AMA Muhith

The government is still undecided over the key donor condition of giving more authority to the central bank over the state-run banks, despite not having much time in hand.

The parliament must pass the Banking Companies Act as well as the VAT Act within the next month for the country to be able to get the second instalment of $1 billion from the International Monetary Fund (IMF).

"Still, there is no consensus over the reforms in the Banking Companies Act," said Finance Minister AMA Muhith.

Providing full control to the Bangladesh Bank over the state-run commercial banks remains a sticking issue of the Banking Companies Act.

"We have informed the IMF about our position and they have informed us of their decision. They want to see the language of the law [before it is passed]. I told them that would be possible,” Muhith told The Daily Star in Tokyo on Saturday.

The IMF wants the government to cut the authority of the Banking Division, a wing of the finance ministry, and give more power to the central bank -- to allow it to control the state-run banks.

Muhith said there would be some delay as he would not be able to do anything until he returns from Hajj.

"It is now in my hand, with the ministry. Bangladesh Bank has sent their proposals. The committee we have formed has also sent its proposals. We are ready, but I want to think over it a bit."

With regards to the VAT reforms, Muhith does not think that the IMF conditions are serious.

The finance minister, however, is hopeful Bangladesh would receive the loan from the IMF in

November.

The lender has approved $987 million for Bangladesh to help it overcome macroeconomic pressures and build a buffer reserve, with the first of the seven instalments already received last year.

"Our domestic demand is good. But the export has a major impact,” said Muhith, who is in Tokyo to attend the semi-annual meetings of the World Bank and the IMF.

He added that the Eurozone debt crisis is risky for Bangladesh as the continent is home to about half of the country's exports -- and the growth potential of the country is heavily reliant on exports.

Although exports grew by 3-4 percent in the last three months because of the slowdown in the European Union, the government is hopeful that it would grow by 10-11 percent in the current fiscal year, according to Muhith.

At the meetings, the IMF forecast that Bangladesh's economy would grow by 6.1 percent in the 2012 calendar year.

Naoyuki Shinohara, a deputy managing director of the lending agency, said the country's GDP would grow by 5.8 percent in the current fiscal year.

“The IMF projection is always low, which is globally more or less accepted,” he said.

The WB and Asian Development Bank projections are higher, as per Muhith.

"But the actual performance of the country depends upon God."

Muhith said he himself asked the IMF about its opinion.

"They have publicly and privately said there is consensus between the countries which are under trouble and the countries who can afford to help others. Its result will be positive."

"When there is any consensus the situation can be brought under control, even if you do not get out of it. It is good news for us."

Muhith said he has told the new WB president -- who says has only one goal in his mind, that of poverty eradication -- that he has to act differently to meet his targets.

"I have told the WB that there is poverty in high-, middle- and low-income countries. But the poverty of high- and middle-income countries is not comparable to that of the low-income countries."

"You will have to think differently if you want to eradicate poverty in other [lower income countries] countries."

"I hope that perhaps he would consider this plea seriously as he is so focussed on poverty. I have been making the same plea for the last three years."

Muhith said the low-income countries do not receive special benefits from the policies of the WB and the IMF, although they are the ones most in need of the facility.

"It was discussed significantly at the meeting of the finance ministers of Commonwealth countries."

During his visit, Muhith met Japan's Deputy Prime Minister Katsuya Okada, had lunch with Japan-Bangladesh Parliamentary League and held meeting with the Foreign Correspondence Club of Japan.

About Japanese investors' eagerness to invest in Bangladesh, the minister said Japan has long been trying to invest in Bangladesh but the country is not being able to provide adequate land.

"I think Japanese investment will flow to Bangladesh if we can provide them land."

He said Bangladesh would have to keep in mind that Japan has got another place in Myanmar to invest.

Muhith said the government would sign an agreement with Japan to set up metro rail.

"It has already been decided. The Japanese government has already taken the decision. The issue has been stuck because of some small issues."

News: The Daily Star/Bangladesh/15th-Oct-12

The government plans to build a food grain silo at Mongla port to arrest pilferages from imported cargoes.

A Bangladesh-Vietnam joint venture between the local Toma Construction & Co Ltd and the Vietnamese Asia Slipform Corporation has been selected to build the concrete silo and jetty at a cost of Tk 444.35 crore.

A further Tk 91.65 crore would be spent to build other facilities for the godown, said officials of Directorate General of Food (DG Food).

The silo, which will have the capacity to store 50,000 tonnes of wheat, will be built at Joymonirghol on the bank of Pashur river, about 17 kilometres from the Mongla port.

"We have already issued a notice of award to the selected bidder," said Ahmed Hossain Khan, director general of DG Food, while adding that various related works, such as land purchase and earth filling, have already been completed.

"Now the main silo and jetty will be built. We are expecting the completion of construction by June 2014.”

The silo will be the country's fifth, with the four existing silos built between the years of 1967 and 1970 with World Bank financing.

“But no silo was built in the last four decades,” said Khan.

The construction of the silo has been on hold since 1989, but gathered pace upon receiving Tk 200 crore as grant from Japan Debt Cancellation Fund in 2009.

At present, food grains are unloaded manually from the port -- and 90 percent of imports are unloaded from the lighter vessels without even getting weighed.

“It causes abnormal shortage of imported grains,” said Gazi Ur Rahman, director of the Mongla Port Silo Project.

He said around 10 percent of the imported cargoes at the port are lost every year, with the missing volume reaching as high as 1.21 lakh tonnes last decade.

“The percentage of pilferage at the Chittagong port, on the other hand, is very low, because of a silo there.”

The silo at Mongla will also ensure proper weighing and curtail the scope of losses, said Rahman.

“It will also facilitate proper distribution of grains in the southwest and northern parts of the country,” he added.

To ensure smooth transportation of wheat from the silo, the communications ministry plans to construct 17.5 kilometres of road and a bridge on the Mongla river to connect the port town with Joymonirghol, said DG Food officials.

The DG food also seeks Bangladesh Railway to establish a railway track up to the silo.

The four existing silos have 2.25 lakh tonnes of total storing capacity.

News: The Daily Star/Bangladesh/15th-Oct-12

 Bangladesh Bank (BB) will start to exchange newly printed notes of different denominations from today (Sunday) on occasion of Eid-ul-Azha and Durga Puja for meeting the additional demand for cash during the upcoming festivals.

The new notes will be distributed from the Dhaka office and other offices of the central bank until the last working day before Eid.

The new notes will also be available in 11 branches of nine commercial banks in the city, said a BB statement on Saturday. Anyone willing to collect the notes can visit those 11 bank branches in the city.

Like every year, this year the BB will gradually release notes and coins worth more than Tk 200 billion in the festivals, said a BB official. It will issue the new coins and notes of various denominations, such as Tk 2, Tk 5, Tk 10, Tk 20, Tk 50, Tk 100, Tk 500 and Tk 1,000 on the occasion of Eid and Puja, he said.

Along with the new banknotes, all existing paper notes in the same denominations will also remain in circulation.
The central bank has already taken necessary measures against circulation of counterfeit currencies in the cattle markets.

Another BB official said that the BB had urged home and law ministries, and police and Rapid Action Battalion to take necessary measures against fake currencies so that counterfeit notes could not enter the money market during the festivals.

The name of the banks braches are: Press Club Branch and Elephant Road Branch of Agrani Bank, Ramna Branch and Bangabandhu Branch of Sonali Bank, New Market Branch of Janata Bank, Sadarghat Branch of Pubali Bank, Bashundhara City Market Branch of Social Islami Bank, Gulshan Branch of Dutch- Bangla Bank, Kawran Bazar Branch of Southeast Bank, Malibagh Branch of Prime Bank and Jatrabari Branch of Islami Bank Bangladesh Ltd. respectively.

The central bank would launch campaign in print and electronic media about the counterfeit notes to create awareness among people.

Besides, the teams of the BB and the commercial banks would also visit the cattle markets to detect the counterfeit notes.

The BB asked all deputy commissioners to take measures at the main cattle markets of the districts to detect the counterfeit notes. Generally, during Eid demand for new notes increases many folds as it has become a custom to distribute fresh notes among the kids and youngsters as Eid selami (gift) in Bangladesh. Many Hindu people also pay money to their relatives on the occasion of Dashami of Durga Puja. The money is meant to be spent in the Puja fair.

News: The Daily Independent/Bangladesh/14th-Oct-12

DHAKA: External Panel of the World Bank (WB), comprising eminent international experts, arrived here early today (Sunday) to work with the Anti Corruption Commission (ACC) to probe the alleged graft in Padma Multipurpose Bridge (PMB) project.

The three-member WB panel, consisting of well known experts, will hold meeting with the Anti Corruption Commission (ACC) officials some time today.

Luis Moreno Ocampo, a former chief prosecutor of the International Criminal Court, is leading the delegation.

The other member of the panel are -- Timothy Tong, former commissioner of the Independent Commission against Corruption in Hong Kong, and Richard Alderman, a former director of the UK Serious Fraud Office.

Panel chief 60-year-old Ocampo is an Argentine lawyer and the first prosecutor of the ICC. He previously worked as a prosecutor in Argentina, famously combating corruption and prosecuting human rights abuses by top military commanders in the Trial of the Juntas.

The panel will submit reports to the World Bank and also share its findings with the government of Bangladesh and other co-financiers of the project.

Earlier, on October 5, the World Bank appointed the three-member panel of international experts to assess the credibility of the investigation by the Anti Corruption Commission (ACC) into the alleged corruption in the Padma Bridge project.

News: The Daily Independent/Bangladesh/14th-Oct-12

Atiur Rahman

Bangladesh's economy will grow by more than 6.5 percent in the current fiscal year although the global expansion is under-pressure, the central bank governor said.

"I think it will grow by more than 6.5 percent," Atiur Rahman told The Daily Star in Tokyo on Friday.

The governor is now in the Japanese capital to attend the semi-annual meetings of the World Bank and the International Monetary Fund.

His comments came as the IMF earlier forecast that Bangladesh's economy would grow by 6.1 percent in 2012 calendar year. Naoyuki Shinohara, a deputy managing director of the lending agency, said Bangladesh's GDP would grow by 5.8 percent in the current fiscal year.

"It is difficult to forecast the exact growth. We have noticed that historically Bangladesh's growth remains a bit higher than the projection made by the IMF. It has happened all the time and we have seen the pattern historically," Rahman said.

"But I would say that the IMF estimate reflects the global reality. It has forecast India's growth rate at 4.9 percent. Compared to India, IMF has made a positive projection about Bangladesh."

The governor, however, said the IMF estimation does not say that Bangladesh is being able to make up the losses in growth caused by the global meltdown through internal demand.

"Our agriculture is growing. I think it will grow by about 4 percent this year. That will make up some of the losses. Together, there is no chance the growth is going below 6.5 percent. It is not unrealistic too."

Rahman said the growth is under pressure worldwide. "There is no doubt about it. Definitely, Bangladesh will receive some of the heat."

He said the central bank has been cautious in terms of going for inclusive growth. "The quality of growth will ensure that even with the small growth we will have a better growth."

The governor attended a number of programmes and discussions at the IMF-WB annual meetings in the last several days.

"Everybody was saying that Bangladesh is actually a unique story. I have talked to officials from a number of countries. They said Bangladesh is a contrarian when it comes to the growth and inflation story. The Indian governor told me that Bangladesh is a bit separate from the bunch of the countries. We are an outlier in a positive sense."

Rahman said the country is maintaining its growth, the inflation is going down and the exchange rate is stable. In some cases, it is appreciating.

"The countries and the IMF are appreciating Bangladesh."

Rahman said the foreign currency reserves of Bangladesh also drew appreciation from the WB.

"Our current reserves of $11.5 billion can finance imports of three and a half months. If it touches $12 billion then we will be able to finance imports of four months.

"The WB officials are saying that Bangladesh's development story is very unique."

Rahman said he is more optimistic about Bangladesh's story after listening to the IMF managing director and the WB president.

"Both of them are not talking about one-track story. They are considering multiple factors and are going beyond the conventional kind of monetary management and policy story. They are talking about the multi-disciplinary kind of story. They are terming the WB as a solution bank."

He said he finds similarity of the central bank with the WB. "Our central bank is not a mono-track kind of central bank. We are encouraging banks to go for inclusive financing. We are allowing them to go green. From all sense, there was a resonance what the WB president has said and what we are doing in Bangladesh."

"We have already started to address the issues such as the financial stability, supervision and regulation as have been mentioned by the IMF managing director."

He said the capital adequacy requirement under the Basel-III would ultimately be good for the banking sector. "We have fixed capital adequacy ratio at 11-plus keeping that in mind, which will go up in 2018."

The governor said the WB is giving more emphasis on the regional cooperation. "We are also working on the issue. From the discussions, I found that Bangladesh is the most important country in case of regional hub."

The Bangladesh's delegation to Tokyo led by the finance minister also held meetings on the Padma bridge project.

On the issue, the governor said he thinks things are going positively. Confidence is building up.

He said, during this quarter the government's borrowing from the banking sector has been minimal, which is helping inflation come down.

The government and the central bank will have to maintain the existing level of coordination between them and improve it. "We can tell the world that many of the things that the WB president and the IMF MD said in Tokyo have already begun or were done."

"We are one of the few countries in the world who are really going for the inclusive growth, prudent monetary policy and we are tight while spending for the luxury goods. We are loose in case of productive agriculture and SMEs. We are working on the two legs."

Rahman also held meetings with top regional officials from Moody's and Standard and Poor's -- the world's two leading rating agencies.

"They also said they see no reason why the growth of Bangladesh will go below 6 percent."

It will remain 6 percent plus due to the performance of the agriculture sector, the governor quoted the officials as saying.

Rahman met Mauro Leos, regional credit officer of Moody's, and Elena Okorochenko, managing director of S&P's for Asia and the Pacific, in Tokyo.

Rahman said they also appreciated the government's decision to allow exchange rate flexibility when the taka was continuing to fall against the US dollar in November last year.

"They said: 'You had the guts to open your exchange rate'," Rahman said.

News: The Daily Star/Bangladesh/14th-Oct-12