Country in the grip of ‘twin deficits’

Capital flight worsening situation, say economists

Fiscal deficits in developing economies including Bangladesh have direct impact on the current account imbalance, reflecting the 'twin-deficits'.

This new relationship was found in the latest study conducted by the International Monetary Fund (IMF) on 114 developing economies, including Bangladesh.

When an economy goes through both the fiscal deficit and the current account deficit (CAD) it is referred to as having 'twin deficits'.

Twin deficits phenomena returned to Bangladesh in the fiscal year, 2016-17, (FY'17) after five years and further widened in FY'18.

The country last experienced the twin deficits in FY'12.

Economists familiar with the development told the FE that the current deficit has been worsening since the mega projects were taken up, which in turn had been boosting the imports.

Many of them said that the capital flight might be involved in worsening the twin deficits.

In the meantime, the 'twin deficits' situation is expected to worsen further, as the central bank projects the current deficit may exceed US$ 10 billion or equivalent to over 3.5 per cent of the GDP this fiscal year.

The Bangladesh Bank (BB), in its latest Monetary Policy Statement, said the current account is widening due to higher trade deficit despite a rebound in the receipt of remittances.

The fiscal deficit is projected at nearly 5.0 per cent this fiscal year to June 30 next.

The central bank, in its latest monetary policy statement, predicted the current deficit may stand at approximately $ 10.12 billion.

Dr Ahsan H Mansur, executive director at the private think-tank Policy Research Institute of Bangladesh (PRI), told the FE there is a direct and visible relationship between the fiscal deficit and the current imbalance.

"The relationship is direct and instantaneous," he said, analysing the IMF study. This has emerged since 2017 when many mega projects were launched, he noted.

"The current account surplus, which is now a past event and the present reality has been evident since 2017." There is no breakdown for the Padma bridge imports.

But almost all materials including steel structures are imported from China. The payment for services required for the construction of the large bridge is also high. All technical persons were hired from China.

There is another mega project -- Karnaphuli tunnel -- is being constructed in the port city of Chittagong and the materials are being imported from China, so are services.

The BB statistics show that the import payment for iron, steel and other base metals have risen by more than 24 per cent in 11 months to May 2018 from the same period in fiscal year 2017.

It shows that import payment for the head stood at $ 4.39 billion in July-May, 2017-18 period against $ 3.534 billion during the same period a year earlier.

Similarly, the import trend of clinker also remained upward.The raw material is used for making cement and it is believed to be an important indirect import.

Dr Mansur said the government should now be careful about taking up its projects, especially against those which raise the imports.

"The IMF study is a message for Bangladesh although Bangladesh mostly fails to spend its allocation which it earmarks in the budget estimation."

The PRI economist, who was the IMF's middle-east division chief, said Bangladesh is slowly moving towards being debt-trapped if the present situation of its lending is considered.

The cheap funding, especially from the World Bank, is also a thing of the past, so projects funding is critically important for Bangladesh and should avoid 'reckless' borrowing, he said.

Dr Mansur, however, suggested ensuring economic viability of mega projects. "We need to be ensured there will be a good rate of return from the projects and there will no future burden."

He also said Bangladesh should now focus on equity financing for its projects instead of debt.

"This is true for Bangladesh as higher economic growth is likely to lead more deficits in government budget as well as in the current account imbalance, which will put more stress on our foreign exchange reserves," Dr AK Enamul Haque, chairperson and a professor of Economics at East-West University, told the FE

Dr Haque said for Bangladesh there is another risk because the current growth in the GDP is led by significant public investment in mega projects and in many cases expenditure in these projects are not linked with increase in employment growth in the economy.

"To my view, for Bangladesh, the most difficult issue is to ensure higher employment growth as we proceed to be one of middle-income countries in the world", Dr Haque said.

On the other hand, Dr Zahid Hussain, of Dhaka office of the World Bank, said Bangladesh's savings is less than that of investment implying that the money may siphon-off money from the country.

The gross national savings in the just-concluded fiscal year (2017-18) was just 28.07 per cent of the GDP against investment (public and private) of 31.47 per cent of the GDP.

Dr Hussain, lead economist at the Dhaka office of the WB, told the FE the 'unusual behaviour' in the country's gross national savings and investment reflects that there is a capital flight.

He hinted that there are many risks associated with twin-deficits; it may erode foreign exchange reserves, depreciate exchange rate and push up inflation in the economy.

"Due to worsening current account deficit the authorities may rapidly depreciate the currency or increase foreign borrowings to finance the external gap".

However, by using unanticipated government spending shocks for an unbalanced panel of 114 developing economies from 1990 to 2015, the IMF found that a one per cent of GDP unanticipated improvement in the government budget balance improves, on average, the current account balance by 0.8 percentage point of the GDP.

The study released more than a week back, provides the new evidence of the existence of the twin deficits in developing economies.

Courtesy: The Financial Express /Aug 08, 2018

Sheikh Hasina government orders vicious crackdown on students for demanding safe roads

Bangladesh Prime Minister has urged the students to go home after protest entered the eighth day. Thousands of students are injured and many are feared dead in this violent crackdown

Thousands of students have been injured, many have succumbed to their injuries, and girl students have been raped. |Photo Credit: Twitter

Dhaka: Around two weeks ago two students were killed by a privately operated bus in Bangladesh after which thousands of angry school and colleges students hit the streets demanding changes to Bangladesh's transport laws. Paralysing the overcrowded capital of 18 million, the unrest quickly spread beyond the capital. To tackle the protest, Sheikh Hasina government ordered a vicious crackdown on the students, the brutality of which can only be compared to the oppression carried out by the Pakistani military regime in 1971.  The government has also shut down mobile internet services across swathes of the country, officials and local media said. Thousands of students have been injured, many have succumbed to their injuries, and girl students have been raped. The media is silent about this murderous assault and many of outlets are actively conniving with the authorities to suppress the facts. Journalists who have decided to cover the protest have been arrested by government intelligence agencies. Ruling party student cadre, Bangladesh Chhatra League has been accused of participating in widespread violence against the students. 

 Rahat Karim Freelance photojournalist Rahat Karim attacked by supporters of Bangladesh government.      

  

                           Award-winning photojournalist Shahidul Alam, 63, was arrested at his Dhaka home late on Sunday; hours after his comments were broadcast by the Qatar-based TV station. An actress was also detained for spreading rumours after she shared a post on Facebook that two protesters were killed and the eye of another was gouged out.The lawlessness can be gauged from the fact that a car carrying US ambassador Marcia Bernicat was also attacked by "armed adult men" but she escaped unscathed. The embassy has condemned the "brutal attacks and violence" against the students' protesters by security forces, a charge the government denies. 

 Bangladesh’s cabinet has said that it will consider capital punishment for traffic accidents. While Bangladesh Prime Minister Sheikh Hasina has urged students to go home, Shajahan Khan, a government minister with ties to powerful transport unions, questioned why there was such uproar over the two Dhaka children but no reaction when 33 people were killed in an Indian bus crash. 

 Hasina warned Sunday that a "third party" could sabotage the protests and put the safety of demonstrators at risk.Social media is full of shocking images of students, horrific videos and call for help from the international media agencies and rights groups from Bangladeshis. In most of the videos, unidentified men carrying rods, machetes and bamboo sticks can be seen attacking the students.Students are out there on the streets because the government has failed to ensure safe roads. However, their peaceful protest is being questioned as too “disruptive”.

Source - timesnownews.com

Journalists give government 72-hour ultimatum to arrest attackers

Journalists form a human chain in front o, Dhaka on Tuesday, July 7, 2018, demanding immediate arrest of those whsome of Journalists have given the government a 72-hour ultimatum to arrest those who attacked some of their colleagues covering the ongoing popular movement demanding safe roads.

Otherwise, they will go for tougher programmes, the journalists said at a human chain at the SAARC fountain in Karwan Bazar of Dhaka city on Tuesday morning.

As for the arrest, they said, it would not be difficult for the government because there are video footages of the attacks.

Another human chain has, meanwhile, been formed in front of the National Press Club for placing the same demand.

Hundreds of photojournalists, journalists and even freelancers took part in the 30-minute protest event that ended at 11:30am after starting at 11:00am. Bangladesh Photojournalist Association organised the event.

At least seven photojournalists were injured in attacks by unruly youths in the capital’s Jigatala and Science Laboratory areas on Sunday while taking snaps of an attack on protesting students, UNB reported.

The injured were identified as AM Ahad of international news agency the Associated Press (AP), Zawad of the Daily Janakantha, Palash of the Banik Barta, Rimon of US-based Zuma Press, Sharif of the Dainik Naya Diganta, freelancer Rahat and Enamul Hasan, a photography student of Pathsala South Asian Media Institute.

• Courtesy: The Financial Express /Aug 07, 2018

Shadow economy dominates the transport sector

Asjadul Kibria 

Road transport of the country is plagued with innumerable problems. The commuters face hassles on a daily basis. Inadequate and ramshackle buses, small vehicles, unplanned stoppages, disorganised routes, dilapidated roads and inefficient traffic management are taking a heavy toll on the people.

Civil society organisations, right activists and people in general have long been asking the government to fix the disorder on the road. But little progress has so far been made in this regard. Instead, chaos in the transport sector is on the increase. In fact, shadow economy dominates the sector and chaos is a clear reflection of that evil influence. 

The transport and communication sector contributes 11.0 per cent of the country's Gross Domestic Product (GDP). The value of the formal transport sector is estimated at Tk 1.09 trillion and annual growth rate stood at 6.33 per cent in the past year, according to the Bangladesh Bureau of Statistics (BBS).

But there are reasons to believe that the actual extent of economic activities in this sector is much more than recorded in official documents. The most glaring example of shadow economic activities in the sector is the existence of extortion rackets which is an open secret. 

Shadow economy is sometimes termed as the black economy, hidden economy, gray economy or even informal economy. Generally, any economic activity which is hidden from official authority is considered a shadow economy. The reason for hiding or skipping may be regulatory, monetary or any other. Moreover, the activity may be legitimate or not. Most of the experts want to consider the legitimate but hidden economic activates as shadow economy. They are of the view that the shadow economy reflects mostly legal economic and productive activities that, if recorded, would contribute to GDP. Nevertheless, in many cases there is a mixture of legal and illegal activities.   

A minister has recently said that a bus has to pay illegal tolls, ranging between Tk 5,000 to Tk 7,000, for trips from Dhaka to different districts of the northern region.  According to a guesstimate, the amount of terminal-centric extortions in Dhaka stands Tk 100 million daily. Leaders of different unions of the transport owners and workers allegedly receive shares of the amount. Same is the case with the members of the law enforcing agencies and road transport regulators. Local political leaders and activists, particularly linked with the ruling party, are also said to have their stakes.

Extortion is not obviously recorded as a part of the official economic activities of the transport sector. Had it been included, what would have been the size of the transport sector GDP is anybody's guess.

A few initiatives were taken earlier to contain extortion. But very little could be done. Government even thought for legalising the extortion which drew huge criticism from different quarters. Transparency International Bangladesh (TIB), in a policy brief in 2012, opposed the move. It, however, recommended for periodical subscription for the membership of the valid transport unions and suggested that the payment or transaction be made through the banking system. TIB also suggested annual auditing of all the financial transaction of the unions.

While the transport workers are generally infamous for their unruliness and bad behaviour to passengers, they live in povery. Most of the transport workers are underpaid and exposed to a number of criminal activities.  BBS data show that monthly average income of a transport worker is estimated at Tk 11,981. As it combines different types of transport workers, from skilled drivers to untrained bus helpers, the actual pay for most of the workers in the public transport would be much lower than this amount.  The minimum wage for the transport worker was set at Tk 6,300 per month in 2010. Since then it has not been revised so far.

There are 5.20 million transport workers in the country. Most of them have no formal arrangement which also indicates the dominance of shadow economy.  Usually they have to work on day-to-day basis with a target of revenue in intra-city routes.  This informal arrangement turns them, especially the drivers, reckless on reaching to the destinations earlier to get additional trip over others. Reckless driving is a major cause for the killings on the roads as well as accidents. 

LFS data does not show the number or proportion of the informal workers in the transport sector. It is, however, presumable that the ratio is in line with the national rate. According to LFS 2016-17, some 85.10 per cent of the country's employed people are working in the informal sector.

The number of bus is increasing every year.  Statistics available with Bangladesh Road Transport Authority (BRTA) show that the number of registered buses and minibuses stood at 45,384 and 28,061 respectively by the end of June this year. Of these, some 17,570 buses and 2,417 minibuses got registration in the last seven years and six months. 

Nevertheless, these buses are not sufficient to meet the growing demand of commuters.  The Seventh Five-Year Plan (7FYP) also mentioned that buses are the only mode which can carry a large number of people at one time and has the potential to cater to all income groups. "But the number of operational buses is not more than 20 to 25 per cent of the number required to meet the demand. Moreover, bus service in Dhaka city is characterised by overcrowding, lengthy wait, difficulty in transferring from one route to another, long distance to and from bus stop," it added.

Inadequate bus is pushing the number of risky vehicles like human haulers across the country.  More than 10,000 thousand registered human haulers pressed into service in the last seven and half years in the country. Of these, around 2,600 are in Dhaka. Besides, many unregistered vehicles run the different parts of the country.  

Non-renewal of route permits and driving licenses is another gray area of the sector. When the authorities go on a drive to check documents of the buses and minibuses, the transport union leaders allegedly reduce the number of vehicles or even call a strike.

The shady investment and ownership in the transport sector is widespread.  Sources in the road transport ministry and BRTA mention that a large number of owners of the buses, minibuses and human haulers are not the actual owners. They are allegedly proxies for law makers, policy makers and members of the law enforcing agencies. As a result, it becomes very difficult for the authorities to take legal action against the unruliness in this sector.

One way to curb shady ownership is to form holding companies of transport owners. Experts have been suggesting the idea for long. An initiative is also there. But progress is very slow. It requires strong political will and legal binding to move in this direction. 

• Courtresy: The Financial Express/ Aug 07, 2018

Attack on media continues

An ominous sign

We are outraged at the attacks on journalists of different media outlets by the BCL over the last two days. Reportedly, on Sunday, some ruling party men swooped on the journalists who were performing their duty covering the ongoing student movement with sticks, iron rods and machetes. What is more appalling is the fact that this happened in the presence of the law enforcers who, reportedly, played the role of silent spectators. Not only that, the police even detained two photojournalists of a photo agency.

This, we repeat, is a violation of the media's constitutional right to free expression, press freedom and the right to information, and is totally unacceptable in a democracy. In this regard, we are also alarmed to learn that Shahidul Alam, an internationally acclaimed photographer and a social activist, was picked up from his home by the police on Sunday night and charged under section 57 of the ICT Act. 

The government's resistance to free flow of information is becoming increasingly sterner. What is even more worrisome is the fact that the so-called ruling party cadres are singling out journalists of particular newspapers among those covering the incidents with, we fear, very sinister motives. Targeting the photojournalists, and preventing them from doing their work has made very obvious the administration's effort to conceal the violent methods it is applying to suppress a popular demand. It cannot be lost on the policymakers that in this day of modern technology, nothing can remain unobtrusive, certainly not for long. Unfortunately, the image of the country has suffered, not because of what the students have done but because of the way the government has handled the issue.

• Courtesy: The Daily Star /Editorial/ Aug 07, 2018

আন্দোলনের ছবি ফেসবুকে দেয়ায় সাংবাদিককে পিটিয়ে পুলিশে দিলো যুবলীগ

ঢাকা-বরিশাল মহাসড়কের গৌরনদীতে ছাত্র আন্দোলনের ছবি সামাজিক যোগাযোগ মাধ্যম ফেসবুকে পোস্ট দেয়ার অভিযোগে দৈনিক বিপ্লবী বাংলাদেশের গৌরনদী প্রতিনিধি রাজিব হাসান খানকে ডেকে নিয়ে বেধড়ক পিটিয়ে পুলিশে সোপর্দ করেছে যুবলীগ। পরে তাকে গৌরনদী থানার নাশকতার একটি মামলায় গ্রেপ্তার দেখানো হয়। 

সাংবাদিক রাজীব অভিযোগ করেন, নিরাপদ সড়ক চাই দাবিতে গত শনিবার বরিশালের গৌরনদীতে ঢাকা-বরিশাল মহাসড়কের বার্থী কলেজের সামনে সড়ক অবরোধ করে লাইসেন্স ও কাগজপত্র পরীক্ষা করে বার্থী কলেজ ও বার্থী তারা মাধ্যমিক বিদ্যালয়ের শিক্ষার্থীরা। ওই ঘটনার ছবি ও ভিডিও নিজের ফেসবুকে পোস্ট করেন। 

তিনি বলেন, শনিবার রাত ৯টার দিকে আমি টরকী বন্দরের বাগদাদ হোটেলে নাস্তা খেতে গেলে আবদুর রহিম (৩৩) নামের এক যুবলীগ কর্মীকে দিয়ে উপজেলা আওয়ামী লীগ সভাপতি এইচ এম জয়নাল আবেদীন তাকে পার্টি অফিসে ডেকে পাঠান। রাজিব পার্টি অফিসে গেলে সভাপতি তাকে গালাগাল দিয়ে চড়থাপ্পড় মারে।

একপর্যায়ে কার্যালয়ে উপস্থিত যুবলীগ ছাত্রলীগ কর্মীরাও তাকে মারধর করে রাত সাড়ে ৯টার দিকে পুলিশে সোপর্দ করে। রাজিব জানান, সে শিক্ষার্থীদের আন্দোলনের ঘটনাস্থলে ছিল না। কাউকে উস্কানি দেয়নি। তাকে হয়রানি করতে মিথ্যা মামলা দেয়া হয়েছে। 

রাজিব হোসেন খানসহ দুইজনের নাম উল্লেখ ও অজ্ঞাতনামা আরো ১০ থেকে ১৫ জনকে মামলায় আসামি করা হয়েছে।’ 

• কার্টসিঃ মানবজমিন/আগস্ট ৭,২০১৮ 

Probe into report of torture on Shahidul Alam in custody - HRW

It also urges to stop attacks on student protesters, critics

Human Rights Watch today urged Bangladesh authorities to order an immediate investigation into reports that renowned photographer and activist, Shahidul Alam, was beaten while in custody.

“Alam was detained on August 5 for criticising the government and its supporters for targeting students,” said the international human rights watchdog.

In a report published in its website yesterday, HRW also said the Bangladesh authorities are “arresting students and targeting activists and journalists who are highlighting the abuses, instead of prosecuting those responsible for unlawfully attacking student protesters demanding road safety.”

Thousands of students, including school children, have been blocking streets to protest the July 29 killings of two students by a speeding bus.

“Yet again, Bangladesh authorities seem determined to take abusive shortcuts to problems, and then denounce those who criticize,” said Brad Adams, Asia director at Human Rights Watch.

“The authorities should immediately release anyone, including Shahidul Alam, they have locked up for peaceful criticism. Instead, authorities should prosecute those, including members of the ruling party’s youth supporters, who are attacking children with sticks and machetes.”

According to numerous witnesses, members of the ruling Awami League student and youth wings, the Bangladesh Chhatra League, and the Awami Jubo League, have attacked the protesters with machetes and sticks, HRW claimed.

“Eyewitnesses and journalists, including Shahidul Alam, also reported that in some areas police stood by while children were beaten up by Awami League supporters, some of whom wore helmets to hide their identity. Some perpetrators were identified when the attacks were caught on camera,” the report said.

Following the protests, Bangladesh authorities have promised an end to reckless driving, to regulate traffic, and to enact a new Road Safety Act, it added.

Home Minister Asaduzzaman Khan Kamal, however, warned protesters to “not to cross the limit,” or be prepared to face police action. Security forces used teargas, rubber bullets, and in some cases, live ammunition against protesters, according to the report.

“It would be shameful if the Sheikh Hasina government is deploying party hoodlums to target students for demanding safe roads,” said Adams.

“Bangladeshi authorities must immediately halt the violence perpetrated by government supporters against protesters and journalists and respect the rights to freedom of expression and peaceful assembly.”

• Courtesy: The Daily Star /Aug 07, 2018

25,882 more cases filed on 2nd day

On the second day of Traffic Week, police lodged 25,882 cases for traffic violations like wrong side driving, using hydraulic horns and not having driving licenses or fitness certificates.

In Dhaka city alone, 8,898 such cases have been filed in the last 24 hours, an official at the police headquarters told The Daily Star.

Dhaka Metropolitan Police decided to take strict measures against traffic offences amid widespread protests demanding safe roads.

Traffic Week began from Sunday, with police filing 19,366 cases for violating traffic rules across the country.

Apart from some incidents of leniency, police were seen strictly checking vehicles at different points of the capital. They also filed cases against many vehicles plying without valid licenses or documents. Many were towed away.

After two students, 17-year-old Dia Khanam Mim and 18-year-old Abdul Karim of Shaheed Ramiz Uddin Cantonment College, were killed on the footpath by an errant bus racing with another on the Airport Road on July 29, thousands of school and college students took to the streets to protest against dangerous driving and lax traffic laws.

Many students assumed the role of the traffic police by regulating traffic and asking to check the licenses of drivers.

• Courtesy: The Daily Star /Aug 07, 2018

Civilisation's existential question!

It is heartening to see police checking documents of vehicles on the streets as part of their announced Traffic Week that began across the country on Sunday." 

It is inspiring that they are doing the job with sincerity. And it is more so because of the slogan that the police have used this time: "Traffic discipline is a symbol of a civilised nation

All these are what the country needs today to check thousands of unnecessary and avoidable deaths on roads and numerous mutilations and injuries.

But may we ask a few simple questions: Why this traffic checking for one week only? Is it that vehicles would ply only for a week and civilisation will be restored for only one week? After that our roads will be void of traffic? And more importantly why can't we continue this checking throughout the year? Why can't our police force enforce the law round the year?

Moreover, when the traffic week began, all the public transports, a large number of which are run by unlicensed drivers and without fitness and documents, disappeared from the roads because of an undeclared strike by the owners and workers.

The behaviour of the transport owners and workers is something to scrutinise and think about.

Whenever any disciplining drive is launched, mainly after some sensational accidents, these people call wildcat strikes. There are even instances that they have called strikes against court verdicts too penalising errand drivers. And most strikingly, some of our ministers have backed these strikes to the detriment of civilisation that the police want to ensure from today.

When a court gave life term to the driver of the bus that killed filmmaker Tareque Masud and cinematographer Mishuk Munier on the Dhaka-Aricha highway in 2011, the transport workers called a strike.

In the midst of public outcry against the strike, Shipping Minister Shajahan Khan, who also happens to be a workers' leader, defended the strike saying “if anyone is aggrieved, he or she has the right to call a strike. Hence the transport workers just followed the method.”

Awami League General Secretary and Road Transport and Bridges Minister Obaidul Kader, however, contradicted Shajahan and termed the strike “unacceptable”.

The government had to negotiate with the workers and promised to take “legal steps” to consider the court verdict against the driver to make them lift the strike.

When a Dhaka court sentenced a truck driver to death last year for killing a woman in Savar as a sequel to previous enmity, the transport workers again called a strike.

When the government last year tried to bring discipline to the city's public transport, the bus owners enforced an undeclared strike and the decision was made at Shajahan's residence in the presence of another minister, Moshiur Rahman Ranga, who also happens to be the president of transport owners' association.

In the wake of public sufferings, Obaidul Quader expressed his helplessness.

“Those in the transport sector are no ordinary people. Many of them are very influential. The current situation in the transport sector can be described as nothing but anarchy,” a helpless Quader had said then.

So the anarchy continued and hence the current student protest to restore “civilisation”. So when the police put up the banner of “Traffic discipline is a symbol of a civilised nation” how far the job can be done is anybody's guess. 

• Courtesy: The Daily Star /Aug 07, 2018

Cops, BCL men disperse protesting students in Ctg

At least nine students are allegedly picked up by Chittagong Kotwali Police for interrogation on Monday, August 6, 2018. Photo: F M Mizanur Shipo

Law enforcers along with the activists of Bangladesh Chhatra League (BCL) dispersed protesting students when they tried to gather in front of Chittagong Press Club today for forming a human chain.

The incident took place when hundreds of students gathered in the area around 11:00am to form the human chain protesting the recent attacks on protesting students in Dhaka, our Chittagong correspondent reports. 

Before they could form the human chain, both police and BCL men reached the spot and dispersed them.

At least nine students were allegedly picked up by Chittagong Kotwali Police for interrogation, reports our local correspondent from the spot.

Jahidul Islam, inspector (investigation) Kotwali Police Station, said the students were picked up from the spot for security reasons."We don’t know for sure whether these demonstrators are actually students or not", the inspector added.

“Hence, to ensure their identity, we are taking these students with us", he said adding that this step was not taken to harass anyone.

• Courtesy: The Daily Star /Aug 07, 2018