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Bangladesh's poverty rate rises to 30pc amid pandemic


As the country is set to embrace a ‘hard’ lockdown from tomorrow (Wednesday), the World Bank (WB) on Monday released the Bangladesh Development Update (BDU) highlighting the impact of the Covid-19 on the labour market, including loss of jobs and rise in poverty.

The Country’s poverty rate increased by 7.0 percentage points to 30 per cent in the last fiscal year than that of a non-Covid counterfactual scenario, the WB estimated.

As far as the GDP growth for the current fiscal year is concerned, the WB has kept its projection rather flexible, keeping in view the uncertainties centring the ongoing pandemic. Real GDP growth might be between 2.6 per cent and 5.6 per cent, the BDU said.

In a survey, the Washington based-lender found that one in five economically active individuals had experienced either a job loss (5.0 per cent) or a prolonged absence from work (14 per cent) since the onset of the Covid-19 crisis.

“Among the latter, the average duration of unemployment was three months. Of them, 51 per cent reported a loss in earnings or wages,” the WB said.

In presence of WB country director Mercy Tembon, senior economists of the bank Bernard James Haven and Matias Herrera Dappe briefed journalist on the Update virtually in Dhaka.

According to the BDU, some 56 per cent of those who did not own their dwelling are reported unable to pay their rent in full in the month preceding the interview (Sept. to Nov. 2020).

Food insecurity, as measured by self-assessments by the respondents, was also substantial, with 54 per cent of respondents expressing concerns that they would run out of food, 41 per cent having to reduce their consumption of preferred food, and 32 per cent having run out of food or money in the week preceding the interview, the BDU noted.

The WB conducted the nationwide phone-based survey from September to November 2020 and documented substantial labour market impacts of the pandemic, including widespread losses in labour earnings and poverty.

The WB report, however, said if the economic growth of the country is firmed up, the poverty is projected to decline marginally in the current fiscal year (FY2020-21).

The WB report added that the subsequent surveys pointed to a gradual labour market recovery in major urban centres by February 2021 and the households in poor and slum areas of Dhaka and Chittagong self-reported that their food security has improved substantially.

The economy is showing nascent signs of recovery backed by a rebound in exports, strong remittance inflows, and the ongoing vaccination programme, the report said.

The WB has projected a 3.6 per cent gross domestic product (GDP) growth in the current FY as there are still some downside risks and uncertainties over the Covid-19 pandemic.

“Given the significant uncertainty pertaining to both epidemiological and policy developments, real GDP growth for FY21 could range from 2.6 to 5.6 per cent depending on the pace of the ongoing vaccination campaign, whether new restrictions to mobility are required and how quickly the world economy recovers,” it added.

When asked about the conservative growth projections for Bangladesh even after some positive indicators, WB country director Ms Tembon said they had maintained a cautious approach as the pandemic situation at home and in global perspective was very uncertain.

“The outlook is subject to significant downside risks, particularly from the financial sector. The pandemic has exacerbated the financial stability risks stemming from high levels of non-performing loans (NPLs), weak capital buffers, and poor bank governance and risk management pre-date Covid-19”. the BDU said.

Reduced profitability, weaker asset quality, and lower credit growth can have large second-round repercussions on the real economy, it warned.

The report further said that the fragile outlook for the global economic recovery adds external risks, if it impacts demand for RMG products and employment of Bangladesh’s overseas workforce.

Meanwhile, the WB has projected a 5.1 per cent GDP growth in FY2021-22 as exports and consumption would continue to recover.

The bank also forecasted a better 6.2 per cent GDP growth in the subsequent FY23 as investment rises, led by externally financed public infrastructure investments under the recently adopted 8th Five-Year Plan.

“These dynamics will support job creation, and labour income is expected to rise as pandemic related disruptions wane in the second half of FY21. Private consumption is expected to continue a gradual recovery.”

The BDU noted: “Although official remittances are expected to taper from record highs, inflows will continue to support household consumption. Strengthening competitiveness through improved logistics and competitiveness performance could help accelerate the Covid-19 recovery over the medium-term.”

It said the inflation is projected to remain close to the Bangladesh Bank’s 5.5 per cent target despite expansionary monetary and fiscal policies, and monetary accommodation is likely to continue.

The fiscal deficit is projected to remain at 6.0 per cent of GDP in FY2021 before moderating in the medium term.

External stability is likely to be sustained, supported by export growth and resilient remittance inflows.

Meanwhile, the BDU has cautioned about some significant downside risks. It said the movement restrictions could again be required if Covid-19 infections accelerate, disrupting economic activity.

Fiscal risks include a shortfall in international support for Covid-19 vaccination programmes, cost overruns on major infrastructure projects, and delays in tax reforms, it added.

Vegetable prices jump in capital

The prices of vegetables shot up on the kitchen markets in the capital city on Thursday, the second day of Ramadan, the fasting month for the Muslims, as a supply shortage of the items took place due to fresh restrictions on business, transport and public movement to contain the COVID-19 infection.

The prices of most of the vegetables increased by Tk 20-40 a kilogram in the last two days and the prices of aubergine and cucumber hit Tk 100 a kg in the city markets.

The two items along with some other items usually witness higher demand in the fasting month.

Traders said that the prices of almost all the vegetables went up in the city’s wholesale market as a very few number of vegetable-laden trucks entered the Dhaka city due to the restrictions.

‘The supply of vegetables almost halved at the Karwan Bazar kitchen market in the city in the last two days as regional traders and suppliers are buying vegetables in less quantities from different districts in the country in fear of losses amid the restrictions.’ Md Yousuf, a wholesaler, told New Age on Thursday.

He said that the prices of vegetables increased on both wholesale and the retail markets due to the supply shortage.

‘We cannot buy required quantities of vegetables from the wholesale market even after paying additional prices due to a supply shortage,’ said Mintu Sheikh, a retailer at the Mohammadpur kitchen market.

The price of all vegetables except papaya and tomato increased by Tk 10-30 a kilogram on Thursday in the city markets and most of the items were traded for Tk 70-80 a kg.

Aubergine sold for Tk 80-100 a kg, papaya for Tk 40-45 a kg, bitter gourd for Tk 60-70 a kg, bottle gourd for Tk 50-60 apiece, cucumber for Tk 80-100 a kg, string beans for Tk 70 a kg, okra for Tk 60-70 a kg, pointed gourd for Tk 60 a kg and tomato for Tk 30-40a kg.

Potato was selling for Tk 25 a kg while green chilli was selling for Tk 60 70 a kg on the day.

Customs houses asked not to allow unauthorised officials to use Asycuda

The National Board of Revenue has asked customs houses to refrain from allowing the unauthorised revenue officers (ROs) and assistant revenue officers (AROs) to conduct customs assessment using the Asycuda World System.

The revenue board on Sunday issued a set of directives to the customs houses in this connection after detecting irregularities in customs assessment by a section of ROs and AROs using the system.

Expressing deep concern over the irregularities, the customs wing of the NBR said that the customs houses were supposed to assign a RO or ARO in the system for a specific bill of entry to conduct the customs assessment of imported goods and ensure duty collection from the assignments.

Only assigned RO or ARO is responsible to conduct the customs assessment of the bill of entry using the system, it said.

But it has been found that other revenue officials, except the assigned one, have been performing the responsibilities without any reason, it added.

The practice creates room and risk of duty evasion, according to the directive.

No customs houses have brought the practice to the attention of the revenue board although the system was introduced in 2013, it said.

As per directives, customs houses should not allow unauthorised revenue officials to conduct customs assessment without any valid reason.

It also set a specific process on reassignment of ROs and AROs to carry out the customs assessment to ensure transparency in the Asycuda World system and check duty evasion.

Unapproved reassignment may cause loss of revenue due to illegal nexus between officials and importers, officials said.

They said that customs officials would be able to reassign the responsibility following a specific process.

The officials concerned will have to take prior written approval from the assistant or deputy commissioner of the customs house, explaining the reason for reassignment, they said.

The reassignment process, however, will have to be included in the Inspection Act or information page of Asycuda world system, according to the directive.

Reassignment not having prior approval or without a solid reason will be considered as misconduct, it said.

Assessment officer, approval officer and supervising officer will be held responsible personally and officially if the government loses revenue due to reassignment, it added.

First SME IPO gets BSEC nod

The Bangladesh Securities and Exchange Commission on Thursday allowed Nialco Alloys Limited to raise Tk 7.5 crore to be listed on the SME platform of the country’s stock exchanges.

Nialco Alloys will be the first company to be listed on the small and medium enterprise board of the stock exchanges.

The BSEC made the decision at a commission meeting presided over by its chairman Shibli Rubayat-Ul-Islam, a BSEC press release said.

In accordance with BSEC (Qualified Investor Offer by Small Capital Companies) Rules, 2018, Nialco will issue 75 lakh shares at Tk 10 each to eligible investors through qualified investor offer, it said.

The company will utilise the proceeds in land development, purchasing machinery and meeting IPO expenses.

The regulator also decided that individual investor who has investment of Tk 1 crore in the market will be considered as a QI.

As per financial statements as of September 30, 2020, Nialco Alloys’ net asset value per share (NAV without revaluation reserve) and earnings per share were Tk 12.43 and Tk 0.91 respectively.

The company will not be allowed to declare bonus dividend in three years after commencing trading on the SME board.

MTB Capital Limited is the issue manager of the IPO.

The BSEC on Thursday issued an order, exempting Midland Bank from complying with a provision of its public issue rules.

Earlier, the bank decided to raise Tk 70 crore through an IPO. The bank sought the exemption before applying for the IPO to the commission.

According to the order, 35 lakh out of the total 7 crore shares to be allotted by offering to the employees of Midland Bank must be considered as part of its IPO.

The employees of the bank may subscribe their portion of shares during the period of general public subscription and subscribed shares must be kept lock-in for two years from the date of issuance of prospectus or close of subscription, whichever comes later, it said.

BSEC approves green bond for first time in Bangladesh

Bangladesh Securities and Exchange Commission (BSEC) has allowed a non-governmental organisation to raise Tk 1.0 billion from the capital market by issuing green bonds for the first time in Bangladesh.

The regulator took the decision at a meeting on Wednesday, reports bdnews24.com.

The NGO, SAJIDA Foundation that focuses on improving health outcomes of the poor, aims to use the funds raised through the Green Zero-Coupon Bond to increase the outreach of its microfinance programme as well as ensure environmental development.

 

The price of each unit of the bond has been set at Tk 1 million, with a maturity period of two years.

The bonds will be non-convertible, unsecured and redeemable, meaning that these cannot be converted into shares.

No collateral is required to issue the bond and the money will be refunded with interest at the end of the two-year term.

Public financial institutions, mutual funds, insurance companies, listed banks, cooperative banks, regional rural banks, organisations, trusts and autonomous corporations can buy these bonds.

Sena Kalyan Insurance is the trustee of the bond while Standard Chartered Bank is the lead arranger.

In the global capital market, green bonds, just like other debt instruments, require investors to pay interest at the end of the term.

Typically, the company issuing the bonds must also fulfil certain commitments to ensure environmental development.

There are very few cases in the world where the company gets special benefits for this. However, in the interest of environmental development, investors are usually satisfied with the lower returns or interest on these bonds than on ordinary bonds of the same quality.

Asked about the matter, BSEC spokesperson Rezaul Karim said SAJIDA Foundation would spend the money generated from the green bonds on agriculture, sanitation and solar projects.

“In other parts of the world, interest rates on green bonds are lower. That is not possible in Bangladesh right now as the interest rate on savings certificates is much higher here. If the interest rate was low, it would be difficult to raise funds from it.”