What Does Wild Fall Of Taka Portend?

Wild fall of Taka causing worries,
Most blame goes to deferred LCs.
Before and after election year,
Gathers abroad illicit capital sheer.

The rapid fall of Taka against major currencies has become headlines recently.Central Bank is selling dollar at Tk 86.70.However, at the exchange market US dollar is selling at TK 93. This rapid depreciation of Taka has been reported to be caused by rising commodity prices,settlement of deferred Letter of Credits, lack of foreign tourists, and rising trade deficit¹.

Government even issued notice banning unnecessary travel of the bureaucrats. But I think bureaucrats’ visit abroad and lack of tourists are poor reasons attributed to wild fall of Taka.The two represent a miniscule part of demand for dollar. The ban came at a time when a minister and her relatives’ visit to another country drew lot of flak in the press. Later, minister claimed that she paid her own expenses and never relied on public money for meeting the expenses. So govt's ban is a diversion to pass the blame to others.

Unease of the govt is compounded by falling remittances, which earlier offset trade deficit and made a current account surplus. In addition, medium and long term debt commitment has also increased, but as percentage of export earnings it is still below 25%(as per my calculation).Along with Occidental multilateral institutions, which are more generous towards Bangladesh, Russian and Chinese credit repayments do not pose serious problem for the moment. Loan repayments of Russian credit line would start from 2023 and some social media put the annual payment somewhere between $565 million. The Ban on Russia and Russian decision to repay the credit in local currency would not cause pressure on US dollar demand. However, such ban could increase dollar demand if US dollar payment could take place in disguise of legitimate international trade via other friendly countries. It is hard to trace such trade payment, so it is better not to embark on such speculation.

So the single reason stands out among others is the deferred LC payment. Most of the LCs opened for importing capital machinery, raw-materials,cooking oil and grains².Rising commodity prices also raised the import expenditure and it is causing the depreciation of Taka. Now here comes another point that we are missing. 2022 is the year before the election scheduled to be held in 2023. Years before and after the election generally witness illicit financial outflow through trade misinvoice. Bout of skirmishes and deteriorating law and order sow panic and lack of trust on domestic system among some quarters. Panic mongers work as sales executive of places where illicit capital finds safe sanctuary.

In an embarrassing report in 2017,Global Financial Integrity (GFI) revealed worrying accounts of illicit financial flow from Bangladesh between 2009 and 2015 with an average flow of $ 8.8 billion. The mismatches between declared value of goods on the invoices and true value of goods were reported to be $5.2 billion in 2008, $6.9 billion in 2010,$8.8 billion in 2011,$7.65 billion in 2012,$9.35 billion in 2013 and $11.92 billion in 2015 ³.As US places sanctions on some personnel of law enforcement agencies for violating human rights, many are under spell of panic. In addition, retribution in politics looms large. Political situation in neighboring countries makes that threat more credible. So exists there a perfect ground for clandestine capital flight through trade anomalies.

However, Canada postponed its residency permit through purchase of flat for two years. But our RMG items are being regularly exported to Canada. And recently one Canadian minister expressed desire to export cooking oil to Bangladesh. So ample means are there to channel out the money.Moreover, Turkey recently opened 2nd-home program like Malaysia. UAE is also running similar campaign.

Two or three quarters later a picture may emerge about the volume of illicit flow. As it happened in the past, this speculation---illegal money transfer through trade data anomalies---may have some roots and may be a reason for depreciation of Taka that is widely ignored.

This depreciation of Taka will work as instrument to curb further import as import is going to be costly. Meanwhile, govt is going to receive another $250 million of ADB’s budget support pretty soon,as reported by the press. Hopefully, Taka will be hovering over some fixed figure for sometimes after that.

Notes And References:

1 “ Dollarer Bazar Osthir,Oshosti(Volatile Dollar Market, Causing Unease)”,Sanaullah Sakib,Daily Prothom Alo(page-1),May 12,2022.

2 “Bank O Khola Bazar E Dollarer Damer Parthokya 8 Taka Chhariyechhey( Difference Between Dollar Exchange Rate At Bank And That Prevails In Market Crosses Taka 8)”,Sanaullah Sakib, Daily Prothom Alo(page-01),May 13,2022.

3 “Bangladesh Lost $50 Billion To Trade Related Illicit Financial Flows In Six Years: Report”,bdnews24.com,December 17, 2021.

Weak Passport Belies Success II

Weak passport remains the same
As Bangladeshis get the blame
In Canada for soaring house price.
Henley index lays bare the development lies.

Bangladeshi passport retains 103 rd position among 116 countries for 2021 in Henley Strong Passport Index. In 2020, it held the same position. Despite the improvement from 108 to 103 in recent years, Bangladeshi passport remains one of the weakest passport (9th) in the world¹. Meanwhile, corona, internal turbulence and war made many counties' score bad. So the improvement is not an improvement at all.In the meantime, US imposed sanctions on RAB and several security establishment officials for deterioration in law and order situation. This week Canada postponed its second home program, nationality through purchase of house, for two years as property prices soar up unprecedentedly because of foreign nationals' house buying spree in that country².

Back in October last year I penned “Weak Passport Belies Success “ to highlight Henley’s then ranking of Bangladesh³. Sharing it again:

The weakening of our passport has been going on for the last seven years. In 2013,our passport was ranked at 85 in Henley Passport Index(HPI). In 2017,the green passport was slides down by 10 places. In 2019,its rank worsened further to 99.In 2020, it was ranked 101st. Perhaps not all the countries are buying our success stories⁶.

Recently, European Union published a list of asylum seekers in EU where they entered illegally by crossing the Mediterranean Sea. Bangladesh ranked second in the list.

This week Lafarge Holcim cement announced that it would sell its operations in Bangladesh.⁴

E-commerce debacle left a serious blot on reputation of the government. One after another e-commerce platform that follows multilevel marketing model failed to meet customers’ need and many simply swindled money. What could have been the success story of govt's digital economy turned out to be an embarrassing point for the government.

It has been reported that government might have avoided this incident had it been stricter to malpractices.

Meanwhile, remittances shows a downward spiral following a remarkable growth last year.

In September 2021-22,Bangladesh received remittances worth $1726.29 million whereas the sum was $2171.03 million in May this year⁵However, rising oil price could break the downward spiral as construction boom may resume in the Middle Eastern countries, riding on the high oil price.

Back in April this year,I wrote a piece titled “Falling Ranking,Fading Identity” in the wake of unrevised HPI. I would like to share some part of it again:

“Education is the area where we fall behind our neighbors. In Global Knowledge Index, Bangladesh held the lowest rank in South Asia. Its position was 112th among 138 countries.Even Pakistan and Nepal were placed ahead of us (Source: Daily Star, December 12 , 2020).

In Innovation Index, Bangladesh was far behind than its South Asian neighbors. Among the 131 economies, Bangladesh occupied 116th position. It perched on that position for three consecutive years (Source: The Financial Express, September 14, 2020).

In recent years, school drop out rate, number of child marriage have also increased. I cannot figure out how we can continue our achievements in economic and development sectors with such a sorry state in education and innovation.

What complicated the matter is the presence of three different streams of education. A greater section of the population are not at the same wavelength while reading a particular event or situation and are not behaving in the right way at a crucial occasion or circumstances.

Our 14 years of schooling is not as good as others. It is casting a shadow over our overseas development markets. In middle eastern countries where our nationals mostly took up the jobs of housemaid, drivers, agricultural workers etc , Bangladeshis find themselves in awkward situation for failing to communicate in a proper manner. It is affecting their livelihoods there. Many even fall victims to deception and cheating. In Kuwait a Bangladeshi MP in connivance with Kuwaiti officials ran a human trafficking network. Thousands of Bangladeshis were lured into their traps, losing millions of Taka and risking their lives. The issue remains a sore point in the relationship between two countries and engenders overseas employment of Bangladesh in Kuwait.

Reuters last year carried a report divulging dilapidated conditions of stranded Bangladeshis , victims of human trafficking, in Bosnian jungles.

Like those cheated Bangladeshis abroad, state of our health sector does not vouch safe for our economic success story. COVID-19 laid bare the anarchy going on in this sector. Fake screening program ran by some politically-blessed quarter alarmed us about quality of our health professionals. Poorly equipped hospitals and dearth of health professionals brought us foreign grant and support in thick and fast. To our dismay, we watched that oxygen system and 300 ventilators bought with foreign credit were locked in warehouses of Dhaka International Airport for ten months. They are meant to equip the public hospitals. Meanwhile, deteriorating condition at home led to ban flights towards countries from where most of our remittances come.

With great enthusiasm and effort, Bangladesh implements infrastructure and development projects, very few turn out to be beneficial in the end. However, same vigor and enthusiasm are not displayed while creating social institutions that aim to develop human resources at the grassroot level. Tribal nature of our politics , tendency to set a yeoman at every organization are widely seen as encumbrance to developing such institution. For the last three decades, a moribund growth has been being observed on institutions that work on youth, discrimination, literacy,digital divide, communal harmony,folklore,hygiene,rural-urban migration, inclusion of new technology, charity, music and culture. These institutions in the past played key roles in churning out quality nationals. It does not mean they have to depend on foreign fund for their operations. Community, individual and government should step in so that they can function without any trouble. COVID-19 bluntly laid it bare that our health system is not working and one fine morning we will discover, to our surprise, that our country becomes an unlivable prison. And HPI and QNI may coshare positions with other doomed countries.”⁶

Notes And References:

1” Bangladesh Ranks 103rd In Henley Passport Index2022”, Dhaka Tribune,April 04,2022. For more read at https://www.dhakatribune.com/bangladesh/2022/01/12/bangladesh-ranks-103rd-in-henley-passport-index-2022

2 “Videshider Kacchey Bari Bikri Bondho Korechhey Justin Trudeau'r Saraker(Canada: Trudeau Govt Halts Sale Of House To Foreigners”,BBC Bangla,April 07,2022. For more read at https://www.bbc.com/bengali/news-61028973

3 “Weak Passport Belies Success”,Rezaul Hoque,https://hoquestake.blogspot.com,October 09,2021. For more read at https://hoquestake.blogspot.com/2021/10/weak-passport-belies-success.html?m=1

4 “Bangladesh Theke Babsha Gutiye Nichhey Lafarge HolCim(Lafarge Winds Down Bangladesh Operations)”,Sylhet Today 24,October 06,2021.For more read at https://www.sylhettoday24.news/news/details/Sylhet/125786?fbclid=IwAR07pXwOgCNECDjcN9NLpKVipVlTk52NR6VUGwNlqmHyz6aVWlFr89rzGhk

5 Bangladesh Bank.

6 “Falling Ranking,Fading Identity “,Rezaul Hoque,https://hoquestake.blogspot.com.April 19,2021.For more read at https://hoquestake.blogspot.com/2021/04/falling-ranking-fading-identity.html?m=1

La Semaine Dernière A Mes Yeux

(01 avril --- 08 avril)

Selon un reportage, Pour 2021 Henley Passport Index a placé Bangladesh dans la même place que Bangladesh tenait en 2020.

Selon un reportage, Canada a reporté le programme de nationalité par achat de maison canadienne pour deux ans.

Selon un reportage, OMS dans étude a trouvé que chaque année 250.000 personnes ont décédées à cause de air pollution.