Onneshan (UO), an independent multidisciplinary think-tank, in its July 2017 issue of Bangladesh Economic Update, states that lack of fiscal accountability due to limited role of the parliament in budget making process together with constitutional and systematic rigidities results in inefficiency, poor implementation of budget and misuse of public resources.

To deal with the problem, the research organization calls for immediate adoption of necessary reform measures that may include revision of budget-related constitutional provisions, expansion of scope of parliamentary surveillance over fiscal management, and strengthening of concerned parliamentary standing committee.

The think tank finds that the status of budget implementation is on the decline since FY 2010-11. Of the total budget outlay, 97.05 percent was implemented in FY 2010-11, whereas the rate subsequently decreased to 93.18 percent, 90.76 percent, 84.59 percent, and 81.59 percent in FY 2011-12, FY 2012-13, FY 2013-14, and FY 2014-15 respectively.

 

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