La Semaine Dernière A Mes Yeux

( 29 mars --- 4 avril)

Cliquez pour voir/cacher

Ma Semaine Gastronomique

Date	Petit déjeuner/Début de jeûne	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures/Fin de jeûne
29	Riz,Poulet,Courge amère	---	Pastèque,Jilebi,Lait	Riz,Papaye-Pomme de terre,Poulet,Courge amère
30	Riz,Papaye-Pomme de terre,Œuf	---	Pastèque,Patate douce	Riz,Pangash,Gombo
31	Riz,Pangash,Gombo	Nouilles	Riz,Pangash,Gombo	---
01	Riz,Pangash,Œuf	Riz,Poulet,Papaye-Citrouilles	Riz,Poulet,Papaye-Ctrouilles	Beurre de cacahouète (fait à la maison),Pastèque
02	Riz,Pomme de terre,Poulet	Riz,Pangash,Brinjal avec ruban sec	Riz,Pangash,Brinjal avec ruban sec	Beurre de cacahouète(fait à la maison), Biscuit, Pastèque
03	Riz,Brinjal avec sec ruban,Œuf	Riz,Pangash,Papaye-Citrouilles	Riz,Papaye-Ctrouilles	---
04	Riz,Œuf,Papaye-Citrouilles	Riz,Pangash,Brinjal-Gombo avec crevette sec	Riz,Pangash,Brinjal-Gombo avec crevette sec	Ptate douce,Pastèque

Are We Heading Towards Stability?

Govt fails to meet revenue target, This will make stability hard to get.

Remittances inflow set a new record. Around $3 billion worth of remittances came from abroad in March, still sparing 3 more days to officially end the month. However, Taka against the USD shows a depreciating trend. Three weeks ago when I checked the official website of the Bangladesh Bank, USD fetched Tk 121. Now it is being sold at Tk 122 and in the unofficial market it is being traded at Tk 123. In December last year, official rate was Tk 120 ,but unofficial market rate reached Tk 128, reflecting public and private settlement of annual international obligations.

Forex reserve is still hovering at $20 billion for the last three months. Despite record growth in remittances inflow, Taka continues to show a depreciating trend. Earlier Moody's projected that inflation would remain elevated (above 9.5%) across the 2025. Moody's had already downgraded Bangladesh's credit rating from B1 to B2 and set the outlook negative. While Fitch and Standard & Poor's keep the credit outlook stable, they may downgrade us further if things do not improve in coming months and Bangladesh fails to avail the next IMF credit installment. Govt in the recent months provided cash support to the ailing banks. But recent news reports indicate that several problem banks are failing to meet the provision requirement set by the central bank. It means that regulatory authority is preparing for the eventuality of shutting down few problem banks ,which will be good for the economy in the long run.

Revenue data furnished by the NBR shows govt is failing to meet the monthly revenue target. The IMF set the revised target of Tk 4.55 trillion to avail the next package. Despite the growth in year to year monthly revenue, the NBR repeatedly fails to meet the target. The January target was Tk 2.47 trillion, but there was a shortfall of Tk 520 billion. The February target was Tk 2.8 trillion,but there was a shortfall of Tk 590 billion. The shortfall keeps widening, making it a mammoth task to meet revenue targets for the rest of the fiscal year.

This deficit in revenue collection will further cut govt's ability to spend. And if the revenue target is not met the IMF may shut the door,followed by other multilateral agencies. This in turn may put further strain on the economy, leading to further depreciation of Taka. Stable currency and political stability are the two crucial things for drawing foreign investment. Meanwhile, poor credit rating will make tougher collateral requirements when country's private sector may plan to borrow from abroad.

Summing up all the things came up here in this piece does not lead us to a stable situation in the short run. Elevated inflation, depreciation pressure , poor credit rating, failure to meet the revenue target and poor law & order condition may cause further erosion of trust among the investors. I think govt should try at its best to get the next IMF credit. For doing so, it has to make a giant leap forward in terms of revenue collection.

La Semaine Dernière A Mes Yeux

( 22 mars --- 28 mars)

Cliquez pour voir/cacher

Ma Semaine Gastronomique

Date	Petit déjeuner/Début de jeûne	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures/Fin de jeûne
22	Riz,Tchop de pomme de terre,papaye	---	Pastèque,Melon sucré	Riz,Gombo,Petit poisson
23	Riz,Ruhi,Gombo	---	Pastèque,Lait,Patate douce	Riz,Petit poisson,Courge amère
24	Riz,Poulet	---	Pastèque,Jilebi	Riz,Épinard,Pabda avec moutarde
25	Riz,Pabda avec moutarde	---	Pastèque,Lait	Riz,Épinard,Shoal(Snakehead murrel)
26	Riz,Pomme de terre bhaji,Shoal(Snakehead murrel)	---	Pastèque,Nouilles	Riz,Shoal(Snakehead murrel),Pomme de terre bhaji
27	Riz,Gombo,Pomme de terre	---	Pastèque	Riz,Gombo,pabda
28	Riz,Pabda,Gombo	---	Pastèque,Faluda	Riz,Œuf,Pabda,Gombo,Courge amère

Subdued Festival Economy

Festivals face few challenges, They shape sales changes.

In short span of time, Bangladeshis are going to celebrate two major festivals. At the start of April, they are going to celebrate Eid-ul-Fitr, festival marking the end of the fasting month. And two weeks later, Bengali new year will also be celebrated with jubilation. But the two back-to-back festivals have cast shadow over sales of goods. Festival sales already took a hit due to poor condition of law and order. The Police in its own assessment found that criminal activities increased by around 7% since the fall of the former govt in August last year. Rampant mugging incidents and extortion dampen the business mood and dishearten many businessmen.

Usually, one-third of the total sales of a typical store here takes place during this fasting month to celebrate Eid. We still have one week to go. Yet the general atmosphere in the market hints a dull shopping season, causing further woes among businessmen. Previous year, mysterious fire and govt raid were the causes of concern. Now collapse of law & order appears to be the main concern.

Platform of the retail stores, Bangladesh Dokan Malik Samiti, furnishes a sales figure after Eid every year. According to them, there are 2.6 million shops (groceries, tailoring shop, boutique shop etc) across Bangladesh. Last year , a total of Tk 2 trillion worth of sales occurred in these shops during Eid. I take the estimation with a dollop of salt. I think it is exaggerated. Undocumented transactions are included here. In addition, not all the shops have business identification number (BIN), provided by the NBR to track VAT record.

Even that exaggerated number may become further lower this year. Across the Buriganga river, a little zone of garments factories sprang up in the last two decades to cater the need of local consumers during festivals like Eid.Squeezed private sector credit even cast shadow over their businesses. Recent MPS admits that private sector credit growth shrinked to 7.3% against a projection of 9.8%. However, the World Bank and other private banks mobilized money to the SME sector. I do not know how much of it reached the SMEs.

New year festival economy is also likely to take a hit due to fall in demand amid high inflation. Eid spending further squeezed the pockets of consumers ahead of new year. Many urban dwellers will spend the vacation in the countryside due to a long Eid vacation and as the the new year celebration is mostly an urban event,a dull selling season is apprehended. The press reports indicate that around Tk 200 billion worth of sales takes place during the Bengali new year's celebration. That figure may become much lower this year.

In brief, two major festivals face multiple challenges in terms of sales this year: first, high inflation squeezes the pockets of consumers;second, occurrence of the two events in short span of time may lower the overall sales of the new year; third, poor law & oder condition dampens the mood; fourth, subdued private credit flow hampers business as usual.

Govt may easily address at least two issues to make easy doing business in this festival season. Tightening the law and order situation with beefing up the security at shopping centers. Ensuring access to credit for the businessmen who require money to meet the growing demand of the consumers.

La Semaine Dernière A Mes Yeux

( 15 mars --- 21 mars)

Cliquez pour voir/cacher

Ma Semaine Gastronomique

Date	Petit déjeuner/Début de jeûne	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures/Fin de jeûne
15	Riz,Luffa avec papaye,Courge amère	---	Pastèque,Poire	Khichuri,Ruhi,Œuf
16	Khichuri,Ruhi	---	Pastèque,Poire,Patate douce	Khichuri,Poulet
17	Riz,Poulet	---	Poire,Melon sucré,Rice pudding	Riz,Brinjal,Œuf
18	Riz,Brinjal,Œuf,Soupe aux lentilles	---	Pastèque,Faluda(depuis marché)	Riz,Épinard d'eau,Pabda avec moutarde
19	Riz,Pabda avec moutarde,Faluda(depuis marché)	---	---	Riz,Tengra,Courge amère,Citrouilles,
20	Riz,Courge amère,Tengra	---	Pastèque	Riz,Petit poisson,Courge amère,Papaye
21	Riz,Petit poisson,Papaye,Œuf	---	Pastèque,Melon sucré,Lait	Riz,Ruhi,Pomme de terrre tchop

Trapped In Contradiction

Contradiction in stated policy May make the things messy.

Some recent decisions divulged the anomalies in pursuing the ongoing economic policy. Funding crisis has become acute as new commitment for budget support has dried up. So govt indulges in monetary fiscal expansion instead of pursuing the tightening policy.

Funding crisis led the govt to slash Tk 490 billion from the development budget. It is in line with the fiscal tightening policy, which complements the contractionary monetary policy.

But the Bangladesh Bank is unable to stay strict in its stated policy. In the latest move, it decided to print and inject Tk 20 billion into two trouble-ridden banks. The money will ease the liquidity crisis of the banks during this festival month of Ramzan when the clients need cash to spend. Earlier in November last year , it had printed and provided Tk 220 billion to some troubled banks. Later it also injected another Tk 125 billion into six more banks on the eve of new year. In total, this govt printed and injected Tk 345 billion into banking system since it took power.

Another news also divulges that govt is also mulling to "revisit" the corporate tax. The decision may further relax the corporate tax amid a revenue shortfall. This is happening when revenue deficit is widening. Instead of focusing more on direct tax revenue, the stand is similar to fiscal expansion. The IMF's revised revenue target for current fiscal year is Tk 4.55 trillion, which is unlikely to be met during the rest of the fiscal year.

Meanwhile, the National Board of Revenue (NBR) is determined to separate the policy department from the implementation department by July. It is one of the IMF's goals to get the next instalment.

Moody's downgrading of Bangladesh's credit rating from B1 to B2 makes foreign credit costly for the private sector. So govt has to take the next instalment of IMF credit package, scheduled to be released in June, to meet the budget deficit and provide the liquidity support to the private sector.

Contradiction in govt's stated policy is not convincing everyone about govt's ability to contain the inflation. That is why Moody's is projecting an inflation rate over 9.52% around the year. This is indeed a bad news as fixing the economy is the main reason why the govt is here. Yet the policies worsen the situation instead of improving it.

Troubles With BBS CPI - II

Flaws in CPI calculation May prolong the bad situation.

Bangladesh Bureau of Statistics (BBS) provides this information about calculation of CPI.BBS prepares food and non food CPI for three groups :National ,Urban and Rural. CPIs for the three groups are classified further into twelve sections which include food,beverages, alcohol,housing,clothing transportation, recreation etc among other things.

Later two consumer baskets-- one for urban and another for rural---are derived from Household Income And Expenditure Survey(HIES) 2016-17,comprising of 383 items prepared for computation of CPI.An item's weight is prepared from its percentage share in the total expenditure on all items faced by a consumer.

[credit: BBS]

For data collection, BBS collects price data from 154 markets across the country. Among 154 markets, 90 markets are from urban and the rest are from the rural areas. Three price quotes for each item are collected from each market. Prices of 127 food items and 256 non-food items are collected. Another important thing to note is that rural and urban price data are collected on monthly basis. But data from Dhaka and Chattogram City Corporation areas are collected in every week.

Now some issues I would like to raise here for CPI calculation:

1. BBS could easily introduce two / four more groups(North-South or East,West,North,South) into the existing three groups of National ,Urban and Rural level. Average income and spending are different for different regions. Even the informal sector wage is different in these regions. Differences of income opportunities and consumption spending of these regions should be reflected in the CPI.
2. The 383 items do not reflect which one is tradable and which one is not. External sector has leverage on tradable items( i.e. food grain,cooking oil,fabrics etc). Changes in international prices and exchange rate variation influence prices of these commodities. On the other hand, nontradable items (i.e. housing, medicare,education,transportation, recreation etc) are often influenced by internal situation. This should be reflected in official reporting of inflation data. It will further dispel any policy ambiguity on inflation.
3. Data collection from 154 markets is not well balanced. Urban bias is more pronounced.Urban data are more recent than rural data. Urban consumption spending is different from rural consumption spending. CPI should remove this bias by allowing more rural markets into data collection process.
4. Jevons method is used for calculating CPI in Bangladesh. The other two formulae are Carli index and Detot index. But the problem with Jevons index is that it is deeply influenced by fall in prices. So when vegetables prices drop ,Jevons index is likely to produce a wider fall in overall CPI than as usual. In case of price fall,BBS can calculate CPI using Dutot index. Dutot index generally attaches more weight to expensive items and less weight to cheap items. So usual estimate of the CPI can be captured using Dutot index when there is a price fall ( See "Calculating Consumer Price Indices In Practice" by the IMF).
5. Calculating high level indices require individual item's weight from a base year,which is different and precedes the price reference period(p⁰). This weight is derived from Household Income And Expenditure Survey(HIES). BBS gets its weight from HIES 2016-17. Here comes the crucial thing : the more recent is the weight's base year ,the more pronounced is the variation in overall CPI from the variation of an item's CPI. So BBS needs to update the weights,based on more recent HIES survey. Though HIES survey is costly and time consuming, for the sake of greater macroeconomic stability regular HIES survey should be conducted in short intervals.

BBS inflation reporting is replete with bias and wider variation in some instances. A balanced,unbiased CPI reflecting just variation can provide true estimate of inflation. To attain that, more recent survey, representative data should be introduced.

La Semaine Dernière A Mes Yeux

( 8 mars --- 14 mars)

Cliquez pour voir/cacher

Ma Semaine Gastronomique

Date	Petit déjeuner/Début de jeûne	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures/Fin de jeûne
08	Riz,Pois blancs avec banane verte,Ruhi	---	---	Khichuri,Poulet,Œuf
09	Khichuri,Poulet	---	Lait	Riz,Ruhi,Brinjal avec sec ruban,Soupe aux lentilles
10	Riz,Brinjal,Soupe aux lentilles,Ruhi,Œuf	---	Lait	Riz,Ruhi,Poulet,Brinjal avec sec ruban,Soupe aux lentilles
11	Riz,Gourde serpent,Soupe aux lentilles,Œuf	---	Pastèque,Melon sucré,Poire	Riz,Poulet,Gourde serpent,Feuilles de gourde bouteilles
12	Riz,Brinjal,Soupe aux lentilles,Ruhi,Œuf	---	Rice pudding,Melon sucré,Patate douce	Riz,Loufa avec papaye,Omelette, Courge amère
13	Riz,Brinjal,Ruhi	---	Nouilles	Riz,Ruhi,Papaye dans soupe aux lentilles,Patate douce,Poire
14	Riz,Papaye dans soupe aux lentilles,Ruhi,Lait	---	Melon sucré,Patate douce,Rice pudding	Riz,Luffa avec papaye,Omelette,Courge amère

Troubles With BBS CPI

Flaws in CPI calculation May prolong the bad situation.

February inflation data is out. Overall inflation declined to 9.32% from 9.94% in January. Food inflation for the first time reached to a single digit, shrinking to 9.27% from 10.72% in January. Prices of winter vegetables and import declaration of rices contributed greatly to the decline of overall prices. Govt has started procuring rice from various sources apart from the traditional importing countries. However, non-food inflation registered a slight increase in February, rose to 9.38% from 9.32% in January.

Many economists remain sceptics about the sustainability of drop in inflation in the coming months. They have valid reasons to remain so. What we are seeing now is the result of collective effort taken 3 months earlier in a bid to contain the inflation during the fasting month of Ramzan. Yet soybean oil, meat prices remain high. After Eid ,if this collective effort may dry up,a different scenario will prevail at the market. But I think the much hyped narrative of winter vegetables prices contributing to bringing down the price levels may turn out to be flawed perception upon closer scrutiny. Here comes the crucial question again: Are we calculating the CPI the correct way? Consumer Price Index computation assigns weights to individual items in case of calculation for multiple items. Here comes million dollar question: how do we assign the weight to individual items? Bangladesh Bureau of Statistics can answer that question to clarify lots of things. One simple approach may be based on importance. Now think of an individual consumer's monthly consumption basket. In this basket , carbs,cooking oil and proteins will get priority over vegetables. Goods that households have to buy (price inelastic demand) irrespective of price changes every month will not get the same priority as the winter vegetables enjoy. A consumer's spending behavior over months determines the priority. Now when vegetables prices drop, households definitely increase their consumption of vegetables but not to a great extent. A kilo of potato cost Tk 70 three months ago. With that price, one can now buy a kilo of potato as well as other vegetables in varied amounts. Without altering greatly one's monthly spendings on vegetables, one can increase his/ her consumption of vegetables. So vegetables' share in monthly spendings decides the importance consumer attaches to it. Then comes the question of spending behavior of different income groups and spendings in different regions. When BBS assigned the weight ,did it take into account these factors? I hope they did not randomly increase the weight of winter vegetables just to show the drop in inflation. If BBS did not randomly increase the weight of winter vegetables, then how did we construe that prices of winter vegetables bring down inflation when it occupies the lower rung in the consumption basket? This whole narrative of winter vegetables bringing down inflation is highly misleading. Just look at the formula of the CPI for multiple items:

CPI = (∑ _i=1ⁿ CPI_i x weight_i)/(∑_i=1ⁿweight_i)

Now think of just two items in the market: winter vegetables and rest of the items. Now looking at the sudden drop in prices of winter vegetables ,if you assign more weights to winter vegetables' CPI ,you will get higher drop in overall inflation. It is simple arithmetic. In this case , assignment of the weight is based on purely biased consideration. I just wanted to see winter vegetables is playing a role in overall inflation ,so I just raised the weights! Voilà! It is pretty similar to the incident of including laptop prices( a typical household here buys a computer/laptop once in every 10/12 years!) in consumer basket. BBS should come up with explanation how this weight on vegetables is determined. This whole thing also captures seasonal variation in the CPI. Now another crucial question arises: should seasonal variation in CPI be deemed important for long term trend? Three and half months later we are going to have Bakri Eid. Usually, meat prices remain low for two weeks after Bakri Eid. Based on this information ,if CPI registers a lower trend in inflation ,should we conclude lower meat prices bring down inflation?

BBS in the past involved in data engineering. Though this is an apolitical govt, some economic policies at the beginning indicated that it is following foot steps of its predecessor in some cases. So I am taking the inflation data produced by BBS with a dollop of salt. I hope and believe BBS has discarded past habit of data engineering. Only correct CPI calculation yields correct inflation data. And the right inflation data helps us setting the right interest rate. With flawed inflation data and interest rate, our economic recovery will only be delayed.

La Semaine Dernière A Mes Yeux

( 01 mars --- 06 mars)

Cliquez pour voir/cacher

Ma Semaine Gastronomique

Date	Petit déjeuner/Début de jeûne	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures/Fin de jeûne
01	Pain,Pomme de terre,Œuf	Riz,Tête de poisson dans soupe aux haricots mungo	Pain,Tête de poisson dans soupe aux haricots mungo	---
02	Riz,Tête de poisson dans soupe aux haricots mungo	---	Riz,Citrouilles avec pomme de terre	Riz gonflé,Rice pudding
03	Riz,Citrouilles avec pomme de terre,Poulet,Soupe aux lentilles	---	Riz,Papaye avec banane verte,Œuf,Soupe aux lentilles	Patate douce,Tomate
04	Riz,Soupe aux lentilles,Ruhi	---	Riz,Petit poisson	Faluda
05	Riz,Small fish	---	Khichuri,Egg,Gourde serpent	Faluda,Orange
06	Khichuri,Poulet	---	Riz,Poulet,Pomme de terre bhaji	Paratha,Omelette, Pois blancs avec banane verte,Orange
07	Riz,Poulet,Pomme de terre bhaji	---	---	Riz,Pois blancs avec banane verte,Ruhi