MPS has raised policy rate again
Trying to tame inflation in vain.
Bangladesh Bank introduced Monetary Policy Statement (MPS) for January-June period. Continuation of Gradualist policy,small increase in interest rate at measured intervals so that employment is not affected much, translates into a twenty five basis points increase in policy rate. The MPS was introduced at a time when Islamic banks are still reeling from the shock of liquidity crisis stemmed from fraudulent activities. MPS aims to increase deposit growth at banks by removing the lending rate on consumer credit. In addition, the central bank aims to move towards unified exchange rate with a variation up to 2% by the end of June.
Both the govt and central bank tend to contain inflation at 5.30%.Despite slight improvement,inflation is still hovering around 8.75% as per the official statistics. By the end of June we will have a complete picture whether the MPS is working or not.
There are reports that central bank injected TK 560 billion to face the ongoing liquidity crisis. While the stolen/laundered money is in operation somewhere,this extra money coupled with money off the radar will definitely create pressure on price level. Increasing the lending rate and maintaining a variation of 3% between lending rate and deposit rate may not improve the situation while inflation rate is eight point something! Unofficially inflation is still in double digit figure. Except flour and potato,kitchen commodities show no sign of a downward trend.
Govt is optimistic that inflation may come down by June this year. However, very few pay heed former Russian President’s forecast that oil price may reach $150/barrel by June this year1. This may cause another bout of price level hike. Though presented as a joke ,we should not take the prediction lightly.
Latest MPS boasts Bangladesh had an impressive private sector credit growth(around 12%) after India in this region. Meanwhile, we witnessed how a group laundered fraudulently billions of Taka while IMF team’s visit to Bangladesh in November 2022. And much of the credit goes to pay back old loans. There is hardly any productive use of these credits.
Another thing I noticed is that central bank thinks export receipt reflects external demand growth for Bangladeshi items.It is oblivious of the fact that advanced economies' inflation is still high( In the UK, it is 10% and in the USA it has come down to 7%).Inflationary contribution to export receipt is completely ignored here.
Moving towards a unified exchange rate is a good one. But while most of the economies around the world have focused on increasing their gold reserve,we have gone to opposite direction.It is a record since world war II2. Ours one treaded on an opposite path: selling part of its gold reserve to increase the forex reserve. Despite an EU ban, even Switzerland procured Russian gold to raise its gold stock. Apart from swelling our US dollar stock, we should also raise our gold reserve. In case of another unprecedented fuel price hike or dollar crisis, a significant amount of gold reserve will insulate Taka from unexpected fall.
Cautious optimism displayed throughout the MPS is laudable. However, it is unclear how many of the goals central bank is going to attain. Refinance scheme for import-substitute product and private sector credit growth may backfire while fraudulent activities continue unabated. Growth forecast revision for major economies by multilateral institutions cast a shadow over recovery. This may also alter the price levels.
Notes And References
- "Putin's Aide Predicts War Between France And Germany,Elon Musk As US President In 2023", Outlook Web Desk,Outlook,December 28,2022.
For more read at
https://www.outlookindia.com/international/elon-musk-could-be-the-president-in-2023-predicts-russian-official-news-248791/amp
- "Here's Why So Many Central Banks Are Buying Gold",Mimansha Verma,Quartz,November 10,2022.
Fore more read at
https://www.weforum.org/agenda/2022/11/central-banks-gold-market-economy-global/
[update:This piece has been updated on January 25,2023 at 9:34 am Bangladesh Standard Time.Update includes notes and references.]
(14 janvier--- 20 janvier)
Cliquez pour voir/cacher
Ma Semaine Gastronomique
| Date |
Petit déjeuner |
Déjeuner |
Dîner |
Snacks,Sucreries,Boissons et Fritures |
| 14 |
Pain tchapati,Mélasse dur |
Riz,Purée de banane verte, Tête de Ruhi dans soupe aux haricots mungo,Ruhi
|
Riz,Purée de banane verte, Tête de Ruhi dans soupe aux haricots mungo,Ruhi
|
--- |
| 15 |
Paratha(fait par moi),Tête de Ruhi dans haricots mungo |
Riz,Soupe aux lentilles,Chou,Feuilles de gourde calebasse,Purée de pomme de tetre |
Riz,Tête de Ruhi dans soupe aux haricots mungo,Ruhi,Purée de pomme de terre
|
--- |
| 16 |
Mughlaï paratha(fait par moi),Tomate |
Riz,Banane verte,Ruhi
|
Paratha(fait par moi),banane verte,Ruhi
|
--- |
| 17 |
Paratha(fait par moi),Ruhi |
Riz,Soupe à tomate,Chou,Chou-fleur,Ruhi |
Paratha(fait par moi),Soupe à tomates,Chou,Chou-fleur
|
--- |
| 18 |
Paratha(fait par moi),Chou et chou-fleur,Tomate |
Riz,Soupe à lentille,Puntio barbe poisson,Aubergines et haricot avec poisson ruban sec
|
Pain tchapati(fait par moi),Aubergines et haricot avec poisson ruban sec
|
--- |
| 19 |
Pain tchapati,omelet |
Riz,Soupe à lentille,Épinard,Chou-fleur,Tposhey poisson |
Riz,Soupe à lentille,Épinard,Chou-fleur,Tposhey poisson |
Bombaï Toast(fait par moi) |
| 20 |
Pain tchapati, chou-fleur |
Riz,Soupe à lentille,Épinard,Chou-fleur,Tposhey poisson,Tomate |
Paratha(fait par moi),Chou,Soupe à lentilles
|
Lait doré(Safran des Indes,Lait,Gingembre), Jhal Mury(Riz gonflé et tchanatchur) |
No long queue at bank and post office
Reflects people's trust is on the edge of precipice.
Last week was a happening week for the financial sector.Court has ordered to seize the property of a chairman of a group as well as an Islami Insurance Company. The chairman is in jail for allegedly swallowing Tk 516 crores through abuse of power,treachery and money laundering. Tk 1.5 billion worth of house is situated at the rich neighborhood of Baridhara.This is the snapshot of the anarchy going on in the financial sector.He has even been accused of taking loans in the name of employees without their consent.
Meanwhile, liquidity crisis in the Islami Banks is acute.Last week ,central bank provided credit worth Tk 147.90 billion to Islami Bank,First Security Islami Bank,Union Bang,Social Islami Bank Limited and Global Islami Bank.Interest rate in this case is set at 8.75%.What is interesting banks lack bond or treasury bill to draw credit from the central bank.The special credit provided against promissory demand note,which pledges to pay back the credit at any cost. Liquidity crisis in the banks has driven inter-bank lending rate to 10%. Many banks failed to meet the cash reserve ratio due to the crisis.
This is an indication how clients lost their trust on banking system as govt took a nonchalance stance on earlier irregularities.
Despite slight improvement in inflationary situation,inflation is hovering around 8% as per official statistics. Amid this,Finance minister ditched the idea of a new pay-scale for inflation-battered public servants.Another pay-scale would definitely hike the price level.Meanwhile, central bank is pursuing a monetary policy aiming to tame the inflation.
In addition, govt also raised the price of electricity by 5% ahead of scheduled visit of IMF DMD.The move coupled with the idea of open market determinaton of oil price at the domestic market is a deliberate one to unhook the IMF credit package.
Post offices that sell savings certificates and offer attractive rates on deposits are deserted.Once they are packed like sardines.Same picture can be seen in banks. In the banks only the time deposits bear significant interest rate. But the interest rate is well below the inflation rate. And investment
of more than Tk 500,000 on savings certificate requires submission of tax return.Series of banking scam further erodes people's trust on banks.
Decrease in overall deposit amount last year sums up the whole story.Govt is stubborn to cap the lending rate at 9%.It is still unknown how the government will win back people's lost confidence on the banking system.
(07 janvier--- 13 janvier)
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Ma Semaine Gastronomique
| Date |
Petit déjeuner |
Déjeuner |
Dîner |
Snacks,Sucreries,Boissons et Fritures |
| 07 |
Pain tchapati,Ruhi |
Riz,Purée de pomme de terre et Haricot,Soupe aux lentilles,Ruhi
|
Pain tchapati(fait par moi),Purée de pomme de terre et Haricot,Soupe aux vigna mungo,Œuf poché |
Mughlaï Paratha(fait par moi) |
| 08 |
Pain tchapati,Tomate,Papaye,Œuf dur |
Riz,Ruhi,Soupe aux Haricot mungo,Chou-fleur,Tomate |
Riz,Ruhi,Soupe aux Haricot mungo,Chou-fleur,Tomate |
Patate douce |
| 09 |
Pain tchapati,Chou-fleur |
Riz,Soupe aux vigna mungo,Ruhi,Chou
|
Mughlaï Paratha(fait par moi) |
Pois chiches |
| 10 |
Pain tchapati(fait par moi),Pois chiches,Chou |
Riz,Ompok pabda,Feuilles de l'amarante rouge,Purée de haricot et pomme de terre |
Riz,Soupe aux vigna mungo,Ompok pabda,Purée de haricot et pomme de terre |
Pois chiches ,tomate |
| 11 |
Pain tchapati,Omelette |
Riz,Soupe aux lentilles,Ompok pabda,Chou-fleur, Purée de tomate
|
Riz,Ruhi,Chou-fleur |
Mughlaï Paratha(fait par moi) |
| 12 |
Pain tchapati,Chou-fleur |
Riz,Chou-fleur, Soupe aux lentilles,Purée de haricot et pomme de terre |
Riz,Soupe aux lentilles,Purée de haricot et pomme de terre,tomate |
Moghlaï paratha(fait par moi),tomate |
| 13 |
Pain tchapati,Chou |
Riz,Soupe aux lentilles,Purée de pomme de terre,Omelette,tomate
|
Mughlaï Paratha(fait par moi) |
Patate douce |
Metro shuttles back and forth over our head
Hoping this time transport's gray area is dead.
Demonstrating our own prototype and ability
Could bring new offer and relocate the facility.
Bangladesh inaugurated its Metro service with much fanfare.Though Metro
network has yet to be completed,only two stations (Agargaon and
Uttara(North)) are ready for commuters.Thousands of commuters thronged
the stations, causing technical glitch to ticket vending machines and
giving tough time to staff and guards who are unfamiliar with dealing
such a huge crowd.
Govt tried to project it as another development milestone, muffling the
crackdown on thousands of opposition activists including detention of
senior leaders.Yet many commuters felt it would be much better if
Farmgate station were made ready for use. Now distance between Agargaon
and Uttara only takes 10 minutes 10 seconds! Nobody could ever imagine
that from Mirpur or Agargaon or even from Farmgate Uttara is just 10
minutes away.
Many like me believe govt could easily open the Uttara-Motijheel route
before the new year. Great effort and commitment could make it possible.
But the service is deliberately scheduled to come into fruition by the
end of this year to bag more votes ahead of next election. One shrewd
politician once said about opening new road and bridge ahead of election
year:"Well you see people here have a tendency to forget things quickly.
They forget the good things very quickly.Let them feel the pain
travelling on a road filled with potholes. Few months before election
when they travel on new road they will tell themselves 'How bad the road
was!' "This is indeed a sadistic mindset. The quicker our politicians
and policymakers ditch it ,the better.
I think this is not the first Metro service in Dhaka.The Demo train
introduced back in 2014 on the route Dhaka-Gazipur and later on the
route Dhaka-Narayanganj could vie for country's first Metro service. The
shuttling service between Chattogram and Chattogram University could be
another contender. Demo train is marred with corruption and trains
remained out of service after the Chinese company had refused to provide
source code of the software. Later Bangladeshi engineers developed a
software and successfully installed it in one of the trains to resume
operation.Demo trains now run on several routes and doomed ones await a
new life thanks to the Bangladeshi software.
| Image Credit: My First Trip On Dhaka Metro,January 07,2023 |
On the inauguration day one JICA official said they are willing to share
the Metro software with Bangladesh.This is an apt example where you
demonstrated a capability and others offer something attractive and come
up with sophisticated options.
Our demo train software may not be the smart one or efficient one but it
demonstrates our capability and a cost-effective alternative to the
sophisticated ones.But our know-how and basic design could lead us to
design and develop the smartest one.What we need is to demonstrate the
capability. National Board of Revenue (NBR) demonstrated it when a
Vietnamese IT Company abandoned the project of online tax return
submission. NBR did the job at one-third of the cost and more than
100,000 people submitted tax return last year.By the same token if we
design and develop a vending machine or a management software on our own
,we have an alternative ready and may be used it at any local station to
improve it further.
Like software, if we could design and develop rail coach, Metro coach on
our own,oneday foreign companies that build rail coach could relocate
factory/invest here,acknowledging our capability.
Unfortunately, in Bangladesh we lack environment to foster local
innovation and ideas.For instance, if our campuses showcase locally
developed vending machine for coffee/snacks and allow locally
manufactured four-stroke three-wheelers to roll on then more local
initiatives become commercially viable.
What I found interesting is that a minister said Metro fare is high due
to the "technology" used here.All these years I learn technology is
about to make lives easier and less expensive.In a corruption-ridden
country we see the complete opposite. Metro fare is higher than
neighboring countries.Rumours are rife that it is deliberately pegged
high to give undue preferences to private transport business where
organized groups hold sway over.There is no doubt that when Metro comes
into operation there will be radical change to the private transport
business,where opaque capital finds safe sanctuary.Moreover, govt does
not get any revenue from this sector.
| Video Credit: My First Trip On Dhaka Metro,January 07,2023 |
The Metro for the first time opens door for the govt to collect tax
revenue from daily commuters.Like the mobile phone service, Metro will
provide generous revenue to govt coffer every year, allowing it to
finance projects by introducing supplementary duty on fare.The Metro
will stop a large part of the commuters' money from falling into wrong
hands.It will improve the political system by putting an end to the gray
area in the transport sector.Now we have a mechanism to document and
track commuters' money.The Metro will also work to decongest Dhaka,a
densely populated city.Dhaka dwellers will move towards outskirts of the
city where cost of living is much lower.
The Metro will also be a testing case for us as urban dwellers.If we
fail to make it neat and clean and safe then we will loose to our
neighbors who have already made it a clean and safe mode of
transportation.
The grizzly Holey Artisan Bakery attack that killed many Metro
consultants in Gulshan in 2016 left many questions unanswered.It is
still unclear why the consultants were deliberately targeted,pushing
Bangladesh-Japan ties on the brink of collapse. The Metro may not
improve commuting experience and transport management overnight, but it
will definitely do so in the future.In every aspect, it is indeed a game
changing project.
(31 décembre --- 06 janvier)
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Ma Semaine Gastronomique
| Date |
Petit déjeuner |
Déjeuner |
Dîner |
Snacks,Sucreries,Boissons et Fritures |
| 31 |
Pain tchapati,Pama croaker |
Riz,Purée de pomme de terre et tomate,Soupe aux vigna mungo,tomate
|
Pain tchapati(fait par moi),Purée de pomme de terre et tomate,Soupe aux vigna mungo,tomate
|
Tomate |
| 01 |
Pain tchapati,Tomate,Papaye,Œuf dur |
Riz,Ruhi avec haricot et pomme de terre,Chou |
Riz,Vigna mungo soupe,Tomate,Ruhi,Chou |
--- |
| 02 |
Pain tchapati,Pomme de terre et soupe aux poisson |
Riz,Soupe aux lentilles, Poisson chat avex pomme de terre,Chou-fleur, Tomate
|
Riz,Soupe aux lentilles, Poisson chat avex pomme de terre,Chou-fleur |
Pain tchapati,Chou |
| 03 |
Pain tchapati,Omelette |
Riz,Purée de pomme de terre,Poisson channa striata avec petit pois et pomme de terre |
Mogholaï Paratha(fait par moi),Purée de pomme de terre,Tomate |
--- |
| 04 |
Pain tchapati,Chou-fleur |
Riz,Soupe aux lentilles,Chou-fleur
|
Pain tchapati(fait par moi), Poisson Channa striata avec peti pois et pomme de terre |
--- |
| 05 |
Pain tchapati,Poisson Channa striata avec petit pois et pomme de terre |
Riz,Purée de pomme de terre,Poisson channa striata avec petit pois et pomme de terre,Chou,Purée de haricot et pomme de terre,Soupe aux lentilles |
Pain tchapati,Chou |
--- |
| 06 |
Pain tchapati,Chou |
Riz,Chou-fleur,Ruhi
|
Aloo pury(fait par moi), Purée de pomme de terre |
--- |
| | |
