Keep The Spending In Check

Keep govt spending low For stable economy and FDI flow.

By keeping govt spending in check, we can also check other crucial indicators like budget deficit, govt borrowing, liquidity to private sector, exchange rate and investment. Unwarranted govt spending is not only a waste of taxpayer's money, it also raises tax burden future taxpayers. Take for instance, Bus Rapid Transit (BRT) project,which was conceived to link the Dhaka-Gajipur through an exclusive bus lane, curtailing time and hastle commuters endure in this route. Govt last week scrapped the project, which is marred with corruption and serious design flaws, after spending nearly Tk 48 billion for more than a decade! Semi-complete structures of the project mock govt's lack of vision and management abilities.

Projects like BRT have become common phenomena nowadays. Meanwhile, revenue mobilization does not reach the desired pace. In the first four months of this fiscal year, National Board of Revenue (NBR) manages to collect Tk 1.27 trillion as revenue against a target of Tk 1.77 trillion, registering a shortfall of Tk 500 billion,as per data furnished by the NBR. Subdued economic activity and low revenue mobilization lead to more borrowing for the govt. According to "International Debt Report 2026" by the World Bank, Bangladesh's foreign debt reaches $113.48 billion in 2026. Bangladesh's foreign debt to GDP ratio rose to 26 percent. This borrowing is making dent into revenue resources as well as casting shadow over investment.

S&P Global Ratings earlier observed that govt revenue collection accounts for 8% -- 9% of GDP and interest payments represent 30% of govt revenue.

That means revenue collection is still inadequate and more than a quarter of that revenue goes for paying up interest payment of govt debt. And the external debt servicing is rising. In 2022-23, external debt servicing was $3 billion. In 2025-26, it rose to $4.5 billion.

With falling revenue, budget deficit is on the rise. The World Bank projects debt budget deficit will be 4.8% in 2027 and 4.9% in 2028. To finance the growing budget deficit, govt has to borrow more from the domestic and foreign sources. Since financial account is on deficit, govt is likely to finance budget deficit by borrowing from local banks and printing money.

Indications are already there. There are reports that the central bank seeks Tk 27 billion from govt to bail out 9 troubled Non Bank Financial Institutions (NBFIs), which witnessed unprecedented plundering in the past. Govt also revives many unviable public projects that the interim govt deemed doomed.

Point is the aura of austerity is conspicuously missing from the govt. Since financing the budget deficit is becoming difficult amid existing challenges, the most easy task is to cut govt spending. It will help keeping the budget deficit low.

A low budget deficit is very much likeable to foreign investors as it will not have an impact on investment return. Countries even passed law to keep budget deficit low. For instance, Indonesia introduced a law that requires govt keep budget deficit below 3% of GDP, taking lessons from the 1997 financial disaster. This fiscal prudence made Indonesia an attractive destination for foreign investment.

Moreover, govt's increasing borrowing from the domestic banks curtails credit to private sector, which registered a 4.75% growth in August this year. This further chokes economic activity as private investment suffers from lack of credit.

Irrational govt spending and lack of financing sources often put pressure on local currency. And too much volatility in the currency in short span of time not only discourages foreign investment but also accelerates the clandestine capital flight. For fall in the local currency reduces the wealth of the Rich at home, many prefer to launder money abroad to mitigate currency volatility. And wild fall of the local currency also deteriorates the inflation. So it has become a matter of paramount importance to keep govt spending in check.

Though it is difficult for political govt to keep govt spending low, it has to be done for the sake of economy in the long run. Macroeconomic stability and keeping inflation low should be at the heart of govt economic policies. In that light, cutting govt spending vies for top position of the govt priority list and such move touches lives and livelihoods of millions of people by insulating them from the detrimental effects of irrational govt spending.

La Semaine Dernière A Mes Yeux

(31 octobre --- 06 novembre)

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Ma Semaine Gastronomique

Date	Petit déjeuner	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures
31	Pain,Chou-fleur, Œuf	Riz, Tengra,Beans,Pomme d'éléphant, Chou-fleur	Riz,Lait,Banane	Sweets,Banane,Prune indienne
01	Pain,Beans et pomme de terre	Riz, Beans et pomme de terre,Pomme d'éléphant, Mouton,Soupe au vigna mungo	Riz,Mouton, Beans et pomme de terre,Soupe au vigna mungo	Sweets,Prune à cochon
02	Pain,Chou,Œuf	Riz,Ruhi,Gourde bouteille, Soupe au vigna mungo	Riz gonflé, Pianju	Sweets
03	Pain,Chou,Œuf	Riz, Chou,Koï,Ruhi,Soupe au vigna mungo	Riz gonflé, Pianju,Pois chiches	Lait,Goyave,Prune à cochon
04	Paratha,Chou,Œuf	Riz,Petit poisson, Koï,Gourde bouteille, Soupe au vigna mungo	Paratha,Soupe aux lentilles	Goyave
05	Pain,Chou-fleur, Œuf	Riz, Beans et Ruhi,Chou-fleur,Soupe aux lentilles	Riz, Beans et Ruhi,Chou-fleur,Soupe aux lentilles,Yard long beans	Goyave
06	Pain,Chou-fleur,Œuf	Riz,Koï,Purée de Pomme de terre, Purée de banane verte	Riz,Chou-fleur, Yard long beans	Prune indienne

Concerns With Exchange Rate Forecast

Taka loses value as per projection, Adequate policies may alter the situation.

In the World Economic Outlook, published in October 13,2026,the IMF projected a downgraded growth forecast for Bangladesh. GDP growth forecast is 3.2% for 2027 and 2.2% for 2028. If the prevailing situation at home and abroad changes dramatically ,then forecast on key indicators will also change. However, rising oil prices,swelling of Non Performing Loan (NPL), rising inflation and unemployment do not leave much room for optimism. Just as the growth is forecast to be downgraded in the outlook, so the exchange rate is forecast to be depreciated.

In November, the US dollar is being traded at Tk 134.70 in the Bangladeshi market. According to the IMF outlook, taka may be depreciated annually against the greenback by 0.56% in 2027, by 5.6% in 2028, by 12.12% in 2029, by 4.72% in 2030 and 1.93% in 2031. The largest annual depreciation is projected to take place in 2029. For 2027, there is nothing to worry about, but after that the fall in taka is projected to accelerate until 2030.

In the recent past , Bangladesh witnessed 40% depreciation in its currency, which was largely reflected by the pass-through effect in the inflation. In contrast to earlier situation, Bangladesh can easily absorb 5% or 10% depreciation of taka. But things become worrying if other indicators are taken into account with this projection of depreciation. Inflation is projected to be 10.9% in 2027. When you add the pass-through effect of even moderate depreciation to that inflation , the resulting pressure may become quite exorbitant for the households.

In addition, as govt debt service obligation rises and foreign commitment to finance budget deficits falls, reflected in financial account deficits, future depreciation complicates the matter by raising the debt servicing cost.

Moreover, cost of development project and investment is likely to rise due to depreciation. Though the projection of depreciation gives investors an indication where the currency is heading, unsteady exchange rate or too much fall taka in few years discourages investors to invest in Bangladesh. In that light, exchange rate volatility is likely to impact future investment that Bangladesh badly needs to offset the drop in foreign loan.

Luckily, there is continuous growth in forex reserve and remittances keep registering high records every month, insinuating no crisis in the supply of dollar. Yet escalation of tension in the Middle East can make a dent in the inflow of remittances as well as increase fuel price that will require additional dollar than usual to pay off the high fuel bill, putting further pressure on taka.

Hopefully, things will improve in future and projections will look better. Projections change with the change in situation in the ground. However, projections made are based on govt spending plan, money supply growth, financing reality, NPL stock, inflation, investment scenario, import, export and other data available at that moment.

Take govt spending for instance, govt programs require huge spending years down the line. The pay hike and bank support initiative lend credit to such spending possibility. Without clear financing initiatives, such spending tends to worsen inflation and exchange rate is the obvious victim. Now recently govt has scrapped some development projects and postponed ECNEC meeting that gives final nod to such projects. If govt continues and sticks to austerity measures, then it will manage to curb spending and future projections on key indicators including the exchange rate will improve dramatically.

Steady exchange rate for a prolonged period of time gives a good indication of good economic management and earns investors' trust. Too much fall in local currency in short period of time raises cost for implementing projects both for the public and private sectors. Depreciation, when moderate, is good for economy as it increases incentives for exporters and remitters to bring the foreign currency at home. However, as our debt servicing is increasing and import as percentage of GDP is larger than export, volatility in exchange rate raises debt servicing cost and import spending. So clearly there is a trade-off associated with depreciation. So policymakers have to decide what is pressing concern now and in the future. Based on that concern, course-corrective measures will be chalked out. And adequate policy measures will be reflected in future projections.

La Semaine Dernière A Mes Yeux

(24 octobre --- 30 octobre)

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Ma Semaine Gastronomique

Date	Petit déjeuner	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures
24	Pain,Papaye-Soupe au vigna mungo	Riz,Koi poisson,Papaye-Soupe au vigna mungo	Riz,Yaourt,Banane, Lait	---
25	Pain,Banane, Œuf	Riz, Koi poisson, Radis-Chou-fleur	Pitha	Prune à cochon
26	Pain,Chou-fleur,Œuf	Riz,Yard long beans,Pois blancs avec tête de chèvre	Pain,Pois blancs avec tête de chèvre	Prune à cochon
27	Pain,Pois blancs avec tête de chèvre	Riz, Pois blancs avec tête de chèvre, Radis-Brinjal	Fried chicken, Chicken patties,Pianju,Firni	Prune à cochon,Goyave
28	Pain,Pois blancs avec tête de chèvre	Riz,Koi poisson,Taro,Radis-Brinjal	Riz,Koi poisson,Taro	Goyave
29	Pain,Chou-fleur, Œuf	Riz, Pois blancs avec tête de chèvre, Radis,Taro	Riz,Poulet,Taro,Radis	Prune indien,Goyave
30	Pain,Poulet,Œuf	Riz,Poulet,Soupe aux lentilles, Épinard d'eau	Riz,Poulet,Soupe aux lentilles, Radis		Pianju,Puri

Creating Another Draconian Entity?

Empowering BCC without vital reform, A draconian entity is in making without uniform.

Bangladesh Competition Commission (BCC) presses hard the govt to make amendment to the Competition Commission Act 2012 that will allow it to break into offices,servers of the companies not willing to share information. If the new amendment makes its way, the BCC will be able to search companies, seize documents and digital device of the companies [accused for] market malpractices and [being] noncooperative to BCC demands.

BCC remains inactive for quite some time while imperfections in various markets conspicuously observed in recent times. So far it has failed to implement the act that clearly spelt out its role in case of clear violation in creating a congenial atmosphere for a competitive market. This matter has been discussed by me at length in the piece titled "Wake Up BCC", published here on September 15,2026(see https://hoquestake.blogspot.com/2026/09/wake-up-bcc.html?m=1). Consumers were appalled to notice inaction from BCC's part when packed pilaf rice market went volatile, daily market witnessed price hike, less competition observed in the MFS market and energy division introduced a biased private sector fuel import and distribution policy. Existing competition law is enough to make corrective intervention and to hold a public audition. Yet that thing did not happen.

Dissemination of the news of its intervention and transcript/ live broadcast of its auditioning will send a convincing signal to the market and consumer. Instead it is reported that BCC seeks amendment to the law to break into a company and seize its documents.

This step is objectionable for couple of reasons. First, BCC must have capability and means to retrieve information from elsewhere when a company decides not to cooperate. BCC should have clear framework of agreements with other organizations like NBR, customs, utility companies, joint register of stock, market research firms,law firms and universities to get information on certain market and stakeholders of that market. If this happens, noncooperation of alleged company will not be a big deal.

Second, BCC is asking for role similar to NBR officials who can look into the matter of tax evasion by a company and get hold of its documents for further scrutiny. Though objectives of NBR and BCC are different, their roles are similar. It is needless to say that NBR data is more than enough to get things done for the BCC. Then why does [govt] allow BCC to perform similar role? There is a global trend that homogeneous organizations should function together. In this backdrop, Bangladesh merged Bangladesh Investment Development Authority (BIDA) and Bangladesh Export Processing Zone Authority (BEZA) into Invest Bangladesh to facilitate foreign direct investment. Since market share and market dominance reflected in tax return, VAT return and custom duties, it will be redundant and waste of taxpayers' money to assign similar NBR roles to BCC. What is needed is greater cooperation and coordination between two organizations and BCC's access to NBR data in times of need.

Third, BCC is mostly staffed by govt officials of various educational background. It appears that staffs like them may make BCC a police organization. And proposed amendment may turn it into a draconian organization as they swoop into a company's servers,documents in whimsical pretext, violating the company's business secrecy. For a company, its business secrets are vital to protect it from other competitors. If its vital [business] detail,monthly sales,forecast,technology used etc fall into wrong hands, then its business may incur serious losses. Interestingly, income tax act protects a taxpayer/entity by not allowing NBR or any other person disclosing his/its tax details into public domain unless the taxpayer is a public figure or the company belongs to a public figure. Income tax act also proposes punishment if there is any breach to the law. In contrast, the Competition Commission Act 2012 does not offer any protection to a company to safeguard its business secrets.

Fourth, integrity and professionalism of BCC staffs are important. Since we live in a corrupt environment, integrity and competency of the govt officials are always questioned. BCC will be well managed and headed by barristers or former judges who are well versed in company laws and dealt extensively with company disputes, chartered accountants, market researchers, investment bankers, economists and former NBR officials. It is interesting that govt is splitting the NBR into two departments --- a policy department led by NBR experts and a management department led by govt officials. It is being done so that policy making and implementation will be done by two distinct entities, reducing harassment of the taxpayers. This is not the case with the BCC, which is largely managed by govt officials and there is a lack of specialized workforce. Prevailing situation increases the likelihood of harassment of the companies if BCC manages to implement the proposed amendment to the Competition Commission Act.

The existing competition act has provided enough ammunitions to BCC to go after the market malpractitioners. Yet it remained dead silent in the time of crisis. It indicates BCC is not up to the task and it has yet to prove its mettle. In this backdrop, the proposed amendment will make BCC a draconian organization and an instrument of harassment. What is needed is greater coordination between BCC and other organizations. Laws and amendments are needed first to decide who will be eligible to manage and head BCC, ensure privacy and secrecy of the companies, split BCC into two distinct bodies like the NBR and hold accountable BCC officials in case of failure to comply with the law. Before addressing these issues, empowering BCC with the proposed amendment will hurt both the companies and consumers alike.

La Semaine Dernière A Mes Yeux

(17 octobre --- 23 octobre)

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Ma Semaine Gastronomique

Date	Petit déjeuner	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures
17	Pain,Œuf	Riz,Épinard d'eau,Poulet,Citrouille	Pain,Poulet	Goyave,Prune à cochon,Banane, Lait,Sweets
18	Pain,Poulet,Œuf	Riz, Taro,Poulet,Soupe aux lentilles	Pitha	Pomme,Prune à cochon, Banane
19	Pain,Gourde bouteille,Œuf	Riz,Poulet,Œuf	Pitha,Riz,Soupe au poulet	Pomme,Prune à cochon, Banane
20	Pain,Œuf	Riz, Kajari poisson,Meni poisson,Soupe au vigna mungo	Pitha	Pomme,Prune à cochon,Banane
21	Pain,Papaye-Lentilles,Œuf	Riz,Papaye-Lentilles,Kajari poisson	Puri	Goyave,Lait, Banane
22	Pain,Papaye-Lentilles,Œuf	Riz, Yard long beans,Épinard malabar,Soupe aux lentilles	Pois chiches,Riz gonflé	Goyave,Yaourt sucré
23	Pain,Yard long beans,Œuf	Riz,Purée de cumin noir,Feuilles de citrouille, Yard long beans,Soupe aux lentilles	Pois chiches, Riz gonflé, Pianju	Goyave

A Recipe To Keep Economy On Steroids

A recipe to keep economy on steroids, Policies contradict as inflation deteriorates.

Bangladesh Bank has decided to publish Monetary Policy Statement (MPS) quarterly. It is indeed a good move. It will allow govt to correct monetary policy measures quickly instead of half yearly. It will also help to monitor the impact of its monetary policies quarterly, facilitating corrective decisions at the earliest possible time.

The latest MPS (Oct-Dec 2027) keeps the policy rate same at 9.50%. It is due to inflation easing at 8.26% in August. However, inflation soared to 8.34% in September. And the fuel price hike and pay hike in general cause pressure on inflation. MPS acknowledges that the recent pay hike, which will annually cost govt additional $8.5 billion, is likely to worsen inflation. In its latest world economic outlook, the IMF projects that inflation in Bangladesh will hover around 10.9% in 2027. This provides strong context for increasing the policy rate and pursuing a tight monetary policy in the Jan-Mar 2027 period.

The MPS reveals that in the first two months of FY 27, there was deficit in overall balance due to deficit in financial account. This highlights that govt did not manage enough foreign credit and aid to finance budget deficit. If this trend continues, then govt has to borrow more from the banking sector to finance budget deficit. This will further curtail credit to private sector, which registered 4.75% growth in August.

Weak revenue generation also makes borrowing from the banks inevitable. Banking sector on the other hand is overwhelmed by swelling of Non Performing Loans(NPLs), which is more than 34% of total outstanding loan.

Meanwhile, the central bank governor Mostaqur Rahman said the govt would require Tk 60000 crore for at least 5 years(see "Banking sector recovery requires Tk 60000 crore for 5-8 years: Governor", The Business Standard, October 10,2026 ,https://www.tbsnews.net/economy/banking/banking-sector-recovery-requires-tk60000cr-annually-5-8-years-governor-1568051). The govt said the money would come from the budget. For a moment, think a bunch of thugs plundered Tk 100 from your banking system and got away with the money. The govt could not recover the money but inject Tk 100 more into the banking system. This money either would come from the taxpayers or from govt's money printing machine. This literally means taxpayers are paying for the crime of bank plunderers. If money stems from printing the required sum, then this means more money is in circulation in the system and govt is literally paying for the crime. In this situation, inflation will deteriorate, further complicating the economic recovery.

If you look at the total figure govt intends to inject into the banking system, you will be stunned as the figure stands at Tk 3 trillion ($ 24.39 billion). If govt is really serious about this, I do not think it will solely depend on taxpayers' money. Why? The revenue mobilization is weak and downgraded growth forecast and subdued economic activity do not provide room for optimism that govt will generate enough revenue to meet its expenses. This means support to the banks will partly come from the taxpayers' money and partly come from printing money. Money printing will account for a large part of this banking support. This means Bangladesh's economy will largely be on steroids! And both the taxpayers and govt are likely to pay for the crimes of bank looters if govt really goes ahead with its banking support plan.

This line of thinking also lays bare contradictory policies govt is pursuing. The pay hike will require additional $8.5 billion every year. The bank support will require further $4.8 billion annually. Together the two will make the additional cost $13.3 billion per year. Even if the one-third ($4.3 billion)of this extra cost comes from the taxpayers' money, the rest will either come from printing money or from foreign borrowing. Since commitment of foreign assistance is drying up, there is greater likelihood of money printing to finance the rest ($8.86 billion) of the additional cost.

This approach is clearly monetary expansion while the central bank is pursuing a contractionary monetary policy. This is where policy credibility of the central bank is called into question. Central bank's monetary policy focuses on fighting inflation, tilting towards tight monetary policy. Meanwhile, the governor hints at an annual bank support program, lacking clear financing policy and indicating money printing measures. What signal does the market get? Govt should focus on containing inflation and discard the bank support program. Bailing out some others' mistakes/ crimes is not job of taxpayers and govt. Inflation penalizes people and govt, raises borrowing cost and subdues the economy. It is not the interest rate that is to blame. So inflation-fuelling measures should be stopped and efforts should be doubled to contain the inflation.