World Bank makes grim economic forecast

Bangladesh’s economic growth will be between 2.0 and 3.0 per cent in the current fiscal in the aftermath of coronavirus pandemic, the World Bank has forecast. The WB has made the forecast on Bangladesh’s economic growth in its report on “South Asia Economic Focus Spring 2020: A Cursed Blessing of Public Banks”. The government has a GDP (gross domestic product) growth projection at 8.2 per cent for the fiscal 2019-20. The growth rate will get even worse during fiscal year 2020-21, dipping as low as 1.9 per cent. The GDP cannot crashland since the economy is on a strong footing except for export growth during the first eight and a half months to March 15. The bank has also drawn a grim picture in fiscal management as it said the lower revenue collection and higher recurrent spending are likely to increase the fiscal deficit to 7.7 per cent of GDP in FY2020. The bank said a decrease in international remittances is expected to have a smaller short-term impact on the poverty rate, as migrants tend to come from better-off households. The World Bank prepares its forecasts independently using international and national data, observed trends, and global risk factors.

Source: https://today.thefinancialexpress.com.bd/first-page/world-bank-makes-grim-economic-forecast-1586711608

Closure of DSE puts market’s reputation at stake

The indefinite closure of the Dhaka Stock Exchange (DSE) and the Bangladesh SEC’s circular in March that prevents stock prices falling below their five day average, have wrought significant damage to your stock market’s reputation among international institutional investors. Every other stock market in the world (other than Colombo Stock Exchange) remains open at this time, since the functioning of the capital markets is considered an essential service. Meanwhile, there is almost no precedent in recent times for the BSEC’s circular imposing a floor on the stock market; the result will be vastly constrained trading once the exchange reopens. International investors have continuous liquidity needs and depend on the reliability and functionality of underlying markets in order to meet those needs. Serious repercussions are already in train for Bangladesh: there have been suspensions of some mutual funds outside of Bangladesh, which until now have invested enthusiastically in your country, and questions are being asked by specialists in operational risk control as to whether the DSE should be rendered permanently non-investible for foreign funds.

Source: https://today.thefinancialexpress.com.bd/stock-corporate/closure-of-dse-puts-mkts-reputation-at-stake-1586706013

Public banks can spearhead Govt’s rescue efforts: WB

Public banks in Bangladesh and other South Asian nations can play a positive role in figuring out the impending financial crisis from the coronavirus pandemic by providing financial services to the rural economy. The Cursed Blessing of Public Bank” said the lenders had played a positive role during the financial crisis between 2008 and 2010. In the current economic situation, public banks are needed to provide countercyclical lending — as they did during the last global financial crisis. And in some cases, they may be needed to inject capital into weak private banks. Bangladesh has 60 banks in total, of which 8 are public banks. And public banks have better coverage across districts than private ones. However, public banks’ share of loans to agriculture and micro, small, and medium enterprises (MSME) is not very different from that of private banks. The state-run banks represent nearly 65 per cent of all rural branches, being responsible for ‘social safety net’ payments and other government services but with limited compensation). SCBs and SDBs have 53 and 88 per cent of all their branches in rural areas, respectively, while private commercial banks (PCBs) have just 35 per cent, and foreign commercial banks (FCBs) have none. Credit to agriculture and MSMEs is only a small part of the SCBs’ loan portfolios, suggesting a limited developmental impact. Credit to traditional key targets for improving the incomes of poor and excluded groups (agriculture, fishing, forestry, and MSMEs in the industry) is low for SCBs at just 13 per cent of their total portfolio, which is not that different from PCBs and FCBs at 9 and 6 per cent respectively.

Source: https://www.thedailystar.net/business/news/public-banks-can-spearhead-govts-rescue-efforts-wb-1892434