** Government should know that days of reckoning have arrived and punishing BNP is futile ** 1 killed in police-BNP clash at Nayapaltan ** Police detain Rizvi, Annie after violent clashes over Dhaka rally ** Man dies as police, BNP activists clash at Dhaka’s Naya Paltan ahead of ‘grand rally’ ** Curiosity, panic run high over BNP’s Dec 10 rally ** Morocco and Spain scoreless at halftime ** Gas supply to remain off for 11 hours in parts of Dhaka Wednesday ** 4 die as train hits auto-rickshaw in Cumilla ** Gaibandha-5 by-election on January 4: EC secretary ** Sublime Brazil crush South Korea 4-1 with attacking masterclass ** HC order on bank loan scams is welcome, but we need a permanent fix ** Croatia beat Japan on penalties to reach quarter-finals ** Homeless people sleep on the footpath in the capital's Kakrail area on Monday, braving winter night. ** 2 kids burned to death in Madaripur ** General inflation in Bangladesh slightly down to 8.85% in Nov ** 5.2 magnitude earthquake felt in Dhaka, other areas ** Suhrawardy’s 59th death anniv today ** France storm into qtr-finals of FIFA WC ** Bangladesh edge past India in first ODI ** 12kg LPG cylinder to cost Tk 46 more ** Umrah e-visa: Biometric data must for pilgrims from Bangladesh, 4 other countries ** Messi helps Argentina past Australia into World Cup quarter-finals ** Women passing through the rickety wooden bridge built on Pakhimara canal at Nilganj union under Sadar upazila in Patuakhali district on Saturday. ** US Asst Secy Noyes in Bangladesh to discuss refugee, migration issues ** Thousands gather BNP rally in Rajshahi **

Five Decades of Bangladesh Economy Macro Economic Management

28 October 2020
Five Decades of Bangladesh Economy Macro Economic  Management

Bangladesh, geographically, lies between 20°34" and 26°38" N latitude and 88°01" and 92°41' E longitude, has an area of 147,570 Sq. km, bordered by India on three sides -West, North and East and a short strip of land of Myanmar also borders in the East while on the south lies the Bay of Bengal with its warm blue water. The hills at its head  (on the North and Eastern parts, an extension of the Himalayan ranges) keeps the country safe from cold waves from Siberian belt  and at the feet of the Bay of Bengal balances the hot temperatures of its being on the tropical cancer line. Bangladeshis a deltaic plain of the three major river systems of South Asia - the Ganges, the Brahmaputra and the Meghna, the land is formed with the alluvial soil of these rivers. Green paddy fields and vegetation are found all around. The most significant characteristic of the landscape of Bangladesh is its extensive networks of rivers and magnificently moving monsoons contributing a great deal to shape the socio-economic life of the country. The population of Bangladesh is over 161.4 million (2018), growth rate now being 1.37%.is one of the most densely populated countries (990 per sq. km.). 80% of the population lives in the rural areas. Of the total population 47% are in the civilian labour force, male 29.14% and female 17.86%.Per capita gross national income (PCGNI) is $2079 in 2019. In terms of human development Index, Bangladesh ranked 135 out of 189 countries. (Human Development Index, HDI, UNDP 2019).
Bangladesh -- was a prosperous region of South Asia until modern times. It had the advantages of a mild, almost tropical climate, fertile soil, ample water, and an abundance of fish, wildlife, and fruit, forming a favourable standard of living comparing with other parts of South Asia. As early as the thirteenth century, the region was developing as an agrarian economy. It was not entirely without commercial centers, and Dhaka in particular grew into an important entrepot during the Mughal Empire. The British, however, on their arrival in the early seventeenth century, chose to develop Kolkata as their commercial and administrative center in South Asia. The development of Bangladesh was thereafter limited to agriculture. The colonial infrastructure of the eighteenth and nineteenth centuries reinforced of this land's function as the primary producer--chiefly of rice and jute--for processors and traders in Kolkata and beyond.
Some of the same factors that had made in Bangladesh a prosperous region became disadvantages during the nineteenth and twentieth centuries. As life expectancy increased, the limitations of land and the annual floods increasingly became constraints on economic growth. Traditional agricultural methods became obstacles to the modernization of agriculture. Geography severely limited the development and maintenance of a modern transportation and communications system. The partition of British India and the emergence of India and Pakistan in 1947 severely disrupted the former colonial economic system that had preserved Bangladesh (then East Pakistan) as a producer of jute and rice for the urban industrial economy around Kolkata. East Pakistan had to build a new industrial base and modernize agriculture in the midst of a population explosion. The federal government of Pakistan expanded the cultivated area and some irrigation facilities, but the rural population generally became poorer between 1947 and 1971 because improvements did not keep pace with rural population increase. Pakistan's five-year plans opted for a development strategy based on industrialization, but the major share of the development budget went to the then West Pakistan. The lack of natural resources meant that East Pakistan was heavily dependent on imports, creating a balance of payments problem. Without a substantial industrialization program or adequate agrarian expansion, the economy of East Pakistan steadily declined. Blame was on the West Pakistani leaders who not only dominated the government but also most of the fledgling industries in East Pakistan.
The economic situation faced Bangladesh as it emerged from the liberation war in 1971 included the highest rural population density, chronic malnutrition for the majority of the people, and the dislocation of between 8 and 10 million people who had fled to India and returned to independent Bangladesh by 1972. The new nation state had few experienced entrepreneurs, managers, administrators, engineers, or technicians. There were critical shortages of essential food grains and other staples because of wartime disruptions. External markets for jute had been lost because of the instability of supply and the increasing popularity of synthetic substitutes. Foreign exchange resources were minuscule. Commercially exploitable industrial resources, except for natural gas, were lacking. The liberation war had crippled the transportation system. Hundreds of road and railroad bridges had been destroyed or damaged. And rolling stock was inadequate and in poor repair. The new country was still recovering from a severe cyclone that hit the area in November, 1970 and caused 250,000 deaths.
After West Pakistani owners of industrial enterprises fled in 1971, the government had to take over managing and operating more than 300 medium- and large-scale industrial plants, which represented nearly 90 per cent of the value of all such enterprises in the new nation. It organized public corporations to oversee the major industries. The main government institution responsible for coordinating national rehabilitation and development was the Planning Commission, which prepared plans that directed economic priorities for five-year periods. The First Five-Year Plan covered the period July 1973 to June 1978. It was succeeded by a two-year plan, covering the period July 1978 to June 1980, which was followed by a year-long hiatus. The Second Five-Year Plan (1981-85) and the Third Five-Year Plan (1985-90) put the planning process back on track. The broad objectives of the subsequent Fourth and Fifth Five-Year Plan and Poverty Reduction Strategy Papers ( PRSP), Sixth and Seventh Five Year Plans   were to reduce poverty, bring down the rate of population growth, increase exports, and domestic savings, attain self-sufficiency in food production, and realize an annual growth of the gross domestic product. These ambitious goals went well beyond the previous actual performance of the economy.
Table 1
Macro Economic Indicators
Source: Bangladesh Economic Survey, Ministry of Finance
Through the decades Bangladesh economy has experienced mixed developments in  both macro-economic stability and robust economic growth. At the backdrop of the deep macro-economic crisis until late 1980s, a series of stabilization measures were introduced in the Bangladesh economy which largely restored macro-economic stability in the early 1990s. Subsequently, the Bangladesh economy registered an average GDP growth rate of 4.8 per cent in the 1990s, which was one full percentage point higher than that recorded in the previous decade (i.e. 3.8 per cent). .Despite of such impressive growth the per capita income of Bangladesh continued to be the lowest among the South Asian countries and also below the average per capita income of the least-developed countries (LDCs) for many years until very recent years.  
Bangladesh Economy was facing the most severe exigency after the macroeconomic crisis since 1970s, however, the achievements of the 1990s fell under threat because of the twin shocks emanating from large fiscal deficit and deteriorating balance of payment position which exposed the entrenched vulnerabilities of the Bangladesh.. The pressure accentuated by a benign neglect in undertaking necessary reform measures to improve the competitiveness of the economy.
Within the real economy sectors such as Industry demonstrated stronger growth during the first half of the 1990s as against the impressive performance of the Agriculture all through. In fact, in the 1990s both Agriculture and Industry emerged as the major source of GDP growth in comparison to more pronounced role of the Service Sector in the earlier. Later Service Sector dominates as the major source of GDP growth and accounted a significant share.

Table 2
Macroeconomic Indicators: Public Budget
(Figures in Billion Taka)
Source: Bangladesh Economic Survey, Ministry of Finance
In spite of improved growth, the evolution of the Bangladesh's economy still remains biased against modern, industrial transformation having concomitant implications for sustained growth and equitable income distribution. Weaknesses in the domestic resource mobilization effort have emerged as one of the major structural constraints facing the Bangladesh economy .Though the share of revenue (tax and non-tax together) in the GDP has increased from 7.5 per cent in FY1978 to 11.4 per cent in FY08, nonetheless one observes a plateauing of the revenue-GDP ratio, the revenue receipts in Bangladesh, as a share of GDP, is still lower than many developing countries. The success of revenue earning since the early 1990s has been greatly triggered by the introduction of VAT. The VAT has been providing a bigger source of revenue compared to the taxes it replaced, mainly in respect of taxation of domestic production. Such a feat has been possible thanks to spectacular success in meeting the revenue collection target by the NBR in recent years. The largest part of the nontax revenue--making up 15-20 per cent of the revenue budget are also coming from the nationalized sector of the economy, including industrial enterprises, banks, and insurance companies.
Even by the standards of developing countries, Bangladesh's ratio of taxes to GDP, and of direct tax revenue to total tax revenue, has been very low. In 1984 taxes amounted to only 8.1 per cent of GDP, just half the percentage for India, less than half the average for 82 other developing countries, and far below the average of 29.7 per cent for the developed countries. Similarly, the 20.1 per cent of tax revenue coming from direct taxation was one of the lowest in the world (the average for developing countries was 29.3 per cent, for industrialized countries 34.2 per cent).
The development budget is presented to Parliament at the same time as the revenue budget each year. Most development budgets since independence called for resource mobilization the majority of which was to be provided by foreign grants and loans. The great bulk of capital expenditures goes to the Annual Development Programme. The records of the Annual Development Programme (ADP) do not show any constancy between original, revised and actual ADP.
The Annual Development Programme directed new project financing to particular sectors, consistent with the goals of the five-year plans, in practice it has been observed that most projects are carry overs continued from previous years. Large portions of the ADPs are earmarked for power projects and infrastructure .Looked at from another perspective,  each year program calls for overall expenditures higher than the previous year, but certain sectors were to receive much greater increases than the average. Since independence these trends should have been changed annually because demands of particular projects absorbed disproportionate amounts of capital and because some sectors were more capital intensive than others.
Independent Bangladesh, from the beginning, has been regarded as a test case for development by economists, policy makers, and program administrators of donor countries and international financial institutions. Interest in the area predated political independence, as East Pakistan represented the world's most extreme case of population growth outstripping resources. Because Pakistan was a single country, project design and approval processes occurred at the national level. West Pakistan, also poor, appropriated most commodity aid, capital, and technical and project assistance. The people of East Pakistan considered the attention they received to be inadequate and inequitable.
In October 1974, the Bangladesh Aid Group was established under the aegis of the World Bank, with twenty-six participating governments and institutions. Aid to Bangladesh has remained at a high level since the consortium came into existence, although with substantial fluctuations in new commitments from year to year. In the 1980s, the value of food aid declined to around 11 to 18 per cent of new aid commitments, most of it given on a grant basis. Commodity aid--about 25 per cent of aid commitments to Bangladesh -- included key items for increasing productivity, such as fertilizer, cement, steel, pumps, and other equipment. Project assistance accounted for more than 50 per cent of new commitments. This form of aid was preferred by the largest donors because their funds are put to work in well-defined ways that can be related to policy objectives. From the beginning, the Bangladesh government has been unable to use project funds at the same rate as they are authorized. As a result, a pipeline of authorized but undisbursed project funds has grown bigger every year.
Because much of the funding for the development budget in the mid-1980s was financed by external donors, the Bangladesh government had to attract financing for high-priority sectors and projects. Coordination was carried on at all times between the government and individual donors, but the keynote each year was a meeting organized by the World Bank as leader of the Bangladesh Aid Group. The World Bank has taken the lead in addressing some of the most deep-seated structural constraints in Bangladesh's economy by providing productive employment for those without assets, promoting economic opportunities for women, and addressing the social and economic inadequacies of education, health, nutrition, and population programs. The Asian Development Bank has been the second largest donor, about half of the Asian Development Bank's financing has gone to agriculture and agro-industry. ADB has also supported transportation projects (development and improvement of feeder roads between local markets and primary roads, inland waterways, and railroads) and social welfare schemes for population control, health, and education. The United Nations Development Programme operated its own development projects and coordinated the activities of other United Nations (UN) agencies with programs in Bangladesh, including the World Food Programme, World Health Organization, United Nations Industrial Development Organization, and United Nations Fund for Population Activities. Typically, these agencies provided technical assistance and training. They often functioned as catalysts by doing analytical and policy development work alongside Bangladesh government authorities, preparing the ground for well-conceived programs requiring capital expenditures to be financed by other donors or even by the Bangladesh treasury.The United States was the most important donor until the early 1980s when Japanese aid reached similar levels. As Bangladesh has been hospitable to foreign assistance, in addition to the programs of Britain, Japan, and West Germany, significant aid programs were initiated by Canada, Sweden, Finland, the Netherlands, Switzerland, Australia, and others, in which each country concentrated on areas where it possessed special expertise.
A high intensity of domestic credit expansion in the government sector resulted in a rising level of government borrowing from both the banking system and the public through the use of savings instruments.  The 1974 New Investment Policy restored certain rights to private and foreign investors. In December 1975, the Revised Investment Policy allowed greater private sector activity and authorized joint ventures with public sector corporations in a number of previously reserved areas, provided that the government retained 51 per cent ownership. The Dhaka Stock Exchange was reactivated in 1976, and the Bangladesh Investment Corporation was established the same year to provide financing for bridge construction and underwriting facilities to the private sector. Investment ceilings for private industry were abolished in 1978. Then, in 1980, the government delineated a more liberal attitude toward foreign direct investment in the Foreign Private Investment (Promotion and Protection) Act. Yet the growth of investment nonetheless remained slow, and industry was still dominated by public. The government transferred 650 industrial enterprises to private hands, leaving only 160 under public ownership. Subsequent governments announced comprehensive revision of industrial policies, setting out objectives and strategies to accelerate the pace of industrialization. The policy also emphasized private and foreign investment in high technology, export-oriented, and labor-intensive industries. The revised policy increased the number of sectors open to private investment, liberalized the tariff structure, reduced quantitative import restrictions, and furthered privatization of state-managed enterprises.
In 1987 an amendment to the Bangladesh Industrial Enterprises (Nationalisation) Ordinance was adopted, providing the legal basis for plans to sell up to 49 per cent of government shares in remaining nationalized enterprises. An export processing zone was established officially at the port city of Chittagong in 1980, actually begin functioning in March 1983, when a program of inducements was offered to investors opening up enterprises. In addition to the broad policies encouraging foreign investment, Bangladesh has entered into bilateral investment treaties which included such assurances as unrestricted currency transfers, compensation for expropriation, dispute settlement procedures, and taxation treatment. In addition, Bangladesh has signed agreements for the avoidance of double taxation with 29 countries.
Even with a reasonably attractive framework in place, the flow of private capital to Bangladesh has been slow. Estimates from the Organization for Economic Cooperation and Development foreign direct investment in Bangladesh averaged very insignificant. The largest amounts of foreign private investment are from Asian countries--Japan foremost, with smaller amounts from South Korea, Singapore, Taiwan, and Hong Kong--and from Britain and other countries in Western Europe.
The industrial sector produces around 10 per cent of GDP, and long-term national strategies until in the in the late 1980s did not anticipate a major increase in that percentage. The greatest need and the greatest opportunities remained predominantly in the agricultural sector. Prior to partition of India in 1947, Eastern Bengal was known for its fine muslin and silk fabric. The dyes, yarn, and cloth were the envy of much of the pre modern world. Bengali Muslin, Silk, and Brocade were worn by the aristocracy of Asia and Europe. The introduction of machine-made textiles from England in the late eighteenth century spelled doom for the costly and time-consuming handloom process. Cotton growing died out in East Bengal, and the textile industry became dependent on imported yarn. Those who had earned their living in the textile industry were forced to rely more completely on farming. Only the smallest vestiges of a once-thriving cottage industry survived. At this back drop at independence Bangladesh was one of the least industrially developed of the populous nations. Annual per capita consumption of steel and cement was only about one-third that of India, for example, and electric power consumption per capita was less than one-fifth.
The ready-made garment industry in Bangladesh is not the outgrowth of traditional economic activities but emerged from economic opportunities perceived by the private sector in the late 1970s. Frustrated by quotas imposed by importing nations, such as the United States, entrepreneurs and managers from other Asian countries set up factories in Bangladesh, benefiting from even lower labor costs than in their home countries, which offset the additional costs of importing all materials to Bangladesh. Bangladesh-origin products met quality standards of customers in North America and Western Europe, and prices were satisfactory. Business flourished right from the start; many owners made back their entire capital investment within a year or two and thereafter continued to realize great profits. Some 85 percent of Bangladeshi production was sold to North American customers, and virtually overnight Bangladesh became become the sixth largest supplier to the North American market.
After just a few years, the ready-made garment industry employed more than 200,000 people. About 80 percent are women, never previously in the industrial work force. The net benefit to the economy is a fraction of export receipts, since virtually all materials used in garment manufacture are imported; practically all the value added in Bangladeshis from labor until backward linkages are established.
Not all industrial growth in Bangladeshis stimulated by anticipation of foreign sales. The national economy stands to benefit equally from domestic production that could eliminate the need for imports of one kind or another. A good example of import substitution manufacturing is in the pharmaceutical industry, a field that attracted both foreign and domestic investment in the first decade of independence, based on the large potential domestic market.
Despite progress toward greater industrialization, in the late 1980s agriculture still accounted for nearly 50 percent of the value of Bangladesh's GDP. Approximately 82 percent of the country's population lived in rural areas, virtually all of them making their living exclusively or substantially from agriculture. Domestic production increased at a relatively steady rate in the years following independence, but not fast enough to close the gap created by the continued rapid growth in population. According to official statistics, the real value of all crops and of agricultural production rose every year. Absolute production has increased, and there has been an impressive diversification into a wide variety of seeds and new crops, such as wheat and vegetables. In fact, the patterns of agriculture have been virtually transformed. A previously self-contained and self-reliant subsistence economy has given way to one dependent on inputs, credit, markets, and administrative support from outside.
The Cumilla Model, which began in 1959, has been the most successful and influential example of cooperative agricultural development in Bangladesh. Projects in Cumilla District provided more modern technologies to farmers: low-lift water pumps; low-cost hand-dug six-inch tube wells; pilot research on adapting thirty- five-horsepower tractors for rice cultivation; new crop and animal varieties; testing and introduction of such inputs as chemical fertilizers, pesticides, and high-yield varieties of seeds; and new storage and processing technology. These innovations attracted resources to local rural institutions, against the prevailing urban orientation of the leadership elite.
Bangladesh, though a small country in the South Asian green belt, is the 9th most densely populated country (except for some island countries) in the world today. The country's population was about 42 million in 1951 which increased to 111.5 million in 1991. It is estimated that the current population size (about 147million) will reach about 180.6 million by the year 2020. The young age structure, a basic characteristic of Bangladesh's population, will continue to contribute to the increasing absolute size. The 0-14 -year old group constitutes more than 46% of the total population. The broad base of the age Pyramid reflects the fact that more and more children are born each year. Even if the average number of children per woman falls substantially lower than what it is today, the young age structure will generate continued growth for decades to come as successively larger numbers of the Bangladeshi will enter their child bearing years.
The crude death rate has gradually decreased over the past years. It dropped below 10 per 1,000 in 1995. In spite of the high Infant Mortality Rate (IMR) till today, a significant change has taken place in this respect during the past two decades: A change is also noticed in Maternal Mortality Rate (MMR) over the past decades. An increase in life expectancy at birth has also taken place in the country. The contraceptive prevalence rate has been increased to 61% in 2009. Over the past few years, the total fertility rate has shown, though with fluctuations, a basically decreasing trend. There is a positive trend towards fertility decline.
The percentage of single woman among the age groups 15-19 and 20-24 has also increased over the past few years. The increase of age at marriage has an important bearing on fertility decline. The current trend of delaying marriage, if continued, will cause fertility decline and simultaneously increase the acceptance of contraceptives. The youths are potentially the most productive force in Bangladesh. They constitute 36% of the total civilian labour force. The Government views population growth and the fertility level as too high and tries to bring them to a lower level through policy interventions.
Foreign capital inflows constitute part of the World’s savings. Over the past four decades World savings in proportion to World income has fallen. The decline in World savings implies that not every country can maintain its level of domestic investments by increasing foreign capital inflows. The decline in foreign capital inflows to developing countries has necessitated structural adjustment in the form of an increase in export earning or a reduction in import expenditure. The national accounting identities imply that the adjustment must also raise national savings or reduce domestic investments. To maintain or increase rates of economic growth, the adjustment must be in the form of increased exports and increased national savings. Faced with changed circumstances countries now have no choice but to adjust. Now governments of countries at all income levels and remarkably, of all ideological stripes have come to recognize the need for reforms to increase economic efficiency and flexibility.
At the most abstract level, adjustment programmes use changes in fiscal, monetary and sectoral policies; in regulations, and in institutions to alter relative prices and the level of spending and thereby redirect economic activities. The real exchange rate and the real interest rate are key relative issues because they both affect economic activity and saving as well as export and import and the rate of investment.
The scope of the economic reforms that needed in the developing world varies widely. Some countries need to privatize state-owned enterprises or invest in education, health, and infrastructure. Everywhere these measures are based on macro-economic stability. Experience shows that the surest path to development is to improve policies in all these respects. Reforms have to deal with tradeoffs among macro-economic, political and even social policies. For example reform of the financial sector often calls for distressed financial institutions to be restructured. In the short run, this may rise public spending and make it harder to cut to budget deficit. Adopting positive real interest rates will lower the burden of credit subsidies but increase the cost of servicing domestic debt. Lower tariffs may initially reduce government revenues, whereas shifting from quantitative restrictions to tariffs will generally raise them. The net effect may be a bigger fiscal deficit.   
Low inflation, external viability, fiscal discipline, financial stability and trade liberalization constitute the key elements of a successful structural adjustment programmes. Expectations of high net, rate of return to domestic investment are also essential, which may be achieved by eliminating debt overhang and removing barriers to the efficient allocation of resources within the economy. Again export growth is a determining factor for the viability of any economy. The most effective way to establish export is to liberalize imports in general, trade liberalization requires devaluation. It is thus particular important to think of trade liberalization and exchange rate adjustment as representing a policy package. Under a managed exchange rate system, import liberalization necessitates the adoption of a realistic exchange rate policy to prevent the depletion of foreign exchange reserves.   
The sequencing of the institutional restructuring at the macro level and the price liberalization are required to be decided carefully. It is quite clear that it would be counterproductive to adjust and liberalize prices before economic agents have the incentives and sufficient freedom to respond. Regarding the sequencing of domestic institutional and price measures on the one hand and liberalization of foreign trade and rate of exchange on the other the flexibility of exchange rate movements and convertibility is required to be established at a relatively early state of the reform process.   
However, structural adjustment has been complicated and slow. It remains specially difficult till now and all the more necessary-because many developing countries were in dire financial straits. Countries needed external resources to offset the costs of adjustment. In the 1980s both the IMF and the World Bank had helped finance economic programmes contributing to the adjustment process. Sixty-eight countries received long-term structural adjustment credits or loans from the World Bank between 1980 and 1992. Four countries in the Indian Subcontinent (Sri Lanka January 1979; Pakistan, November 1980; Bangladesh, December, 1980; India, November 1981) negotiated extended facilities adjustment programmes from the IMF. The adjustment strategies were designed to improve resources allocation, promote domestic investment and savings and strengthen external competitiveness. Key elements in these structural adjustment programmes were (i) increased public sector savings through tax reforms, reduced subsidies, wage restraint and realistic pricing policies by public enterprises (ii) increased private saving stimulated by higher real rates of interest (iii) more flexible adjustment of administered prices, such as agricultural procurement prices (iv) deregulation of industry (v) liberalization of import controls and (vi) a commitment to maintain a realistic exchange rate to improve profitability and competitiveness of the export sector. Performances have been disappointing and mostly mixed in most of the economies which embarked structural adjustments. Exchange rate policies demonstrated unusual behaviour in some countries. However, all these countries could maintain their investment ratios despite a worldwide recession. The growth rate remained unchanged in Bangladesh, rose marginally in Sri Lanka but fell in both India and Pakistan. Since  the beginning of the new millennium growth rate have had on the path of slower but steady progress in these countries of the  SAARC region.
Many developing countries in the world have made mixed progress towards restructuring trade reforms and exchange rate policies. In some cases, industrial policies in support of earlier import substitution strategies have maintained a protectionist stance, despite trade reforms. In other cases, inefficient financial systems continue to distort interest rates. In many countries, the failure of fiscal reforms in undermining the adjustment achieved so far and preventing further progress. Unsustainable fiscal deficits create economic uncertainty, contribute to, in many cases high inflation and subvert domestic financial system.   
If reforms are to succeed investment must respond. Expectations of the business community are crucial to induce investment. The private sector may choose to wait and see, and let the government prove its commitment to the new policies. But this may be a vicious cycle, because if it takes too long to restore confidence for investment, the programme may fail for that reason alone. Credibility can be improved by first achieving macroeconomic stability. Often, the government has no choice but to rebuild its reputation and then guard it zealously. In this respect, it is important not to promise too much. It may also be necessary for policy makers to overshoot to prove that the reformers really do mean business.
Macroeconomic stability also makes reform of the financial sector more likely to succeed and thus supports the development of capital market that can foster private investment. The aim of financial reform is to increase savings and to see them used more efficiently, effectively and economically. In many cases, it involves removing interest rate ceiling to achieve positive real interest rates, and abolishing regulation that affect the size and condition of bank credit. Close link with World financial markets require domestic interest rates to be high enough relative to international rates for investors to keep their financial assets in the country. For this to work, macroeconomic stability and strong bank supervision are both needed to be in place.

Dr. Muhammad Abdul Mazid : Retired Secretary to the Government of Bangladesh and former Chairman of the National Board of Revenue (NBR), was appointed as the new Chairman of CSE on 15 February, 2014 in line with the Exchange Demutualization Act, 2013. He is Senior Vice Chairman of South Asian Federation of Exchanges (SAFE). Dr. Mazid, currently is the Chief Coordinator of the Diabetic Association of Bangladesh.
He was a member in the Planning Commission, Deputy - Joint- Additional Secretary of the Finance Division, MoF, Director of the Board of Investment (BoI), and Economic Relations Division. Dr Mazid served as  a trade diplomat  ( Commercial Counsellor) for six years in the Bangladesh Embassy in Tokyo, Japan. Dr. Mazid has had over 28 years' experience of working in the public finance sector. He is a resource person in the Govt. Training Academies like Bangladesh Public Administration Training Center, National Defense College, Civil Service College, Bangladesh Bank Training Academy etc. He has been a visiting faculty in the Ahsanullah University of Science and Technology (AUST) and University of Information Technology and Science (UITS).   
Apart from showing excellences as a public servant, Dr. Mazid has proved his proficiency in writing as well. He authored 28 books on Literature and Socio-economic Condition of Bangladesh. He is a regular columnist in leading national dailies and magazines.
He is a member of the Governing Board of Human Development Foundation, Bangladesh NGO Foundation, International Business Forum of Bangladesh (IBFB). He is the former Treasurer of the Asiatic Society of Bangladesh and Dhaka Ahsania Mission).

Add Rate