Pathetic state of our economy
Sadeq Khan
In the last two days of the last working week, the exchange rate of dollar in inter-bank money market soared to above Tk 80 as the countrys foreign exchange reserve hit a three-year low. Newspapers quoted Bangladesh Bank officials ascribing the cause of dollar crunch to pressure of fuel oil imports for rental power plants.
An exemplary apology by a commercial bank official to a newspaper ran like this: Almost all the banks are now grappling with dollar shortage. We are unable to sell dollars to many clients who want to buy because of the shortage. As a result, the dollar rate which has been rising steadily for the last few months, soared higher in last three to four days.Full Story Sadeq Khan
In the last two days of the last working week, the exchange rate of dollar in inter-bank money market soared to above Tk 80 as the countrys foreign exchange reserve hit a three-year low. Newspapers quoted Bangladesh Bank officials ascribing the cause of dollar crunch to pressure of fuel oil imports for rental power plants. An exemplary apology by a commercial bank official to a newspaper ran like this: Almost all the banks are now grappling with dollar shortage. We are unable to sell dollars to many clients who want to buy because of the shortage. As a result, the dollar rate which has been rising steadily for the last few months, soared higher in last three to four days.
The average dollar exchange rate, set by Bangladesh Bank, was Tk 70.35 on October 18, 2010 and it was Tk 74.23 on June 30 this year. According Bangladesh Bank figures, the settlement of letters of credit for fuel oil import increased by 82.53 per cent to $1687.31 million in the four months of current fiscal year from that of $924.42 million in July-October last fiscal year. Besides, the settlement of LCs for capital machineries, mostly power plant equipment, also rose to $ 821.27 million in July-October from that of $ 610.04 million during the same period last year.
For the common consumer of the country, on the other hand, a much more disturbing news is the spiraling trend of inflation. The point-to-point inflation rate increased to 11.58 per cent in November from 11.42 per cent in October due to increase in the prices of fuel oils by the government. The Director of Bangladesh Bureau of Statistics informed the press last week that fuel price hike on November 11 influenced price hike of non-food items and contributed to the rise in overall inflation, including hikes in bus fare and increased prices of household furniture, utensils & clothing. Fish, meat, fruit, milk and milk products and other food items contributed to rising inflation in comparable rate to the situation in the previous month.
The government increased prices of all fuel oils by Tk 5 a litre on November 11 for the second time in two months to reduce subsidy on imports of petroleum products. As a result non-food inflation increased in November to 10.16 per cent from 9.05 per cent in previous month, as per BBS data released on Dec 5.
The crossing of the single digit barrier by all sections of inflation rate cannot but worry Bangladesh-watchers, if not the complacent policy-makers at the head of our Finance Ministry. Food inflation remains at the danger level above 12% (12.47 percent to be exact, edging down slightly from 12.82 percent in October even as Aman crop and winter vegetables poured into the market). The rate of annual average inflation rose 2.37 percentage point to 10.51 per cent in November. Last year, the figure stood at 8.14 per cent in previous year. BBS report itself said, the food price component of both annual average and point-to-point Consumer Price Index (CPI) inflation have been seeing a double-digit rise since December 2010, considerably affecting the lower-income groups.
BBS took into account 302 items in urban areas and 215 items in rural areas, to estimate the inflation and consumer price index (CPI) situation in the country. On the other hand, the market price report of Trading Corporation of Bangladesh (TCB) showed that prices of edible oils have increased 20 to 24 per cent, during the last one year, that of rice, by 1 to 9 per cent; flour by 24 to 28 per cent; lentils, by 43 to 61 per cent; powdered milk, by 15 to 20 per cent; sugar, by 4 per cent; construction materials, by 13 to 15 per cent; and red pepper, by 33 per cent. Only potato prices fell, in turn bankrupting the potato-growers.
The ruling alliance has been freely using the courts instead of the parliament to coercively stifle and disarm political opposition on many critical political issues. On the socio-economic debacle being caused by the fuel price hike, the table appears to have been turned against the government. Acting on a public-interest litigation filed by two lawyers and a law student, the High Court on Dec. 5 asked the government to explain why its November 10 decision on increasing prices of fuel oils should not be declared illegal. Secretary to the power and energy ministry, Bangladesh Energy Regulatory Commission and Bangladesh Petroleum Corporation were asked to reply to the rule.
The petitioners told the Bench that the prices of fuel could not be increased more than once a year, unless prices go up in the international market, as per the Energy Regulatory Commission Act-2003. But the government had increased for the third time this year prices of all fuel oils, including diesel, by Tk 5 a litre with effect from midnight November 10. Prices of diesel and kerosene had been increased from Tk 51 to Tk 56 a litre, furnace oil from Tk 50 to Tk 55, petrol from Tk 81 to Tk 86 and octane from Tk 84 to Tk . 89.
The prices were increased only 53 days after prices of all fuels but furnace oil had been increased by Tk 5 a litre and that of furnace oil had been hiked by Tk 8 a litre on September 18. The government has by hiking the prices of fuel oils also violated the relevant rule after increasing the prices on September 18 this year, the petitioners argued.
Side by side with these stories when one looks at the pathetic attempts by our authorities to bring back life to the two capital markets of the country and their repeated failures, along with angry small investors cheated of their capital by market debacles howling and protesting on the kerbs almost on a daily basis, hoping against hope for some miracle to happen, one can have little doubt about the enormity of the crisis. The national economy has been thrown into an abyss from which it will take a Herculean effort to recover.
Holiday
Sadeq Khan
In the last two days of the last working week, the exchange rate of dollar in inter-bank money market soared to above Tk 80 as the countrys foreign exchange reserve hit a three-year low. Newspapers quoted Bangladesh Bank officials ascribing the cause of dollar crunch to pressure of fuel oil imports for rental power plants.
An exemplary apology by a commercial bank official to a newspaper ran like this: Almost all the banks are now grappling with dollar shortage. We are unable to sell dollars to many clients who want to buy because of the shortage. As a result, the dollar rate which has been rising steadily for the last few months, soared higher in last three to four days.Full Story Sadeq Khan
In the last two days of the last working week, the exchange rate of dollar in inter-bank money market soared to above Tk 80 as the countrys foreign exchange reserve hit a three-year low. Newspapers quoted Bangladesh Bank officials ascribing the cause of dollar crunch to pressure of fuel oil imports for rental power plants. An exemplary apology by a commercial bank official to a newspaper ran like this: Almost all the banks are now grappling with dollar shortage. We are unable to sell dollars to many clients who want to buy because of the shortage. As a result, the dollar rate which has been rising steadily for the last few months, soared higher in last three to four days.
The average dollar exchange rate, set by Bangladesh Bank, was Tk 70.35 on October 18, 2010 and it was Tk 74.23 on June 30 this year. According Bangladesh Bank figures, the settlement of letters of credit for fuel oil import increased by 82.53 per cent to $1687.31 million in the four months of current fiscal year from that of $924.42 million in July-October last fiscal year. Besides, the settlement of LCs for capital machineries, mostly power plant equipment, also rose to $ 821.27 million in July-October from that of $ 610.04 million during the same period last year.
For the common consumer of the country, on the other hand, a much more disturbing news is the spiraling trend of inflation. The point-to-point inflation rate increased to 11.58 per cent in November from 11.42 per cent in October due to increase in the prices of fuel oils by the government. The Director of Bangladesh Bureau of Statistics informed the press last week that fuel price hike on November 11 influenced price hike of non-food items and contributed to the rise in overall inflation, including hikes in bus fare and increased prices of household furniture, utensils & clothing. Fish, meat, fruit, milk and milk products and other food items contributed to rising inflation in comparable rate to the situation in the previous month.
The government increased prices of all fuel oils by Tk 5 a litre on November 11 for the second time in two months to reduce subsidy on imports of petroleum products. As a result non-food inflation increased in November to 10.16 per cent from 9.05 per cent in previous month, as per BBS data released on Dec 5.
The crossing of the single digit barrier by all sections of inflation rate cannot but worry Bangladesh-watchers, if not the complacent policy-makers at the head of our Finance Ministry. Food inflation remains at the danger level above 12% (12.47 percent to be exact, edging down slightly from 12.82 percent in October even as Aman crop and winter vegetables poured into the market). The rate of annual average inflation rose 2.37 percentage point to 10.51 per cent in November. Last year, the figure stood at 8.14 per cent in previous year. BBS report itself said, the food price component of both annual average and point-to-point Consumer Price Index (CPI) inflation have been seeing a double-digit rise since December 2010, considerably affecting the lower-income groups.
BBS took into account 302 items in urban areas and 215 items in rural areas, to estimate the inflation and consumer price index (CPI) situation in the country. On the other hand, the market price report of Trading Corporation of Bangladesh (TCB) showed that prices of edible oils have increased 20 to 24 per cent, during the last one year, that of rice, by 1 to 9 per cent; flour by 24 to 28 per cent; lentils, by 43 to 61 per cent; powdered milk, by 15 to 20 per cent; sugar, by 4 per cent; construction materials, by 13 to 15 per cent; and red pepper, by 33 per cent. Only potato prices fell, in turn bankrupting the potato-growers.
The ruling alliance has been freely using the courts instead of the parliament to coercively stifle and disarm political opposition on many critical political issues. On the socio-economic debacle being caused by the fuel price hike, the table appears to have been turned against the government. Acting on a public-interest litigation filed by two lawyers and a law student, the High Court on Dec. 5 asked the government to explain why its November 10 decision on increasing prices of fuel oils should not be declared illegal. Secretary to the power and energy ministry, Bangladesh Energy Regulatory Commission and Bangladesh Petroleum Corporation were asked to reply to the rule.
The petitioners told the Bench that the prices of fuel could not be increased more than once a year, unless prices go up in the international market, as per the Energy Regulatory Commission Act-2003. But the government had increased for the third time this year prices of all fuel oils, including diesel, by Tk 5 a litre with effect from midnight November 10. Prices of diesel and kerosene had been increased from Tk 51 to Tk 56 a litre, furnace oil from Tk 50 to Tk 55, petrol from Tk 81 to Tk 86 and octane from Tk 84 to Tk . 89.
The prices were increased only 53 days after prices of all fuels but furnace oil had been increased by Tk 5 a litre and that of furnace oil had been hiked by Tk 8 a litre on September 18. The government has by hiking the prices of fuel oils also violated the relevant rule after increasing the prices on September 18 this year, the petitioners argued.
Side by side with these stories when one looks at the pathetic attempts by our authorities to bring back life to the two capital markets of the country and their repeated failures, along with angry small investors cheated of their capital by market debacles howling and protesting on the kerbs almost on a daily basis, hoping against hope for some miracle to happen, one can have little doubt about the enormity of the crisis. The national economy has been thrown into an abyss from which it will take a Herculean effort to recover.
Holiday
Or is it because the AL are just too dumb?
