Recent Monetary Policy Statement of Bangladesh Bank (July 2009) An Analytical Commentary

Monetary policy is the process by which the central bank of a country controls the supply of money, the availability of money, and the cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy. Fiscal policy induced demand management approach as propagated by Keynes, which was popular in the postGreat Depression period, later made way to monetary policy led stabilisation approach in the period of high inflation of 1970s. While traditional fiscal policy solutions were useful in confronting unemployment by increasing spending and cutting taxes, counteracting inflation entailed reducing spending or raising taxes. The growing importance of monetary policy and the diminishing role played by fiscal policy in economic stabilisation efforts may reflect both political and economic realities. Monetary and fiscal policies differ in the speed with which each takes effect as the time lags are variable. Monetary policy is flexible (rates can be changed each month) and emergency rate changes can be made, whereas changes in taxation take longer to organise and implement. Also, considerable time may pass between the decision to adopt a government spending programme and its implementation. During the period of Golden Growth covering late 1980s till the recent past, in the mix of macroeconomic policies, monetary policy continued to reserve a place of prominence. However, in the backdrop of global financial meltdown and subsequent confusion in macroeconomic theories, a new quest has emerged in redefining the role and instruments of macroeconomic policy in fostering economic development. It may be recalled that the main objectives of a classic monetary policy are to maintain a stable and low rate of inflation, high capacity utilisation to sustain a low rate of unemployment, and a high trend of economic growth and effective exchange rate management to maintain stability between exporters and consumers interest. Explicit articulation of monetary policy at the behest of an independent central bank ensures transparency in the economic policy making and has become popular in managing expectations of the major stakeholders. In Bangladesh, Monetary Policy Statement (MPS) was first issued by the Bangladesh Bank in January 2006. The intention was to present information on Bangladesh Bank's outlook on real sector and monetary developments over the immediate future and the monetary policy stance it will pursue, based on its assessment of the developments over the preceding period. In continuation to this tradition, on 19 July 2009, the eighth issue of half yearly Monetary Policy Statement was announced for JulyDecember, FY200910 period. The present analytical commentary sets off by providing a brief overview of evolution of monetary policy stances of the Bangladesh Bank as espoused in its recent policy statements. This has been followed by review of the macroeconomic objectives along with a catalogue of the monetary policy instruments deployed in Bangladesh. The paper then subsequently examines behaviour of the monetary aggregates in view of their targets and achievement. Excess liquidity and agriculture credit, the two major issues that should influence the monetary policy this year, has been discussed in the following section. A selected set of critical issues, but missing in the current MPS has been discussed at the penultimate section. The paper rounds up with a few concluding remarks on implementation of the MPS for the first half of the current fiscal year (FY200910).monetary policy, Bangladesh, central bank, Foreign Exchange

DELIVERING ON BUDGET FY2009â€Â10 : A SET OF IMPLEMENTATION ISSUES

The newly elected government proposed its first budget on 11 June 2009 with a view to support a trajectory of moderate growth, reduced poverty through employment generation and expansion of safety nets, low price level and tackle the impact of the global financial crisis. The Centre for Policy Dialogue (CPD) in its budget reaction pointed out that addressing these objectives will entail designing of a set of appropriate budgetary measures, but will depend much more on the efficacy of their delivery (CPD 2009a). Furthermore, such delivery will need a coherent, coordinated, consistent and committed participation of the total government machinery and all other development actors and stakeholders. It was encouraging to see that the Finance Minister publicly agreed with the analysts that implementation of the budget would be the most important challenge. In his postbudget press briefing on 12 June 2009, the Finance Minister stated : While drawing up the budget, we knew its execution was going to pose a huge challenge (The Daily Star 2009). In this context the present study seeks to facilitate an early kickoff of budget implementation in FY200910 and to complement the continuing monitoring process by the government. The study is based on analysis of secondary data, government policy documents and media reports. Interviews with the knowledgeable people were also carried out to generate insights. Along with selective econometric exercise, academic literature was reviewed to strengthen the analysis. Promoting economic growth is the primary objective of the budget implementation; conversely growth itself is a key determinant of successful implementation of budget. In this context, the paper sets off by exploring the growth prospect for FY200910 and its linkages with implementation of the budget. Resource mobilisation is one of the two pillars of a budgetary framework; subsequent two sections, thus, highlight the issues related to revenue mobilisation from domestic source and foreign assistance inflow. On the expenditure side, a select set of expenditure issues relating to the revenue expenditures have been examined, besides reviewing the challenges of annual development plan (ADP) delivery. As mainstreaming of the publicprivate partnership (PPP) has been one of the distinguishing features of the budget, a separate section has been devoted to the theme. The penultimate section of the paper brings the resource and expenditure sides together and discusses the issues relating to budget deficit and its financing. The paper then rounds up with a set of possible scenarios along with a few concluding observations.Bangladesh, Economic Outlook, Budget

Flash Flood Risk and Resilience Analysis of Tanguar Haor Adjacent Areas

Bangladesh faces various types of natural hazards from its birth due to geographical location and physiographic sitting. Flood is the most common event among them. North-eastern part of Bangladesh faces flash flood almost every year with large scale of damage. Tanguar Haor, a famous ramsar site of Bangladesh located in Sunamganj district. This wetland adjacent areas are the most vulnerable zone in terms of flash flood hazard. About more than 80% people are the direct victim of this hazard. This study tries to assess the risk and resilience status of flash flood using risk and resilience assessment matrix. To accomplish this research both primary and secondary data have used. Through this work the comparative view between risk and resilience status has tried to represent. That shows the actual penetration of the depth of risk reduction policy making to improve the condition and minimize the losses of flash flood in the study area

Bangladesh's Export Opportunities in the Indian Market : Addressing Barriers and Strategies for Future

India, Bangladesh, trade, economic integration, revealed comparative advantages, tariff barriers

COVID-19 and Bangladesh Macroeconomic Impact and Policy Choices

Bangladesh, like most of the countries in the world, had to restrict mobility and economic activities to tackle the spread of the COVID-19 virus. Indeed, the pandemic has been exerting pressure on the economy through both global and domestic shocks leading to a detrimental impact on major macroeconomic correlates of the country. The present study urges that Bangladesh will need to pursue a countercyclical fiscal policy stance in the face of deceleration in aggregate demand. The study further maintains that greater fiscal resources should be directed towards those people, households and enterprises having a higher propensity to consume and invest. From this perspective, the study strongly advocates for direct cash transfers, food support, and enhanced public expenditures in health and education rather than a general increase in public expenditures and subsidised credit flow. Using Computable General Equilibrium (CGE) model, the study presents ex-ante economic-wide impact analyses of two expansionary fiscal policy interventions. Doubling government transfers to lowincome household categories is expected to have a greater impact on the real consumption of poorer households. In contrast, a 50 per cent increase in government expenditure for health and education will have a greater positive impact on real GDP and export. In view of the trends of the last decade, the study concludes that it is not the lack of resources, rather the limited capacity of the government agencies which poses the major challenge in pursuing an expansionary fiscal policy in the country

Mental Health Condition among University Students of Bangladesh during the Critical COVID-19 Period

Bangladesh’s education sector has been in a state of flux since COVID-19. During the pandemic, all university campuses were closed. There was a mental health issue among the students. This study aims to examine the mental health condition and the determinants that contribute to adverse mental health conditions among university students of Bangladesh. A survey was performed online among university students in Bangladesh, in mid-June 2020 when averaging 3345 affected cases of the population daily. The convenience sampling technique was used and the survey gathered data from 365 university students. The relationship between general information and Depression, Anxiety, and Stress Scale 21 (DASS-21) subscales of university students was determined. The questionnaire was administered to respondents during the pandemic, which ensured fast replies. Linear regression models were used for statistical analysis. University students indicated normal levels of depression (30.41%), anxiety (43.29%), and stress (47.40%). However, a disproportionate number of extremely depressed, anxious, and stressed university students suggested a mental health status of concern. There were significant connections between the individual’s opinion of social satisfaction, mental health concerns, and the present location’s safety with an undesirable mental health condition. Female students were shown to be much more anxious and stressed than male students. Capital Dhaka city students were more depressed and anxious than students outside of Dhaka. Financial and psychological support for students may help mitigate the psychological impact. Authorities should make effective efforts to reduce mental health problems among these students. This research may aid organizations, health care providers, and social workers in their attempts to prepare for and respond to pandemics

The Global Financial Crisis and Developing Countries: Phase 2 Synthesis

When the global financial crisis broke out in earnest in September 2008, it quickly became clear that developing countries would also be affected, but that the impacts would vary markedly. The Overseas Development Institute (ODI) coordinated a multi-country study over January-March 2009 involving developing country teams in 10 countries. This showed that, while the transmission mechanisms were similar in each (trade, private capital flows, remittances, aid), the effects varied by country, and much was not yet visible. As such, further country-specific monitoring was required. Most findings suggested that, as a result of time lags, the worst effects were yet to come. This synthesis of the effects of the global financial crisis on developing countries updates the description of the economic and social situation during the course of the crisis in 11 countries

Recent Monetary Policy Statement of Bangladesh Bank (July 2009) : An Analytical Commentary

Monetary policy is the process by which the central bank of a country controls the supply of money, the availability of money, and the cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy. Fiscal policy induced “demand management†approach as propagated by Keynes, which was popular in the post-Great Depression period, later made way to monetary policy led “stabilisation†approach in the period of high inflation of 1970s. While traditional fiscal policy solutions were useful in confronting unemployment by increasing spending and cutting taxes, counter-acting inflation entailed reducing spending or raising taxes. The growing importance of monetary policy and the diminishing role played by fiscal policy in economic stabilisation efforts may reflect both political and economic realities. Monetary and fiscal policies differ in the speed with which each takes effect as the time lags are variable. Monetary policy is flexible (rates can be changed each month) and emergency rate changes can be made, whereas changes in taxation take longer to organize and implement. Also, considerable time may pass between the decision to adopt a government spending programme and its implementation.monetary policy, Bangladesh

An Analysis of the national Budget : Allocation for the Ultra Poor

Till date,conceptualisation of poverty in Bangladesh’s policy making is limited to income/consumption poverty where a rise or fall of income/consumption above or below a pre-defined poverty line determines changes in poverty. To identify the budgetary and fiscal measures which can be redesigned in a way that can significantly reduce poverty and ensure economic and political empowerment of the poor,it is important to assess allocations and measures taken so far in the national budgets for the development of the ultrapoor.Bangladesh, National Budget, poverty

Delivering On Budget FY2009-10 : A Set of Implementation Issues

The newly elected government proposed its first budget on 11 June 2009 with a view to support a trajectory of moderate growth, reduced poverty through employment generation and expansion of safety nets, low price level and to tackle the impact of the global financial crisis. The Centre for Policy Dialogue (CPD) in its budget reaction pointed out that addressing these objectives will entail designing of a set of appropriate budgetary measures, but will depend much more on the efficacy of their delivery.1 Furthermore, such delivery will need a coherent, coordinated, consistent and committed participation of the total government machinery and all other development actors and stakeholders. It was encouraging to see that the Finance Minister publicly agreed with the analysts that implementation of the budget would be the most important challenge. In his post-budget press briefing on 12 June 2009, the Finance Minister stated : “While drawing up the budget, we knew its execution was going to pose a huge challengeâ€.Bangladesh, Budget