Bangladesh - International University of Japan

COUNTRY PROFILE

BangladeshOur quarterly Country Report on Bangladesh analysescurrent trends. This annual Country Profile providesbackground political and economic information.

1996-97The Economist Intelligence Unit15 Regent Street, London SW1Y 4LRUnited Kingdom

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Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK

ISSN 0269-8195

December 13, 1996 Contents

2 Basic data

3 Political background3 Historical background6 Constitution and institutions7 Political forces8 International relations and defence

9 The economy9 Economic structure

10 Economic policy14 Economic performance16 Regional trends

17 Resources17 Population18 Education19 Health19 Natural resources and the environment

20 Economic infrastructure20 Transport and communications22 Energy provision24 Financial services26 Tourism

26 Production26 Manufacturing29 Mining and semi-processing29 Agriculture, forestry and fishing34 Construction

35 The external sector35 Merchandise trade38 Invisibles and the current account39 Capital flows and foreign debt40 Foreign reserves and the exchange rate

42 Appendices42 Sources of information44 Reference tables

1

EIU Country Profile 1996-97 © The Economist Intelligence Unit Limited 1996

Bangladesh

Basic data

Land area 147,570 sq km

Population 111.5 million (1991 census); 120.3 million (mid-1996 official estimate)

Main towns Population in ’000 (1991 census)

Dhaka 6,951Chittagong 2,348Khulna 1,002Rajshahi 545

Climate Tropical monsoon

Weather in Dhaka Hottest month, July, 23-35°C (average daily minimum and maximum); coldestmonth, January, 11-28°C; driest months, December and January, 5 mm, averagemonthly rainfall; wettest month, July, 567 mm, average monthly rainfall

Languages Bengali; Urdu and Hindi are minority languages and English is also used

Measures Imperial system. Local measures include: 1 tola=11.66 grams; 1 seer=80 tolas=932 grams; 1 maund=40 seers=37.29 kg

Numbers are commonly expressed in crores and lakhs; 1 crore=10 million,written 1,00,00,000; 1 lakh=100,000, written 1,00,000

Currency Taka=100 paisa. Average exchange rate in 1995: Tk40.278:$1. Exchange rate onDecember 13, 1996: Tk42.450:$1

Fiscal year July 1-June 30

Time 6 hours ahead of GMT

Public holidays in 1997 January 1, February 9 (end of Ramadan), February 21 (National Mourning Day),March 26 (Independence Day), March 28, 31 (Good Friday, Easter Monday),April 18 (Feast of the Sacrifice), May (Buddha Purinama), May 1, May 9(Muharram, Islamic New Year), July (Jamat Wida), July 18 (Birth of the Prophet),August/ September (Janmashtami), September (Shab-i-Bharat), September/October (Durga Puja), November 7 (National Revolution Day), December 16(National Day), 25, 26

2 Bangladesh: Basic data


Political background

Bangladesh has a parliamentary democracy based on universal suffrage.Executive power is exercised by a cabinet headed by the prime minister. TheAwami League (AL), led by Sheikh Hasina Wajed, was elected to power inJune 1996, thereby ending the five-year rule of the Bangladesh National Party(BNP). The main opposition party is currently the BNP, led by Begum KhaledaZia. Both women succeeded murdered male family members as leaders of theirrespective parties; Sheikh Hasina succeeded her father, Sheikh Mujibur Rahman,the first president of Bangladesh, while Begum Zia followed her husband, aformer president, General Ziaur Rahman. Before a change to the constitution in1991 the country had a presidential form of government.

Historical background

Bangladesh wins itsindependence led by

Sheikh Mujib—

After British rule in India ended in 1947 the country was partitioned, and Bengalbecame the eastern part of Muslim Pakistan. From the start of its existence EastPakistan had an uneasy relationship with the more powerful and richer WestPakistan. Gradually discontent grew, particularly among the middle classes inEast Pakistan, and, despite some concessions from the rulers in West Pakistan,which included making Bengali a joint official language and separating Pakistaninto two wings (East and West) with equal representation in parliament, asecessionist movement led by Sheikh Mujibur Rahman and the AL gainedincreasing support. In 1970 Sheikh Mujib, recently released from prison, led theAL to victory in almost all the seats in East Pakistan in both national andprovincial assembly elections. Buoyed by this success, Sheikh Mujib demandedthat he should become prime minister and that the two parts of Pakistan shouldbe separated, except for a central authority responsible for foreign affairs anddefence. Both demands were refused by the president, General Yahya Khan. Hisrefusal, which coincided with the perceived failure of the government to allevi-ate severe flooding in the East, led to a general strike. On March 10, 1971, theAL seized power and declared independence 16 days later. A full-scale civilwar broke out; the Bengali freedom fighters eventually triumphed, after Indiaintervened on their side in November 1971.

—but he is murdered in amilitary coup in 1975

Sheikh Mujib won an overwhelming parliamentary electoral victory inMarch 1973. Nevertheless, he declared a state of emergency in late 1974 and in1975 became president with virtually dictatorial powers. Sheikh Mujib wasassassinated in late 1975 in a military coup. After a series of further coups,General Ziaur Rahman (General Zia) came to power and imposed martial law.Since the murder of Sheikh Mujib and most of his family by a group of armyofficers in 1975, the history of Bangladesh has been dominated by the inter-vention of the army in politics and by the intense personal rivalry between theleaders of the two main parties, the AL and the BNP. Army officers have beenprominent in both parties, and periods of democratic government have beeninterspersed with periods of martial law and strong executive government.

Bangladesh: Historical background 3


General Zia too isassassinated—

General Zia was a good administrator and his period in power was characterisedby improvements in public order and economic management. In June 1978General Zia won the presidential election and in the following year his BNP wontwo-thirds of the seats in parliament. However, in May 1981 General Zia wasassassinated by a disaffected army officer but this did not lead to an attemptedmilitary coup. In March 1982, in a widely signalled action, the army chief,Lieutenant-General Hossain Ershad, took power in a bloodless coup, replacingan ineffectual government.

—and is eventuallysucceeded by General

Ershad

Initially, General Ershad tried to gain opposition agreement to the holding ofparliamentary and presidential elections so that he could be confirmed in officeby constitutional procedures. However, the opposition parties refused to agreeto elections, which they did not consider could be freely and fairly conductedwhile martial law remained in force. The refusal of opposition parties to takepart in elections has been a potent tool used in Bangladesh to deny legitimacyto rulers who have come to power as a result of a coup, or to bring downgovernments whose popularity has waned. Elections which have been heldunder these circumstances have usually resulted in overwhelming victories forthe party in power because of the opposition parties’ boycott, and have usuallybeen characterised by very low voter turnout and rampant poll irregularities.Faced with this opposition strategy, General Ershad strengthened martial lawcontrols in March 1985, banned strikes and all political activities, and placedmany party leaders under house arrest. Although a parliamentary election washeld in 1986, the BNP refused to take part. In the presidential election held laterin the same year turnout was estimated at a mere 5%, and General Ershad gaineda landslide victory.

Opposition to GeneralErshad’s rule is

widespread—

General Ershad’s attempt to institutionalise the army’s role in government pro-voked the worst riots and violence the country had seen since he seized power.In late 1987 the two opposition groupings led by Sheikh Hasina and Begum Ziaagreed to join forces with 21 other opposition parties: their single demand wasfor the president’s resignation. In the following three years there was widespreadviolence in the country, which provoked General Ershad into proclaiming statesof emergency and making mass arrests of opposition activists. Despite the resis-tance to his rule, General Ershad cleverly managed to exploit divisions betweenthe opposition parties. He also used the catastrophic floods of 1987 and 1988 tothe advantage of his own Jatiya Party (JP), as he confidently organised emer-gency relief through numerous army administrators.

—and opposition partiesunite to oust him

Finally, in 1990, faced with the prospect of a presidential election in 1991, theopposition parties sank their differences and united against General Ershad in aseries of strikes, demonstrations and rallies. In December 1990 General Ershadresigned from the presidency, handing over power to a caretaker governmentwhich organised the country’s first truly free and fair election in February 1991.General Ershad and many of his cronies faced charges of corruption and theillegal possession of arms. He was eventually sentenced to 13 years’ imprison-ment, against which he is still appealing.

4 Bangladesh: Historical background


The new BNP governmentfaces severe tests—

The outcome of the 1991 general election was a victory for the BNP led byBegum Zia, although the AL and its allies polled more votes. Begum Zia’sgovernment faced severe tests during its five years in office. The cyclone onApril 29-30, 1991, posed an immediate test for the new government. Its inexpe-rience was evident in the ensuing clear-up operation and the army was eventu-ally called in to coordinate the relief effort. In domestic politics the governmentfound itself caught between the conflicting demands of aid donors and tradeunions over manning levels and pay rises in the state-owned industries, and hadto face strikes and stoppages by disaffected workers.

—and an oppositionboycott of parliament

In parliament there was initially an uneasy truce between the AL and thegovernment while a decision was awaited about the repeal of the IndemnityOrdinance, which protects the killers of Sheikh Mujib from being brought tojustice. In November 1993 Sheikh Hasina began a new course of action againstthe government by threatening to resign from parliament, a move that eventu-ally resulted in a complete boycott of parliament by all the opposition partiesafter alleged irregularities at a by-election in February 1994. The main demandof the opposition parties was that the government should resign immediatelyand hand over power to a neutral, caretaker government which would beresponsible for conducting a free and fair general election. Throughout 1995the opposition parties kept up their pressure on the government, accusing it ofcorruption and incompetence. Finally, in late 1995, parliament was dissolvedand a general election called in February 1996, which the opposition partiessaid they would boycott unless Begum Zia stepped down. In the face of herrefusal, the opposition parties orchestrated a series of strikes and blockadeswhich paralysed the country. Having won a landslide victory on very lowturnout in the general election, Begum Zia’s new government was forced by theescalating violence to resign and hand over power to a caretaker government.

Important recent events

February 27, 1991: The country’s first ever truly free and fair elections are held by a

caretaker government headed by Justice Shahabuddin Ahmed.

April 29-30, 1991: The severest cyclone ever to hit the coast of Bangladesh devas-

tates the coastal areas around Cox’s Bazar, killing 150,000 people.

March 1994: All the opposition parties unite to boycott parliament indefinitely and

force the government to resign in favour of a neutral caretaker government which

would be responsible for holding a free and fair general election.

August 1994: Taslima Nasreen, a feminist writer accused by Muslim fundamentalists

of blasphemy, flees the country in fear for her life.

February 15, 1996: The BNP government wins a landslide victory in the general

election which is boycotted by all the opposition parties.

May 1996: A military revolt led by the chief of staff, and apparently intended to ensure

the installation of an AL government, fails to gain support.

June 12, 1996: The AL wins the largest number of parliamentary seats in the general

election held under a caretaker government headed by Justice Habibur Rahman.

Sheikh Hasina heads the first AL government since the murder of her father in 1975.

Bangladesh: Historical background 5


The AL returns to powerafter 20 years

At the general election held on June 12, 1996, in which all the political partiesparticipated, the AL was victorious. In the aftermath of the election theJP pledged its support for the AL in the hope that the new government wouldfree its leader, ex-president General Ershad, from jail. One of the first acts of thenew AL government was to repeal the Indemnity Ordinance which hadprotected the killers of Sheikh Mujib. However, this precipitated a BNP walk-outof parliament and has raised fears that the BNP may emulate former AL tacticsto undermine political stability.

Constitution and institutions

Parliament The system of government in Bangladesh is a parliamentary one based on auniversal adult franchise. Before the Twelfth Amendment Bill was passed inAugust 1991, the constitutional system was a presidential one, with a primeminister and a Council of Ministers in a subsidiary role to the directly electedpresident. Under the current parliamentary system the prime minister is vestedwith executive power and the president (now indirectly elected by parliament)can act only on the advice of the prime minister. The Council of Ministers isappointed by the prime minister.

The Jatiya Sangshad (parliament) is a unicameral legislature with 300 directlyelected seats, plus a further 30 seats reserved for women. It sits for five yearsunless dissolved earlier. Elections are supervised by an independent ElectionCommission, which is also responsible for constituency boundaries. The votingsystem is first past the post. Laws are passed by simple majority in parliament,but constitutional amendments require a two-thirds majority. Local govern-ment is based on a two-tier system, the union parishad at village level and thezila parishad at district level.

Constitutional peculiarities

In a general election a candidate may stand in up to five constituencies. This gives partyleaders the maximum chance of election to parliament. A by-election occurs if acandidate wins in more than one constituency. In a country where political allegiancesare fluid and are based less on policies than on personalities, this system ensures thatparty leaders manage to get elected in at least one constituency.

Parliament has 30 seats reserved for women MPs, who are indirectly elected whenparliament sits for the first time after a general election. The party with the largest shareof the vote in the general election often joins with another party (following the June1996 elections, the Awami League joined up with the Jatiya Party) in order to achievethe majority necessary to select the women MPs.

The judiciary The Supreme Court is at the pinnacle of the judicial system. There is a system ofboth criminal and civil courts, and in the major cities there are metropolitanmagistrates. Citizens are equal before the law and are free from arbitrary arrestand discrimination on any grounds. However, detention without trial is allowedin a state of emergency, and under the Special Powers Act 1974, which has beenused by every government to date.

6 Bangladesh: Constitution and institutions


Political forces

The main parties are the Awami League (AL) and the Bangladesh National Party(BNP). The Awami League was led by Sheikh Mujib when it spearheaded thewar of independence in 1971 and is now led by his daughter, Sheikh Hasina,the current prime minister. The AL won the June 1996 election after two yearsof implacable opposition to the BNP government. The AL was successful inbranding the BNP government as being corrupt and incompetent, chargeswhich were borne out by events such as the fertiliser shortage in 1995 whichled to food shortages and rising inflation, and the irregular conduct of theMagura-2 by-election. The AL’s electoral success in June 1996 can also beattributed to the party’s clear break with past policies, such as nationalisation,its support of a free-market economy, and its promise to modernise agricultureand pursue policies which would boost employment, production and exports.

The Bangladesh National Party is led by the leader of the opposition,Begum Khaleda Zia, the widow of General Ziaur Rahman. The BNP professes tostand for authentic Bangladesh nationalism, claiming that this sets it apartfrom the AL, which it accuses of being pro-Indian. The BNP is committed tofostering the market economy and the role of the private sector, giving priorityto industrialisation and to encouraging both domestic and foreign investment.By 1996 the differences between the AL and the BNP in terms of economicpolicy were not great; however, there remains a bitter rivalry between themand a strong personal animosity between their respective leaders.

Other parties active in Bangladesh include: the Jatiya Party (JP), the party ledby General Ershad which has never developed much grass-roots support ororganisation but has existed mainly as a grouping of politicians supportinghim; the Jamaat-e-Islami (Jamaat Party), which espouses an Islamic state;and a number of leftist parties, including a communist party, which haveassociated in a variety of shifting alliances for electoral purposes.

General election results

Feb Jun1979 1986 1988 1991 1996 1996

AL 39 76 – 96 – 146

BNP 207 – – 139 272 116

JP – 153 251 35 – 31

Jamaat Party – 10 – 18 – 3

Others 54 61 49 12 – 4Source: Press reports.

The parties’ student wings The student wings of the political parties have always played an important role,both within their own parties and in political life generally. Often they attractviolent elements, which the leaders of the parties have been unable to control.In 1990 the All Party Students Union was instrumental in forging the alliancebetween the quarrelling opposition parties, a tactic which resulted in thesuccessful overthrow of the Ershad government.

Bangladesh: Political forces 7


The army’s role in politics The army has always played a prominent part in Bangladesh political life andmany leading politicians have been drawn from its ranks. After the fall ofGeneral Ershad the army withdrew from the political arena to play a strictlymilitary role. However, in May 1996, in the run-up to the second generalelection that year, the chief of staff, General A S M Nasim, staged a militaryrevolt against the caretaker government apparently in an attempt to ensure theinstallation of an AL government. Although the action failed to gain wide-spread support, the episode demonstrated that in the event of a serious break-down in law and order military intervention could be expected.

Main political figures

Sheikh Hasina Wajed: prime minister of Bangladesh and leader of the AL

Begum Khaleda Zia: leader of the opposition and leader of the BNP

General Hossain Mohammad Ershad: ex-president and leader of the JP

Shahabuddin Ahmed: former chief justice and president of Bangladesh

Professor Golam Azam: amir (leader) of the Jamaat-e-Islami Party

Humayan Rasheed Chowdhury: speaker of parliament

Moudud Ahmed: former vice-president of the JP who defected to the BNP after the

June 1996 general election

Oli Ahmed: BNP MP and former BNP communications minister

Dr Kamal Hossain: former MP and president of the Gano Forum

Rashed Khan Menon: former MP and leader of the Workers’ Party

International relations and defence

Bangladesh is a member of the South Asian Association for RegionalCooperation (SAARC), the Commonwealth, the World Trade Organization(WTO, formerly GATT), the UN (following Bangladesh’s recognition by Pakistanand the withdrawal of the Chinese veto) and several other internationalorganisations.

Relations with India Relations with India have been marked by growing animosity since inde-pendence, while those with Pakistan have become increasingly cordial. Disputesabout the sharing of the waters of the Ganges and crossborder terrorism aroundthe area of the Chittagong Hill Tracts (CHT), where tribes have been engaged inguerrilla warfare against Bangladeshi settlers and the Bangladesh army, haveparticularly soured relations with India over the years. In late 1992 the govern-ment began negotiations with the leaders of the guerrillas in the CHT, and in1994 a few refugee families returned home. However, no permanent accord hasbeen made with the guerrillas, although there have been a series of ceasefiresbetween the two sides. The prospects for relations with India have improvednow that the AL, which has traditionally appeared more pro-India than theBNP, is in power. This has been marked most recently by an agreement betweenIndia and Bangladesh to settle the 20-year dispute over sharing the waters of theGanges river.

8 Bangladesh: International relations and defence


Relations with China have consistently improved, as trade and levels of assis-tance have expanded. Bangladesh backed Nepal when India blockaded thelandlocked kingdom in 1989 and has looked to Nepal for support against Indiaover the water-sharing issue.

The Rohingya refugeesfrom Myanmar

Relations with Myanmar have been strained by the influx of refugees intoeastern Bangladesh during the early 1990s. In 1991 many Muslims from theArakan region of Myanmar fled into the area around Chittagong after persec-ution by the army. The refugee crisis mounted throughout 1992, until the firsttrickle of refugees started to return to Myanmar in September 1992. Bowing tointernational pressure in late 1993, the Myanmar government agreed in princ-iple to allow the UN High Commissioner for Refugees to monitor the safety ofreturnees. The pace of repatriation has quickened since 1994 and by June 1996only about 50,000 still remained in the camps in and around Cox’s Bazar.

The armed forces The armed forces totalled 115,500 in 1995. Expenditure on defence has hoveredaround 2% of GDP in recent years. The inclusion of Bangladeshi forces in theUN peacekeeping forces in former Yugoslavia and in Haiti has given the army aprofessional role and a new source of income which has been much appreciatedby both the government and the army.

The economy

Economic structure

Main economic indicators, 1995

GDP growtha (%) 4.4

Consumer price inflation (%) 5.8

Populationb (m) 120.3

Current-account deficit ($ m) 824

Foreign debtc ($ bn) 16.6

Exchange rate (Tk:$) 40.28

a Fiscal year ending June 30. b Mid-1996. c End-1994.

Source: EIU.

Bangladesh is among the world’s poorest countries, according to the WorldBank’s World Development Report. The economy is predominantly agrarian,with some two-thirds of the population engaged in rural activities, such asfarming or fishing, and often falling outside the money economy. Agriculturalproduction dominates the national product, contributing around 30% of GDP(having fallen from around 38% in the early 1990s). (See Reference table 7 fora breakdown of GDP by sector.) It is also the source of much of the smallindustrial sector’s raw materials, such as jute. Meeting the country’s growingfood requirements remains a central government objective; there has beenprogress in increasing rice production and diversifying the crop base. Butowing to the climate and terrain, adverse weather, usually in the form of heavy

Bangladesh: Economic structure 9


flooding, constantly threatens to disrupt plans and make targets unattainable.Losses of both food and cash crops are a common occurrence, seriously disrupt-ing the entire economy by precipitating unanticipated food import require-ments, which place strains on industry and cause shortfalls in exports. Mostnon-agricultural raw materials, machinery and equipment must be imported,and although natural gas production is of increasing importance, Bangladeshstill runs up a heavy fuel import bill. Levels of domestic saving and investmentare low, although they have been growing in the 1990s. These factors place asevere constraint on economic growth and development; the opportunities fordiversifying the economic base are limited and, faced with a perennial tradedeficit, the country relies very heavily on aid assistance and is likely to do so forsome time to come.

Comparative economic indicators, 1995

Bangladesh India Malaysia Pakistan Sri Lanka Vietnam

GDP (US$ bn) 29.1 322.1 81.2 60.6 12.9 19.8

GDP per head (US$) 242 343 4,042 467 713 268

Consumer price inflation (%) 5.8 10.3 3.4 12.3 7.7 16.8

Current-account balance (US$ bn) –0.8 –5.3 –7.1 –3.6 –0.5 –1.9

Exports of goods (US$ bn) 3.7 32.4 73.1 8.2 3.8 5.2

Imports of goods (US$ bn) 6.1 39.4 72.9 10.9 4.7 7.5

Foreign trade (% of GDP) 33.6 22.3 179.8 31.5 65.9 64.3Source: EIU.

The main centres of industrial activity are in Dhaka and Chittagong. In boththese cities Export Processing Zones (EPZs) have been set up to attract foreigninvestors by offering firms locating there generous tax concessions. Industrycontributes over 11% of GDP, having risen from around 10% in the early1990s, with large-scale enterprises (usually enterprises with more than tenworkers) accounting for about two-thirds of the total.

Economic policy

Alleviating povertythrough growth

The main problem confronting all governments in Bangladesh has been howto raise the rate of economic growth in a country in which 61.3% of urbanhouseholds live below the poverty line and 40.2% below the “hard-core”poverty line in the mid-1990s, according to an Asian Development Bank-sponsored study carried out by the Centre for Human Studies. (The poverty lineis defined by the Household Expenditure Survey in terms of a daily intakeof 2,122 calories, and “hard-core” poverty as a daily intake of less than1,805 calories.) In consequence, the country is highly dependent on foreignaid for development projects, and for food for the poorest members of thepopulation. At the behest of foreign donors, governments of all parties have,with varying degrees of success, pursued economic policies aimed at encourag-ing GDP growth, increasing domestic foodgrain production and reducing thecountry’s reliance on foreign aid.

Economic policy in the 1970s and 1980s was contained in a series of five-yearplans, which largely failed to achieve their targets: GDP growth in the 1980s

10 Bangladesh: Economic policy


averaged a little over 3%. Problems arising included the rise in world oil prices,natural catastrophes such as severe floods and cyclones, political disorder, andinadequate management and unrealistic objectives. Various combinations ofthese problems meant that the economic policy aims of successive govern-ments were rarely achieved in any single year, although modest progress wasmade towards the long-term goals of achieving self-sufficiency in foodgrainproduction, a reduction in the rate of population growth and the alleviation ofthe grinding poverty endured by so many of the population. A report pub-lished by the Bangladesh Institute of Development Studies suggests a slightimprovement in the levels of poverty in recent years: the proportion of thepopulation living below the poverty line is reported to have fallen from 57.5%in 1987 to 51.7% in 1994.

Central government finances, 1994/95

Tk bn % change, year on year

Total revenue 141.8 13.2 Tax 111.9 16.2 Non-tax 29.9 3.1

Total expenditure 221.5 18.6 of which: current expenditure 103.1 13.1 Annual Development Plan 100.9 15.8

Budget balance –79.7 –Sources: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh; Ministry of Finance, Bangladesh Economic Review,

June 1995.

Government policy is nowaimed at economic

liberalisation

Since the overthrow of the Ershad government in December 1990, the policiesof, first, the Bangladesh National Party (BNP) and, more recently, the AwamiLeague (AL) governments have been aimed at liberalising the economy andmaking it market-based in order to raise the growth rate, mainly by reducingthe role of the government and giving encouragement to the private sector.The BNP government, in power in 1991-96, also attempted to reduce currentexpenditure and increase tax revenue by expanding the tax base. In 1992 itintroduced a value-added tax (VAT), more broadly based than the sales tax itreplaced. VAT was brought in against stiff opposition because it would be muchharder to evade. The government also set about improving revenue collectionand the administration of the tax system. As revenue increased, the proportionof development projects which could be financed from domestic resources roseto 40% of the Annual Development Plan (the government’s capital expend-iture programme) in fiscal 1996/97 from only 10% in 1990/91, reducing thecountry’s dependence on foreign aid. (For further detail on governmentfinances, see Reference tables 1 and 2.)

Monetary policy Monetary policy was used sparingly by the BNP government as an instrument ofeconomic policy, partly at least because its impact in an undeveloped financialsystem can be somewhat haphazard and very strict controls over monetarygrowth could have posed severe strains on the banking system which remainslargely in the public sector and in a very weak state of financial health. Themoney supply was allowed to grow more rapidly than nominal GDP during1991-95 and interest rates were cut several times. (For details about the money

Bangladesh: Economic policy 11


supply and domestic credit, see Reference tables 3 and 4.) The government thendealt with the resultant inflationary pressures in the economy by graduallyraising interest rates from September 1995 and by selling government bonds.Reform of the banking system, which is beset by bad debts, corrupt officials andovermanning, is high on the economic policy agenda (see Financial services).

The AL’s economic policiesare broadly similar to the

BNP’s

The economic policies of the AL during the 1990s and subsequently in theparty’s manifesto for the June 1996 election have been broadly similar to thoseof the BNP, albeit with slight differences of emphasis. By the time of the 1996election, the AL had importantly abandoned its former espousal ofnationalisation.

In the party’s first budget delivered in August 1996, the new finance minister,Shah A M S Kibria, announced measures to broaden the VAT base further andto tighten up the taxation administration. In an attempt to encourage growthin the important agricultural sector, Mr Kibria fulfilled his party’s electionpledge to farmers by offering them limited subsidies on loans for irrigationequipment and agricultural machinery. Policies supported by both parties havebeen the removal of bureaucratic procedures which so delay the conduct ofbusiness in Bangladesh, and the rooting out of corrupt practices, although inthe latter case political opponents have only too often been the targets of theclean-up campaigns undertaken by the government.

Major changes in the 1996/97 budget

• VAT was further extended to cover services such as accountancy, consultancy,

leasing and trading, but was removed from some agri-inputs.

• Limited subsidies were given to farmers on the interest charges on loans for the

purchase of agricultural machinery and irrigation equipment.

• The income tax threshold was raised to Tk60,000 and the rate of corporation tax

for banking, insurance and other financial institutions was cut by 2.5% to 45%.

Agricultural income up to Tk40,000 was exempted from tax.

• The highest rate of import duty was reduced to 45% (from 50%), and some other

rates were lowered.

• Capital gains on bonus shares were exempted from income tax.

• The lock-in regulations preventing foreign portfolio investors from selling their

shares bought at initial public offerings within a one-year period were lifted.

Privatisation ofstate-owned industries

proves difficult

The BNP, while in government, attempted to promote private-sector investmentand a privatisation drive was undertaken in order to sell off the loss-makingindustries in the public sector. In 1992/93 the losses of state-owned enterprises(excluding the Bangladesh Petroleum Corporation, the Bangladesh Telegraphand Telephone Corporation, Bangladesh Railway and the nationalised financialinstitutions) amounted to $418m, or 1.7% of GDP. A law was passed inJuly 1994 enabling state-owned enterprises (SOEs) to be turned into publiclimited companies. However, the privatisation programme has largely beenunsuccessful, with far fewer SOEs than envisaged being sold off by the start of1996. In addition, Jute Sector Adjustment Credits were stopped when losses in

12 Bangladesh: Economic policy


the industry continued to mount and little progress was made in privatising thejute mills.

Since coming to power the AL has pledged to continue with the policy ofmaking the SOEs profitable and saleable to the private sector. Initially the ALpromised not to close down any SOE before trying to make it profitable and notto make workers redundant without making alternative arrangements forthem. However, donors continue to push for more progress in this area andhave made many of their aid pledges conditional on the achievement ofcertain targets in cutting public-sector losses (as indicated most recently by theWorld Bank’s offer of aid contingent on the sale of 15 SOEs), but the ALgovernment will be anxious not to pursue a deeply unpopular policy against apowerful sector of the workforce: there will be hard choices ahead.

Government measures to stimulate private investment in the 1990s

• In 1990 the BNP government announced that private investment would be

released from bureaucratic controls; in 1991 the government issued an economic

policy document, Industrial Policy 1991, which was revised in December 1992.

• Under the industrial policy scheme, exchange controls for private manufacturing

firms were liberalised for current-account transactions, the government announced its

intention to end its ownership of industrial enterprises, and the Board of Investment

was given the task of facilitating private investment instead of regulating it.

• Since 1993 import controls have been reduced and import permits have been

abolished. The main import controls remaining relate to the import of textiles.

• Tariff reform began in 1991. Since then import sales tax and most of domestic

excise duty has been replaced by VAT, and tariffs rates have been simplified and

reduced. In 1996 the highest rate of import duty was cut to 45%.

• Export production has been encouraged through Export Processing Zones (EPZs),

the duty drawback scheme and the special bonded warehouse (SBW) scheme. The

SBW scheme has been important for the clothing industry. Firms in an EPZ can import

capital and raw materials free of duty, retain foreign currency earnings, employ non-

unionised labour and enjoy exemption from income tax for ten years.

• Rates of corporation tax have been reduced, although the complexity of the tax-

ation system is still considerable.

Economic policies need tobe more rigorously

implemented

If the country’s economic performance is to improve and the current level of aidpledges is to be maintained, future economic policies will need to continue onthe path followed since 1991, but be more rigorously and more efficientlyimplemented. In order to keep the budget deficit below the required maximumof 6% of GDP, the AL government will have to impose tight controls on currentexpenditure and, in particular, on wage rises for government employees. Thesale or closure of unprofitable SOEs remains a priority as their losses still accountfor 1.2% of GDP, although the cost to the AL of pursuing this policy may behigh in political terms. The administration of tax collection requires yet furtherattention, if revenue is to be maximised. In the area of development projects,which are so vital for improving the country’s infrastructure, better appraisal ofproposed projects is needed as is improved implementation of projects once

Bangladesh: Economic policy 13


they have been included in the Annual Development Plan (ADP). Financialsector reforms are necessary in order to mobilise domestic saving better and putan end to non-performing loans at unrealistically low interest rates. If this canbe achieved it will be easier for the government to keep monetary growth at alevel consistent with a low inflation target. The development of a responsivemonetary system requires the establishment of a better auction method for thesale of government bills and the phasing out of set interest rate bands fordifferent types of loans.

Main figures and institutions in economic policy

Finance minister: Shah A M S Kibria

Governor of the Bangladesh Bank (central bank): Lutfar Rahman Sarkar

Sramik Karmachari Oikya Parishad (SKOP): the umbrella organisation of the

trade union movement

Prokrichi movement: the organisation of specialist civil servants (doctors, engi-

neers, etc) belonging to the non-administrative cadres of the civil service

Bangladesh Garment Manufacturers and Exporters Association (BGMEA):

the association representing the garment manufacturers

Economic performance

GDP growth is erratic andremains below target

Vulnerability to national disaster and a heavy reliance on annual rains makeGDP growth erratic. (For detailed data on GDP, see Reference tables 5, 6 and 7.)Discrepancies between official estimates of growth and independent estimatesfurther confuse the picture.

Despite the country’s erratic climate, agriculture has been, and will long remain,the driving force behind economic growth, particularly as large sectors of ind-ustry rely on the crop and fisheries sectors as a source of inputs. Recent signs ofa secular stagnation in agriculture therefore have serious implications for overallgrowth prospects, although the fisheries sector has shown strong growth inthe 1990s.

Since 1989 annual GDP growth, although higher than in the 1980s, has consis-tently remained between 4% and 4.5%. Exceptional years were 1989/90, a yearof recovery after the severe flooding of 1988 and 1989, when GDP growthreached 6.6%, and 1995/96, when growth reached an estimated 4.7% despitepolitically inspired disruptions to the economy, illustrating considerable resil-ience in the economy. Growth in 1990/91 was affected by the Gulf war and bythe damaging cyclone in April 1991, but 3.4% growth was achieved neverthe-less. There were no national disasters between 1992 and 1994, but drought anda fertiliser shortage in 1994/95 resulted in a 1% contraction in agriculturalproduction that year and an acceleration in the fall in agriculture’s share ofGDP, by 1.8% to 32.8%.

Industrial growth, spurred on by the reforms undertaken by the BNP govern-ment and led by the export-oriented garments industry, has achieved impress-ive growth in the 1990s. However, by 1995/96 the industrial sector still

14 Bangladesh: Economic performance


accounted for only 11.5% of GDP, with 34% of the sector’s contribution fromsmall-scale, usually traditional, industry.

Gross domestic product(% real change)

Average1991/92-1995/96 1995/96a

Agriculture 0.7 1.9 of which: fisheries 7.1 3.7

Industry 7.9 6.0 of which: large-scale industry 10.5 7.1

GDP 4.4 4.7

a Provisional.

Source: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh.

The investment rate GDP growth has consistently been below government targets and at too low alevel to enable the majority of the population to see much improvement in itsliving standards. In 1995/96 income per head reached Tk10,816 ($264), havingrisen by an average annual rate of 2.5% since mid-1991. Raising the rate of GDPgrowth to around 7% per year must be the medium-term aim of the governmentif meaningful inroads are to be made on the alleviation of poverty. However,this target will only be achieved if the investment rate can be raised to about20% of GDP. A corresponding rise in the rate of domestic saving will also berequired; saving contributed only 7.8% of GDP in 1995/96, although this was animprovement on the level of 5.8% in 1991/92. In 1995/96 the investment raterose to account for 17% of GDP, from only 12% in 1991/92. It will be importantfor the newly installed AL government to maintain the confidence of bothdomestic and foreign investors and to encourage export-oriented industries bycontinuing with the programmes aimed at liberalising trade further, reducingbureaucratic obstacles to establishing new firms, and selling off the loss-making SOEs.

Inflation targets havebeen met in the 1990s

Since 1990 the government has had some success in controlling inflation.According to IMF data, consumer price inflation averaged 3.4% annually in1991-95. (For more detail about consumer prices, see Reference tables 8 and 9.)Since food accounts for almost two-thirds of the index weighting, food pricesare the prime determinant of inflation. Sharp fluctuations in food prices occurperiodically owing to temporary shortages, delays in delivery and speculativehoarding. In January 1995 a fertiliser shortage followed a disappointing mainrice crop harvest and inflation rose on a year-on-year basis to between 6% and9% despite a Public Food Distribution Scheme aimed at preventing pricesrunning out of control. According to the IMF, the average inflation rate forcalendar 1995 was 5.8%. Inflationary effects are not evenly spread. In 1993/94and 1994/95 prices rose faster for lower-income and rural families than formiddle- and high-income families living in Dhaka. This was largely due to thefact that food makes up a greater part of the consumer price index for lower-income and rural families—up to 79% compared with 56% for higher-incomeurban families. In 1995/96 this situation was reversed as prices of staple foods

Bangladesh: Economic performance 15


rose only slowly whereas prices of other goods, important in the price indicesfor better-off families, rose more quickly.

Prices and wages(% change)

Average1990/91-1994/95 1994/95

Consumer pricesMiddle-income families, Dhaka 3.3 5.2 of which: food 3.1 7.8Rural population, Dhaka region 4.0 7.3 of which: food 4.1 10.1

Wage ratesManufacturing 5.4 6.5Agriculture 5.8 3.8All occupations 4.8 4.5Source: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh.

Wage rises in all occupations have outpaced price rises in the 1990s (seeReference table 10). The government, which is responsible for the employmentof around one-third of those in formal-sector employment, either directly inthe civil service or indirectly through SOEs, has attempted to restrain wageincreases during the 1990s in order to curb the rise in its current expenditureand reduce its budget deficit. Government wage and employment policiestherefore have an important impact on the rest of the formal sector.

Regional trends

There is considerable disparity in income across the country. Income per headis at its highest in the centres of economic activity: Dhaka, Chittagong, andKhulna on the coast. Inhabitants of Chittagong enjoyed the highest incomeper head in 1992/93, at 55% above the national average, largely owing to theeconomic benefits of Chittagong port. In Dhaka income per head was 11%above the average overall and in Khulna 19%. Pabna, situated on the Ganges inthe north-west of the country, had the lowest income per head, at 74% of theaverage. Government is heavily centralised and local government is conse-quently weak. However, the city mayors of Dhaka, Chittagong, Khulna andRajshahi, who have been directly elected since 1994, are powerful politicalfigures.

Dhaka is the country’s capital and seat of government. In 1992/93, 14% of thecountry’s GDP was generated in Dhaka district, 37% more than in Chittagongdistrict. Dhaka has the country’s only international airport and is at the centreof the country’s transport network. An EPZ is located there.

Chittagong is the country’s main port and commercial centre. The first EPZ issited here, and there are proposals for at least one more EPZ to be built. Theairport at Chittagong is to be upgraded to international standards, at a cost of$149m, with completion expected in 1999. Since November 1994 there hasbeen a direct road link between Chittagong and Dhaka.

16 Bangladesh: Regional trends


Resources

Population

Bangladesh, with a land area of 147,570 sq km and a population officiallyrecorded at 111.5 million in the census in 1991 and estimated at 120.3 millionin mid-1996, is among the world’s most densely populated countries, withroughly 755 people per sq km. (See Reference table 11 for details of populationgrowth.) The urban population has been growing rapidly, by 5.3% per yearin 1980-93, according to the World Bank, and accounted for 20.1% of thepopulation by 1991. The principal urban centre is Dhaka, with a population of6.95 million in 1991, followed by Chittagong, with 2.35 million. Other maintowns are Khulna (1 million) and Rajshahi (544,650). The 1991 census indi-cated that 88% of the population was Muslim, 11% Hindu and the remaindermainly Buddhist or Christian.

Recent official evidence from a health and demographic survey, conducted bythe Bangladesh Bureau of Statistics, has shown sustained improvements in keyhealth and social indicators during the 1990s. The population is officiallyestimated to be growing at about 2.17% per year, with high priority given topopulation control and family planning; government initiatives have beensupplemented by various internationally funded programmes. In 1994 thecrude birth rate, at 28 per 1,000, was one of the lowest among countries ofBangladesh’s level of poverty, with the crude death rate at 9 per 1,000. Some37% of married Bangladeshi women of childbearing age now use contra-ception, and the fertility rate (the average number of children a women can beexpected to bear in her lifetime) is falling, from 6.8 children in 1965 to 3.6 in1994. Despite improvements, infant mortality remains high, at around 7.7%(3 per 1,000 higher than the regional—South Asia including India, Pakistan, SriLanka—average), and life expectancy, at 58 years, is low (the regional averageis 62 years).

Population by age, 1991

Age bracket Population (m) % of total

0-4 18.7 16.8

5-9 18.4 16.5

10-14 13.4 12.0

15-24 18.9 17.0

25-34 16.3 14.6

35-44 10.9 9.8

45-59 8.9 8.0

60+ 6.0 5.4

Total 111.5 100.0Source: Bangladesh Bureau of Statistics, Statistical Yearbook of Bangladesh, 1994.

According to official figures, nearly 200,000 people left Bangladesh in 1994/95to seek work abroad. The figure for new emigrants has grown steadily, from110,000 in 1989/90, falling to 97,000 the following year as a result of reducedjob opportunities in the Middle East because of the Gulf war, but then nearly

Bangladesh: Population 17


doubling in 1992/93 to 185,000. By 1996 there were an estimated700,000 Bangladeshi workers in Saudi Arabia, 80% of whom were in manualjobs, and these workers accounted for about half of the annual total of remit-tances. Other popular destinations are Malaysia, South Korea, Mali andMorocco. Recent surveys have shown that because of their low levels of skillsand training, expatriate Bangladeshis are not as well placed and earn corre-spondingly less than expatriate workers from countries such as India, Pakistanand the Philippines. (For information on the labour force and employment, seeReference tables 12 and 13.)

Population by place of residence, 1991(’000)

Rural Municipal Metropolitan

Barisal division 7,757 425 –

Chittagong division 2,902 2,775 2,348

Dhaka division 33,940 5,854 6,951

Khulna division 13,243 1,609 1,002

Rajshahi division 27,500 2,138 545

Total 85,342 12,801 10,846Source: Bangladesh Bureau of Statistics, Statistical Yearbook of Bangladesh, 1994.

Education

Despite the considerable emphasis that has been placed on education sinceindependence, the literacy rate is only about 35% among the adult population,with only 22% of women in 1990 being described as literate, according to theWorld Bank. These figures are far lower than for other countries in the region,with the exception of Pakistan. According to the 1991 census, the literacy rateof those aged five years and over was 24.8%, with a big disparity between urbanand rural segments of the population. In the four metropolitan areas of Dhaka,Chittagong, Khulna and Rajshahi, the literacy rate of the population agedseven years or over was 53.7%.

The central government is the main provider of primary education, while atsecondary school level private schools predominate. Boys are entitled to fiveyears of free schooling and girls eight years (reflecting the fact that families areless willing to pay to educate their daughters and government attempts toredress this). The main complaints raised about schools included poor qualityof education as a result of badly trained (or absent) teachers, large classes andshortages of books, and the lack of responsibility of schools towards theirpupils. Pupil drop-out rates are consequently high, with fewer than half of allchildren completing five years of primary education. Only about 10% of theoverall cohort reach the desired level of skills.

Universities receive generous government subsidies, but are generally consid-ered to produce poor-quality graduates at high cost. Only 30% of universitystudents are women.

Despite some government initiatives, female participation in the educationsystem is significantly lower than for males, and all participation rates are low

18 Bangladesh: Education


compared with most other countries in South Asia, with the exception ofPakistan.

Enrolment in school, 1992/93

Primary school Secondary school Higher education (5-9 years) (10-14 years) (15-24 years)

% of relevant age group 75.0 32.1 6.7 Source: Bangladesh Bureau of Statistics, Statistical Yearbook of Bangladesh, 1994.

Health

Medical facilities remain extremely scarce. In 1993 there were 35,280 hospitalbeds, 78% of which were in government hospitals, only 22,400 registeredphysicians, 19,559 registered nurses and midwives, and 3,459 registered femalehealth visitors (1991 figure), making 3,208 persons per hospital bed and5,054 per physician. Expenditure on healthcare and family planningaccounted for 1.25% of GDP in 1993/94, with just under half coming fromcurrent expenditure and the rest from the Annual Development Plan.

Access to medical services (defined as being able to reach medical facilities in lessthan one hour) in 1991 was estimated to be available to 74% of the Bangladeshipopulation, a lower figure than that for Pakistan (85%) and India (100%).Government-provided health services play only a minor role for most people,with only 18% of the urban population and 26% of the rural population usingthem, and they are not highly regarded. Those who are served by them far preferthe clinics run by the Bangladesh Rural Advancement Committee (BRAC), oneof the largest non-governmental organisations, or else rely on unqualifiedvillage doctors for advice.

Natural resources and the environment

The country is dominatedby waterways

Bangladesh is bordered by India on the west, north and east and by Myanmar(Burma) on the south-eastern tip; its southern coastline faces the Bay of Bengal.The land is mostly flat, although there are hills in the north-east and south-east.It is dominated by the Ganges and Brahmaputra rivers (known locally as thePadma and Jamuna). Much of the land is intersected by the numerous water-ways of the massive Ganges-Brahmaputra delta, the annual flooding of whichprovides rich alluvial soils. The climate is monsoon type with average rainfallamong the world’s heaviest, exceeding 2,540 mm and falling mainly betweenJuly and October. Every year massive flooding takes place during the monsoonperiod, with soil erosion and changes to the river channels posing constantproblems. The possibility of natural disasters is a constant fact of life forBangladeshis, many of whom live in precarious dwellings very close to the riversand the coast. The low-lying area at the mouth of the Ganges delta is at risk oftidal surges and cyclones coming ashore from the Bay of Bengal.

Much of the land issubject to multiple

cropping

Most of Bangladesh’s soil is very rich and able to support intensive cultivation.Of the total land area of 14.8m ha, 7.6m ha (52%) were cropped in 1992/93. Afurther 665,000 ha were fallow and 445,000 ha were classified as cultivable

Bangladesh: Health 19


wasteland. A large and growing proportion of the cropped area is subject tomultiple cropping—weather conditions and the introduction of improvedvarieties often permit three rice crops each year—serving to add a further 79%to the net cropped area in 1992/93. Afforested land covers 1.9m ha, or 12.7%of the total land area.

Mineral reserves arescarce—

Bangladesh is poor in non-energy minerals, its geology comprising mainly ofrecent deltaic sediments with few rocky outcrops. Known resources includerock salt, limestone, white and other clays, glass sand, certain heavy minerals(such as zircon, rutile, leuxocene, ilmenite, monazite and magnetite), traces ofsulphide of copper, and other metals, including uranium and thorium.

Bangladesh has a deposit of some 700m tons of coal at Jamalganj, which hasbeen too deep for commercial exploitation, and a very small deposit of 3m tonsin Sylhet. Deposits of coal at Barapukuria in Dinajpur have been put at303m tons. In 1995 deposits of high-quality bituminous coal were found atDighipara in Dinajpur; the seam is at a depth of 327 metres and is believed tobe the largest deposit in the country (see Mining and semi-processing).

—except for gas Bangladesh’s main energy resource is natural gas. So far 19 fields have beendiscovered. Three of these, Titas, Sylhet and Habiganj, have been in operationfor some time; a further three, Kailashtila, Kamta and Bakhrabad, have comeon stream since 1982; Chhatak ceased production in 1986/87; and the Fenifield began production in 1991/92. New fields discovered in 1995 and 1996 atShahbazpur in the island district of Bhola and at Kutubdia in the Bay of Bengalare currently being evaluated, but more gas and oil reserves are thought to liebeneath the waters of the Bay of Bengal. Oil exploration has been taking placealso in the Chittagong Hill Tracts. Gas reserves are estimated at 21 trn cu ft, ofwhich 12.4 trn cu ft are recoverable, with oil reserves estimated at 4m barrels.(For details about the production of natural gas, see Reference table 14.)

Economic infrastructure

Transport and communications

Poor transport facilitieslimit economic

development

The paucity of transport facilities has severely hindered economic developmentin recent years; only major population centres have anything other thanthe most rudimentary road or rail connections. (For details on transport, seeReference table 15). The government has been forced to place the problem ofpollution and traffic chaos in the cities, particularly in Dhaka and Chittagong,at the top of its urban transport agenda, but the means of improving the situ-ation are as yet unclear. Outside the cities the country is criss-crossed by amyriad of rivers and waterways. There is as yet no fixed link across theBrahmaputra (Jamuna) and Meghna rivers, which in effect divide the country inhalf vertically. This situation will be remedied when the Jamuna multipurposebridge is completed in 1997 or 1998.

20 Bangladesh: Transport and communications


The railway is also indecline—

There were 2,706 km of railway in 1992/93, operated by Bangladesh Railway.Some parts of the network are in poor repair and are being rehabilitated with theassistance of the Asian Development Bank and other aid agencies under theRailway Recovery Programme 1992-97, which aims to make Bangladesh Railwayfinancially viable and able to compete with other means of transport. However,losses have continued to mount: freight carried and passenger numbers bothdeclined steeply in 1995/96 after years of flat performance and the problemshave been compounded by a failure to control costs and collect fares. By 1993the railways carried just 7% of all freight, compared with 28% in 1975, and 12%of all passengers, compared with 30% in 1975.

—as both freight andpassengers choose to go by

road

Although the total length of roads maintained by local government amountsto more than 15,000 km, in 1993 there were just 8,546 km of road defined ashaving a cement, concrete or bituminous surface. Around 108,000 motorisedvehicles of all kinds are estimated to be in use on the roads out of 185,000registered vehicles (excluding auto-rickshaws and motorcycles); animal-drivencarts still provide the main means of land-based transport for people and goodsover shorter distances. Despite the problems of road transport, 61% of allfreight went by road in 1993, up from 35% in 1975, and 75% of all passengerstravelled by road, up from 54% in 1975. The increase in the use of road trans-port has been the result of roadbuilding programmes and the existence of avigorous private trucking industry.

Waterways providetransport to the remotest

areas of the country

Waterways provide an important means of organised transport, and there aresome 3,800 km of permanent waterway, which increases to 5,900 km duringfloods. An estimated 32% of national freight was carried on inland waterwaysin 1993, together with one-third of all passengers using organised forms oftransport, proportions that have fallen little since 1975. The waterway networkis particularly important as the only link to some of the remotest and poorestvillages in the country. There are probably upwards of one-quarter of a millionboats used for transport in the whole of the country. The Bangladesh InlandWater Transport Corporation had a fleet of 323 vessels in 1992/93, but abouthalf of them were officially described as old and dilapidated; only 49 werepassenger and/or car ferries. Badly needed improvements to the waterwaysinclude more dredging programmes, better boat safety regulations and theprivatisation of some of the ferry and cargo routes, but there are currently fewconcrete plans.

Seaports There are two major seaports, at Chittagong and Mongla, and smaller inlandports at Dhaka, Narayanganj, Chandpur, Barisal and Khulna. Chittagong is byfar the largest of the seaports, and is well connected to inland road, rail, riverand air routes. In 1994/95, 8.6m tons of imports and 1.4m tons of exports passedthrough Chittagong, representing 79% of imports and 66% of exports taken bysea. Chittagong port is vital to the economy as the main port for exports, and itsshutdown during the political disturbances in March 1996 had immediate anddramatic effects on the performance of the garment industry. The ChittagongPort Authority has several rehabilitation and expansion projects under way,including new berths and cargo-handling facilities.

Bangladesh: Transport and communications 21


Air transport The national airline, Bangladesh Biman, serves 26 overseas destinations andseven domestic airports and airfields. Its fleet includes four Fokker aircraft andfour DC10-30s. The main international airport is Zia International at Dhaka,and there is a smaller one at Chittagong which is to be upgraded to inter-national standards by 1999. There are stol (short take-off and landing) airfieldsat Rajshahi, Fondpur, Barisal and Khulna. In 1995 Aero Bengal inaugurated stolflights on domestic routes; more private operators were expected to follow.

Telecommunications Telecommunications are poorly developed and recognised as inadequate tomeet the growing demands of commerce and industry. Telephone density isamong the lowest in the world, with only two main telephone lines per thou-sand people, although digital telephone lines are now being installed. The aimof the state-owned Telephones and Telecommunications Board is to install300,000 new lines by 2000, bringing the country’s total to 800,000 lines. Thedecision to allow private-sector investment in the telecommunications ind-ustry should result in cellular and digital telephones becoming more widelyavailable.

Media There is a thriving local press with 102 daily newspapers, 14 of which arepublished in English. The press has considerable freedom, although somereporting restrictions have been imposed during periods of political unrest.

The state-owned television station operates two channels; most programmesare locally produced. There were 515,000 television sets in 1993.

The radio is an important medium of dissemination of information on agri-culture, family planning and development, although the number of licensedsets has declined by nearly 45% in the last decade, to 350,000 in 1993.

Energy provision

Inadequate supplies ofelectricity deter potential

foreign investors

Consumption of commercial energy per head is among the lowest in the worldand the lack of reliable sources of reasonably priced electricity has been a majorfactor in deterring foreign investors and preventing the country from achievinghigher rates of GDP growth. It is estimated that with present usage, each addi-tional 1% of GDP growth will require 2-2.5% growth in energy supply. Only12% of households were electrified in 1993 and most commercial energy isconsumed by a few large industrial units. Nevertheless, Bangladesh has toimport fuel—coal and petroleum—in large quantities: in recent years the cost ofimports has been $280m-400m. In 1995 domestic energy production was suffi-cient to meet 77% of the country’s commercial energy requirements, accordingto Energy Data Associates’ estimates. The new Awami League (AL) governmentis considering the possibility of importing electricity from India to cover thedebilitating shortages in the country.

22 Bangladesh: Energy provision


National energy balance, 1995(m tons oil equivalent)

Elec- Oil Gas Coal tricity Other Total

Primary supplyProduction 0.13 6.60 0.00 0.25a 1.49 8.47Imports 2.27 0.00 0.23 0.00 0.00 2.50Exports 0.00 0.00 0.00 0.00 0.00 0.00Total 2.40 6.60 0.23 0.25a 1.49 10.97

Net transformation 0.45 3.25 0.00 –0.53 0.03 3.20

Final consumption 1.95 3.35 0.23 0.78b 1.46 7.77

a Expressed as input equivalents on an assumed generating efficiency of 33%. b Output basis.

Source: Energy Data Associates.

Gas is the country’s mainenergy resource

Primary energy production is 77% natural gas, 3% hydroelectric power and 2%crude petroleum. Fuelwood, almost the only source of energy for the ruralpopulation, accounts for the remainder. Imports largely comprise crude petro-leum and petroleum products, plus coal chiefly from India, the USA andMozambique.

Bangladesh’s main energy resource is natural gas, development of which isby the profitable state-owned Petrobangla, which also controls oil and coaldevelopment. Gas production in 1994/95 averaged 19.2m cu metres/day.Domestically produced gas was used in 1991/92 for power generation (50%),fertiliser production (34%), industrial and commercial use (10%) and domesticuse (6%).

Demand for electricity faroutstrips supply

The installed capacity for the generation of electric power in 1996 was2,900 mw, but 1,950 mw was the maximum amount generated at any time asaround 25% of capacity is out of service, awaiting maintenance or replacement.Peak-hour demand can reach 2,100 mw and the country’s real current need isestimated to be about 3,900 mw. In 1995 proposals by eight foreign companiesto build power stations with a total capacity of 2,500 mw by 1998 wereapproved. The new joint-venture power stations will be the culmination of thegovernment’s decision to allow foreign investment in the power sector.

Transmission losses inelectricity remain high

Despite pressure from the World Bank to reduce electricity transmission lossesin 1992, losses of up to 40% were still being reported in some areas, due tounbilled electricity and illegal connections. In addition, cash collections fell20% short of billings, with the result that cash collections could be less than halfthe value of power generated. By 1995 system losses had been reduced to 34%and foreign credits to the power sector, which had been stopped in 1990, nowappear likely to be restored. In 1996 the Asian Development Bank demandedthat electricity prices, which have been unchanged since 1991, should be raisedby around 25%, in return for its support of a project to improve power distrib-ution, and that the Dhaka Electricity Supply Authority, whose losses were stillrunning at 37% of electricity supplied, should be privatised.

Bangladesh: Energy provision 23


Financial services

Financial services sector isunderdeveloped and in

need of reform

The financial services sector in Bangladesh is small and underdeveloped (forinformation on the banking sector, see Reference tables 16 and 17). The sectorcontributed only 1.8% of GDP in 1995/96, and has grown more slowly thanGDP during the 1990s. The depth of the financial system, as measured by theratio of M2 to GDP, was 38% in 1994/95, and has shown steady increases since1990. Domestic savings and investment rates have been low historically, buthave recently shown improvement. Savings as a proportion of GDP rose to 7.8%in 1995/96 from 5.8% in 1991/92, while investment rose from 12.1% of GDP in1991/92 to 17% in 1995/96, but these levels are still low in comparison withSouth Asian neighbours such as India and Pakistan. State-owned institutionsdominate the financial sector. The fact that the government is often the ownerof the bank, is responsible for regulating it, guides its lending policies andborrows from it as a customer has largely been the cause of mismanagement ofthe financial sector.

In view of the crucial role that the financial sector plays in determining the rateof economic growth in a country by enabling funds to be channelled to themost effective and profitable projects, the development of an efficient financialsector remains a top priority for the Bangladesh government. Recent surveys ofbusinesses in the private sector all show that the limited availability of creditand its high cost have stalled their attempts to expand their operations. In anattempt to improve matters, the Ministry of Finance and Bangladesh Bank (thecentral bank) set up task forces on banking reform in 1995 and 1996, but as yetlittle headway has been made.

The central bank The Bangladesh Bank is the central bank and issuing authority. The BankingCompanies Act (1991) and the Financial Institutions Act (1993) extended thebank’s powers and responsibilities. However, a further tightening of regulatoryprocedures and controls will be necessary if the bank is to be effective in itssupervisory and enforcement role over the regulation of the financial system.

The commercial banks Six main commercial banks dominate banking in Bangladesh. Four of thesebanks (the nationalised commercial banks, NCBs) are wholly owned by thegovernment: the Agrani Bank, the Janata Bank, the Rupali Bank and the SonaliBank. In addition, there are two commercial banks, which were privatised inthe 1980s: the Pubali Bank and the Uttara Bank. The four NCBs accounted for67% of total deposits and 65% of total advances in 1995. The NCBs and the twodenationalised banks, whose past lending was directed by the government ofthe day, have a substantial portfolio of non-performing loans, many to state-owned enterprises but also to some well-connected private individuals. Theyhave also been forced by the government to endure “loan forgivenessprogrammes”. The four NCBs were recapitalised in 1992 and 1993 at a cost ofTk31.9bn ($750m), but the two former NCBs have not even had this advan-tage. The growth in the number of private commercial banks operating in thecountry has recently provided the commercial banks with some much-neededcompetition.

24 Bangladesh: Financial services


The private banks The number of private domestic banks has been growing since the 1980s andparticularly since 1989 when the government launched a reform programme inthe financial sector at the behest of the World Bank. In 1995 seven private-sectorbanks were granted licences by the government and most of them had startedoperations by mid-1996. The new private banks, including some foreign jointventures, have been challenging established banks by offering more competitiveinterest rates for both borrowers and savers. They have increased their pro-portions of deposits and advances from 19% of total deposits in 1985 to 29% in1995, and from 17% of total advances in 1985 to 29% in 1995.

There are also ten foreign banks whose activities are mainly restricted to offshoreand foreign trade business. They hardly compete with the domestic banks.

The specialised banks There are two specialised banks for industry, the Bangladesh Shilpa Bank (BSB)and the Bangladesh Shilpa Rin Sangstha (BSRB), and two for agriculture, theBangladesh Krishi Bank (BKB) and the Rajshahi Krishi Unnayan Bank (RAKUB).All four banks are publicly owned, all have a negative net worth and all have alarge majority of their loans in arrears with loan recovery rates at between 5%and 29%. The banks have all suffered from political interference, poor manage-ment and a culture of lax credit discipline.

Other specialised banks in Bangladesh are the Investment Corporation ofBangladesh, the Grameen (rural) Bank and the House Building FinanceCorporation. The Grameen Bank, which lends small amounts principally topoor rural women in order to boost rural employment opportunities, differsfrom most other banks in that it has a default rate of only 2%. It receives itsfunds from donor agencies through the Bangladeshi government.

The stock exchange The Dhaka Stock Exchange (DSE) had a capitalisation of Tk63bn ($1.5bn) inJune 1996. (For information on the stock market, see Reference tables 18 and19.) In October 1995 a second bourse was opened in Chittagong. In the pastdemand for shares was weak because of the availability of high-yieldinggovernment stocks with little risk attached to them. As a result, the stockmarket is poorly developed with only 200 shares traded and poor liquidity.Market capitalisation of the stock exchange relative to GDP at 0.5% is smallcompared with its South Asian neighbours. Despite the announcement ofgovernment initiatives aimed at returning enterprises from state to privateownership (and the World Bank’s own insistence on this), doubts remain as towhether the new AL government has the political will or strength to effectsubstantial privatisation. A Securities and Exchange Commission was set up inJune 1994 to supervise the activities of the stock market, but further improve-ments to the regulation of the market are needed if sustained foreign portfolioinvestment is to take place.

In 1995/96 foreign portfolio investment slumped because of the political andindustrial unrest. New regulations (reversed in August 1996) which locked inoverseas investors buying shares at initial public offerings for one year, provideda further disincentive. Since the June 1996 election share prices, as measured bythe All Share Index, have risen dramatically to levels that many people considerunsustainable, and portfolio investment looks set to rise again.

Bangladesh: Financial services 25


Insurance companies The bulk of insurance activity is in the hands of two nationalised companies,Jiban Bima Corporation (life insurance) and Sadharan Bima Corporation(general insurance). Private insurance companies have been allowed since 1984.The largest privately owned insurance company is Green Delta, and there is oneforeign company.

Tourism

Tourism has limitedpotential for development

Bangladesh’s tourism sector is very small, with most visitors arriving for businesspurposes. (For details of tourist arrivals and spending, see Reference table 20.)The most important source of visitors is, predictably, India, although numbershave fluctuated sharply in recent years. Total tourist numbers rose for the thirdsuccessive year in 1995, by 11%. Of the total, visitors from India accounted for30% and those from the UK 20%.

In 1993 the government launched a ten-year tourism development programme.The cost was estimated then at $160m and the programme will involve majorinfrastructural work. The main beach resort will be on Sonadia, an island nearCox’s Bazar which boasts the world’s longest beach (120 km). Other areas whichhave tourism potential are the Chittagong Hill Tracts, although the poor secu-rity situation there will prevent their development for the foreseeable future,and the Sundarbans, the forest swamp area south of Khulna and Mongla whichis rich in wildlife including Bengal tigers.

Production

Manufacturing

The industrial sector isundergoing change—

Bangladesh’s manufacturing sector remains small and narrowly based. (Fordetails of manufacturing production, see Reference tables 21, 22 and 23.) Muchof the sector is involved in the processing of domestically produced agriculturalraw materials, such as jute. In the past decade some progress has been madetowards expanding industrial activity into new areas and a number of non-traditional industries, such as garments and fertiliser manufacture, haveemerged. Small-scale industries, often utilising little capital and making simplegoods wholly for the domestic market, have declined in importance.

—and the problems of theSOEs require action

Despite the growth of large-scale manufacturing enterprises run on moderncommercial lines, the industrial sector accounted for only 11.5% of GDP in fiscalyear 1995/96, up from under 9% in the 1980s but still below the 12% levelachieved in the 1970s. Industry’s smaller share of GDP in the 1980s went intandem with a drop in the level of private investment, from 9% of GDP in 1981to only 6% of GDP in 1991. Recent government policy to revitalise the sectorhas therefore concentrated on promoting private-sector investment, which in1995/96 reached 10.7% of GDP, to achieve efficient and rapid industrialisation,mainly through an export push and the lowering of tariffs and import controls.The state-owned enterprises (SOEs), combined output of which accounted for

26 Bangladesh: Tourism


6.1% of GDP in 1991/92, have been among the industrial sector’s worst per-formers and solutions to their problems will be required if the manufacturingsector is to achieve more rapid industrial growth. Manufacturing was badly hitby the industrial unrest during 1995/96 because of port closures and othertransport problems, despite a rebound after the situation was resolved in April.

Industry

Average1991/92-1995/96 1995/96a

Industry% of GDP 10.9 11.5 % growth 7.9 6.0

Large-scale industry% of GDP 6.8 7.5 % growth 8.3 7.1

Small-scale industry% of GDP 4.0 4.0 % growth 2.9 3.9

a Provisional.


Jute goods Bangladesh is second only to India as a producer of jute goods but, having amuch more limited domestic market, is the world’s largest exporter. The domi-nance of Bangladesh in this trade, and its heavy reliance on it, makes worldmarket conditions of critical importance. The long-term future of the trade isconstantly threatened by synthetic substitutes, although jute products havewon support from the “green” movement. Jute goods produced include carpetbacking, twine and sacking; recently efforts have focused on improving qualityof raw jute with a view to diversifying into paper. Some jute mills were privatisedin the 1980s but most still remain in the public sector under the Bangladesh JuteMills Corporation (BJMC), despite pressure from the World Bank to sell off theloss-makers. The industry made losses of around $250m in the three years toend-June 1993, is overmanned and will require massive cutbacks if it is to bemade profitable.

Ready-made garmentsunderpin exports

Over the last decade there has been a proliferation of export-oriented garmentmanufacturing enterprises (typically small) and output has risen dramatically,although most of the fabrics used have to be imported. There are now some2,400 factories employing 1.2 million workers, 80% of whom are women.Clothing has emerged as the most important export item, overtaking jute in1987/88. By 1994/95 garment exports topped the $1.8bn mark to comprise57% of export earnings. Bangladesh has been particularly successful in supply-ing cotton shirts to Europe and the USA, and protectionist measures have forsome time been in place in several importing countries in an attempt to restrictthe level of Bangladesh exports. However, there are clear signs that the rapidexpansion of the industry, especially between 1991 and 1993, is now losingmomentum. Pressures on the industry are likely to intensify as countries suchas China and Vietnam develop their garments industries.

Bangladesh: Manufacturing 27


Food processing This sector is geared primarily to domestic needs and includes sugar refiningand milling, and edible oils production. There is also a large fish-processingindustry, composed typically of small units, which is in part geared towardsexport, mainly of shrimps and froglegs. Burgeoning world demand for prawnsand shrimps suggests that there is considerable potential here for Bangladesh,but the major constraint has been lack of raw materials.

Chemicals The presence of natural gas in the country has led to the establishment of achemicals industry. Its major product is urea fertiliser, for which there is hugedomestic demand, met in the past mainly by imports. Output of fertiliser hasmore than doubled in the last decade and the country now exports fertiliser,mainly to neighbouring Asian countries. There are six fertiliser factories in thecountry under the state-owned Bangladesh Chemical Industries Corporation(BCIC), plus the Karnaphuli Fertiliser Company (KAFCO) at Chittagong, builtas a joint venture between the government and foreign investors from Japanand Italy. The fertiliser factories are on the whole profitable, although the priceof the gas feedstock is currently uneconomically low.

Cement Cement production, which averaged around 275,000 tons/year (t/y) between1990/91 and 1994/95, is due to rise as Daewoo of South Korea and ACC (AssociatedCement Companies) of India, build cement plants with capacities of 600,000 t/yand 500,000 t/y respectively. These are due to begin production in 1997.

Other industrial andconsumer products

Small-scale manufacture or assembly of industrial and consumer products in-cludes matches, cigarettes, bicycles, tyres and tubes, batteries, pumps, motorsand engines, radio sets and televisions and other electrical items. Recently therehas been some movement into electronics, with a number of foreign investorssetting up light electronics assembly plants in the Chittagong Export ProcessingZone (EPZ), partly to escape rising wages in many other Asian countries.

Export Processing Zones

The government is keen to promote EPZs as a way of luring foreign investment into

Bangladesh. The country’s first EPZ was built at Chittagong in the early 1980s and is

dominated by garments manufacturing firms. The Dhaka EPZ, which specialises in

high-tech firms, opened in June 1993. The construction of a second zone in

Chittagong is nearing completion; proposals have also been made to construct EPZs

in Mongla port and Khulna but so far have not been acted upon. In 1993 further

concessions were made to foreign firms located in EPZs in order to make Bangladesh

more attractive to potential investors and the government is now offering to build EPZs

for the sole use of individual countries; those signifying interest so far have been

investors from South Korea and from the Gulf states. Firms located in EPZs enjoy tax

concessions and a “one-stop” service, which reduces the amount of bureaucratic

regulation faced by firms. In 1994/95 industrial units in the EPZs earned $228m in

revenue earnings, up 60% on their earnings in 1993/94. In 1996 there were nearly

40,000 people employed in 82 industrial units in the country’s two EPZs, 66 of which

were in the Dhaka EPZ. In 1995/96 the target for inward investment into the EPZs was

$45m, and for exports out of EPZs $350m.

28 Bangladesh: Manufacturing


Mining and semi-processing

Mining and quarrying contributed only Tk255m ($6m) to GDP in 1995/96, aminute proportion. Mining and mineral exploration are carried out underthe auspices of the publicly owned Bangladesh Mineral Exploration andDevelopment Corporation (BMEDC). The only minerals commerciallyexploited at present are limestone and china clay, although there are plans tomine coal, with Chinese assistance, from Barapukuria in Dinajpur. Limestonereserves have been estimated at 145m tons, but production of the Takerghatmine has fallen in recent years as extraction costs have risen because of theneed to mine more deeply.

Agriculture, forestry and fishing

Agriculture’s share of GDPhas been declining

Agriculture accounted for 32% of GDP in 1995/96, its lowest ever proportion.The declining share of agriculture in GDP is explained by its very low rate ofgrowth in the past decade; the crop sector, which contributed 23.4% of GDP in1995/96, has experienced real decline in the past five years. Given the sector’simportance, successive governments have targeted agriculture in order to boostoverall GDP growth, but with little effect. The non-crop sector, including live-stock and fisheries, has however performed much better thanks to private-sectorinitiatives. (For information about agricultural crop production and fish catch,see Reference tables 24 and 25.)

Agricultural production

Average1991/92-1995/96 1995/96a

Agriculture% of GDP 34.4 31.9% growth 0.7 1.9

Crops% of GDP 26.2 23.4% growth –0.1 0.6

Forestry% of GDP 2.4 2.4% growth 4.0 4.3

Livestock% of GDP 2.9 3.1% growth 7.8 8.0

Fisheries% of GDP 2.9 3.0% growth 7.1 3.7

a Provisional.


Severe flooding is aconstant threat to crops

Bangladesh’s climate is tropical monsoon, and weather conditions can dra-matically change the agricultural situation from one year to the next. Seriousflooding is a constant threat, destroying crops, livestock and human life. Thedestruction of food crops places heavy, and unforeseeable, strains on importand foreign exchange requirements, even though aid donors usually make

Bangladesh: Mining and semi-processing 29


Comparative economic indicators, 1995

0 100 200 300 400

India

Indonesia

Singapore

Pakistan

Bangladesh

Vietnam

Sri Lanka

Gross domestic product$ bn

Sources: EIU estimates; national sources.

0 200 400 600 800

Singapore

Indonesia

Sri Lanka

Pakistan

Bangladesh

India

Vietnam

Gross domestic product per head$


28,46428,46428,46428,46428,46428,46428,46428,46428,46428,46428,46428,464

0 2 4 6 8 10 12 14 16 18

Vietnam

Pakistan

India

Indonesia

Sri Lanka

Bangladesh

Singapore

Consumer prices% change, year on year


0 2 3 5 7 8 10

Vietnam

Singapore

Indonesia

India

Sri Lanka

Bangladesh

Pakistan

Gross domestic product% change, year on year


30


good some of the shortfall. Damage to the jute or tea crops adversely affectsexports and, in view of the symbiotic relationship between agriculture andindustry, cash crop shortfalls, especially of jute, can reduce industrial activity.

Agricultural crop production(’000 tons)

Average1990/91-1994/95 1994/95

Rice 17,865 16,838

Wheat 1,124 1,245

Jute 917 964

Cotton 52 73

Sugar cane 7,438 7,446

Tea 49 52Source: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh.

Structure of land/farm ownership

Although most farms have been getting smaller in Bangladesh, around 5% of farm

households own and operate 26% of agricultural land, and this category of larger

landowner has been increasing in size and power. As agricultural output has risen as a

result of the use of more intensive methods than those required for traditional farming,

a hidden cost of these improvements has been the increasing marginalisation of the

peasantry, as the “green revolution” technology favours larger agriculturists at the

expense of the small farmers. Taken with the growth in the population which places

ever greater pressure on the land, there has been an increase in indebtedness, landless-

ness and destitution.

The 1983/84 agricultural census established that, of the 13.82 million rural house-

holds, 10.09 million (73%) were agricultural or farm households dependent on agri-

culture and having ownership of, or rights to, land. Agricultural households dependent

on other means of income including sharecropping accounted for the rest. The

1983/84 land census showed that the proportion of farms below 1 acre (0.4 ha) in size

increased from 24% of all farms in 1960 to 40% in 1983/84. The absolute number of

larger farms declined over the same period. Sharecropping is the predominant system

of land tenure in Bangladesh and most plots are fragmented between different sub-

holdings. This fragmentation of farms and the insecurity of tenure of most farmers

discourages investment in the long-term productivity of the land.

Crop yields remain lowdespite better-quality

inputs—

Despite a noticeable improvement in recent years, yields, particularly of foodcrops, still fall far short of attainable levels. Application of chemical fertilisers islow, although increasing, but animals are still by far the largest source ofmanure. There is also little incentive for most farmers to invest in long-termimprovements in their land because of the system of land tenure (see box). Theprivate sector is now responsible for the marketing and distribution of agricul-tural inputs since the Bangladesh Agricultural Development Corporation(BADC) fell victim to the Zia government’s privatisation drive in 1992. Failures

32 Bangladesh: Agriculture, forestry and fishing


in fertiliser distribution in December 1994-March 1995 led to serious shortages,especially for the boro (dry season) rice crop, with disastrous effects on yield.

Distribution of seeds has enabled the introduction of new high-yielding varie-ties of rice and contributed to increased wheat production. The area underirrigation has expanded from 17% of cropped land in 1979-81 to 31% in1989-91, with modern methods, such as pumps and shallow and deep tube-wells, gradually replacing traditional ones. By 1993/94, 3.3m ha were irrigated,just over 40% of the total crop-growing area; this has also helped to raise yields,especially for the boro rice and vegetable crops. However, the long-term futureof tubewell irrigation, which provides over 60% of irrigated area and has beenthe linchpin of agricultural growth, is now in serious doubt, as in regions ofheavy usage tubewell water levels have declined steadily and in periods ofdrought many tubewells dry up totally.

—although riceproduction has increased

The overriding objective of agricultural policy and development in Bangladeshhas been to achieve self-sufficiency in foodgrains. Reflecting slowly improvingmethods and materials, rice yields have risen gradually since the mid-1970s, andin 1991/92 and 1992/93 there were successive bumper rice crops of around18.3m tons. However, a combination of drought and fertiliser shortages reducedthe rice crop in 1994/95 by 7% to 16.8m tons, necessitating large-scale foodimports. Output of wheat, the only other important grain, grew rapidly from anannual average of just 100,000 tons in the early 1970s to about 1m tons in the1980s and 1.2m tons in 1994/95 as high-yielding varieties were planted inalmost all the wheat-growing areas. The index of agricultural production perhead has fluctuated, mainly because of weather factors, but has risen very littleover time. Between 1972/73 and 1992/93 it rose by only 13%, at an annualaverage rate of only 0.6%. The per head rice index has not risen since 1988/89,and (official figures are not yet available) is likely to have fallen in 1994/95.

Jute is the country’s mostimportant cash crop

Jute is important as an industrial raw material and as an export commodity.Bangladesh accounts for as much as 25% of world jute production, 85% of worldjute fibre exports and 45-55% of exports of jute manufactures. The area underjute fluctuates in response to changes in the relative procurement prices of juteand rice, but the jute area has tended to decline. Yields have been improvingand are good compared with those of most other producing countries exceptChina. Jute production rose by 19% in 1994/95 to 964,500 tons as farmersresponded to higher world prices. However, the quality of output is decliningdue to overcropping. Exports of jute have been declining in both volume andvalue, although high world prices in 1995 and early 1996 gave the sector a boost.

Tea production is indecline

Tea is an important cash crop and export product. Most production is in the hillareas around Sylhet and Chittagong. Tea yields are disappointing despite amajor rehabilitation programme which began in 1983. Poor climatic conditions,management problems in the tea estates, diversion of customers away fromBangladesh and low tea prices have been some of the problems afflicting theindustry.

Other crops Other important crops include sugar cane, tobacco and cotton. Sugar caneoutput is broadly static, although subject to wide swings from year to year. Low

Bangladesh: Agriculture, forestry and fishing 33


mill prices have diverted some cane from crushing at the mills to use in theproduction of artisanal sweeteners, known locally as gur. Smuggling of cheapersugar from India is a constant problem. Tobacco output, which finds a readymarket inside the country, has declined since 1984/85. Cotton is a fairly newcrop. There are plans for big increases in output to cut Bangladesh’s large importbill for cotton, which is used to supply the textiles and garments industry.

Livestock The livestock sector is underdeveloped but has been growing strongly during the1990s. While it is only a minor source of food, it plays a critical role in agricul-ture and also provides hides and skins, which are major exports. Livestock arethe main, often the only, source of non-human farm energy, providing most ofthe draught power for ploughing, crushing and rural transportation. An esti-mated 30% of the inputs for crop production derive from livestock and they areoften the only source of fertiliser.

Forestry The commercial felling of timber is limited, amounting in 1992/93 to around8.1m cu ft, and is used for sawn timber and to produce pulp for the paper andnewsprint industry. Reafforestation remains a priority for the government,particularly in view of the importance of forest areas as a source of firewood forrural populations. Considerable efforts are being made in community forestryprojects to provide stands for individual villages to meet their firewoodrequirements.

Fishing Fishing is predominantly artisanal although there is an industrialised process-ing sector geared to export. Fisheries products provide around 70% of animalprotein supply for the domestic population, their crucial role being reinforcedby the low level of development of the livestock sector. The natural resourcesto support a growing fisheries sector are abundant. In 1993 the governmentannounced a scheme to promote semi-intensive shrimp culture in the areasbordering the Bay of Bengal. Despite some quality problems when selling toworld markets, there is considerable scope for expansion of this trade; theconstraint at present is set by resource availability in realising the potentialrather than by export market opportunities. The value of fish and prawn ex-ports rose by 30% in taka terms in 1994/95 from its level a year earlier.

Construction

Construction accounts for about 6% of GDP. Absence of data concerning thissector precludes any detailed analysis. Construction is concentrated on urbanareas where the government seeks to provide housing for low-paid publicemployees and their families. Housing is inadequate both in rural and urbanareas, and in the former construction is undertaken by farmers on their ownland using rudimentary materials. Bridge building and flood control projectsare growth areas, supported by generous foreign assistance. The Jamuna bridgeproject, which received the go-ahead in 1992 from the chief foreign aid donorsinvolved—Japan, the Asian Development Bank (ADB) and the InternationalDevelopment Agency—is expected to cost $700m. Work began on the bridge inMarch 1994 after the Japanese government and the ADB had each approved

34 Bangladesh: Construction


loans of $200m for the project. The balance is being borne by the Bangladeshgovernment.

The external sector

Merchandise trade

Foreign trade, 1994/95(Tk m)

Exports fob 131,310

Imports cif –234,550

Trade balance –103,240Source: Bangladesh Bank, Economic Trends.

Bangladesh runs apermanent trade deficit

Bangladesh suffers from a chronically weak foreign trade account. (For infor-mation on foreign trade, see Reference table 26.) This reflects its dependenceon imports for most essential goods and the decline in the real prices of itstraditional staple exports of jute, jute manufactures and tea. The terms of tradedeclined for Bangladesh in 1988/89 and 1989/90 before improving in the early1990s. However, in 1994/95 they declined by 9% as import prices rose sharplyand export prices remained static. (For details of terms of trade, see Referencetable 27.) In order to try to minimise the trade deficit, government policy hasbeen geared towards encouraging the growth of export-oriented industriesmaking non-traditional goods, such as garments.

The garments industry

The country’s greatest recent export success, the garments industry, has grown in a

decade from contributing 11% of the value of exports in 1984/85 to 57% in 1994/95.

The main reasons behind the sector’s success include the following.

• The government’s policy towards the sector, which leaves it effectively unregulated

in contrast to much of the rest of the manufacturing sector a decade ago. The gar-

ments industry began its operations within an enclave; government policy allows

bonded warehouses and Export Processing Zones (EPZs), so that manufacturing can

take place largely outside the tax and customs duties systems.

• The availability of external finance in the form of back-to-back letters of credit.

• The modest capital requirements and the simple technology of the industry.

• The availability of a large pool of non-unionised, mainly female, labour.

• The ingenuity of the firms in the industry who found export markets for their

products as a result of international subcontracting in the worldwide garments

industry, despite the absence of a domestic market for their goods.

Recent trade shocks Emergency imports of foodgrains and capital goods purchased in the wake ofthe 1988 floods and cyclone were responsible for a sharp increase in imports in1989 and 1990, and the trade gap has widened ever since, albeit with some

Bangladesh: Merchandise trade 35


fluctuations. The Bangladesh National Party government promoted a policy ofimport liberalisation, and the growing demand for industrial inputs has putfurther pressure on the trade gap. Manufactured goods and machinery andtransport equipment accounted for a substantial share of imports in 1993.Prominent among manufactured articles (which, as defined, include a largeproportion of industrial intermediate materials) are textiles, yarns, cement,iron and other metals, with substantial amounts of rubber products, paper andboard, and metal manufactures. In 1995 imports rose by 40% to $6.1bn asdomestic foodgrain production fell short of its target, necessitating large wheatand other cereal imports, and the successful garments industry required corre-spondingly more inputs. (For further information on imports, see Referencetable 28.)

The political disruption in the run-up to the June 1996 election had severeeffects on trade. The shutdown of Chittagong port and the transport blockadeseffectively stopped garments exports, both because finished goods could not beshipped and because imports of fabric and yarn could not be delivered. Theeffects of this disruption have not yet been quantified, but it is feared that vitalexport markets, especially for garments, may have been lost as a result.

Garments exports havesoared in the last ten

years—

The non-traditional garments industry overtook jute as an export earner in1987/88, and by 1994/95 garments exports were worth Tk74.4bn ($1.8bn). (Fordetails of exports, see Reference table 29.) However, garment exports requirecorresponding imports of other items such as fabric, yarn and buttons, so thatthe net benefit of the garments industry to export earnings in 1994/95 was onlyTk21.3bn, 29% of the sector’s gross export earnings. The jute industry, which in1984/85 contributed 54% of total export earnings, accounted for only 12% adecade later. Earnings from jute, tea and hides are highly susceptible to thefluctuating conditions on world markets. Recent initiatives have encouraged theleather industry whose export earnings have grown by an annual average of16% in the period 1990/91-1994/95 to account for nearly 7% of export earningsin 1994/95, and worldwide demand for leather goods indicates that this sectorhas further potential. A sizeable export trade in frozen and otherwise processedfish products has successfully been developed; shrimps are by far the mostimportant product, and world demand for shrimps suggests that further exportgrowth should be possible. Export earnings from fish products overtook thosefrom jute in 1993/94, and in 1994/95 contributed 10% of the total value ofexports.

—but competition formarkets is set to increase

In 1994, as a result of the conclusion of the Uruguay Round of the GATT, theUSA agreed to increase all garment quotas. The quota year was changed to starton January 1 and the base levels from which the quotas were calculated werealso raised; this was a most important concession to the Bangladeshi garmentexporters at a time when the Multi-Fibre Arrangement (MFA), which protectedthe manufacturers of textiles and garments in high-income countries, is gradu-ally dismantled and ceilings on import volumes are lifted. However, the WorldBank has warned that although the phasing out of the quotas under the MFAshould lead to a 250% increase in South Asian garments exports, Bangladesh’sshare of this increase would be determined by its ability to compete with its

36 Bangladesh: Merchandise trade


South Asian neighbours. Pressures on the industry are therefore likely to intens-ify as countries such as China and Vietnam develop their garments industries.In 1995 the Bangladeshi garment manufacturers had to take swift action to endthe employment of children under the age of 14 in the face of a threatenedboycott of their garments by the USA.

Main exports and imports, 1994/95

Tk m % of total

ExportsGarments 74,380 56.6Fish products 13,210 10.1Jute manufactures 13,650 10.4Leather 8,760 6.7Raw jute 2,560 1.9Fertiliser 3,110 2.4Tea 1,300 1.0Total incl others 131,310 100.0

ImportsMachinery & transport equipment 29,110 12.4Petroleum & petroleum products 15,400 6.6Textiles, yarn etc for the garments industry 53,110 22.6Chemicals 13,820 5.9Iron & steel 8,280 3.5Food 12,070 5.1Total incl others 234,550 100.0

Balance of trade –103,240 –Source: Bangladesh Bank, Economic Trends.

The USA is the mainmarket for exports

The USA is still the main market for exports, buying 50% ($700m) of clothingexports in 1994/95. (For more detail about the markets for exports and sourcesof imports, see Reference tables 30 and 31.) The EU, particularly Germany, theUK, Italy and France, is also an important buyer, and now takes one-third ofBangladeshi exports, just behind the USA. The EU has also become the princi-pal source of imports, followed by the United Arab Emirates, South Korea,Singapore, Hong Kong and Japan.

Main trading partners, 1992/93

Exports to: % of total Imports from: % of total

USA 36.4 EU 10.9

Germany 8.2 Germany 2.7

UK 7.2 UK 2.6

France 5.1 UAE 10.4

Italy 4.9 South Korea 8.9a

Belgium 3.6 Singapore 7.2

Netherlands 3.2 Hong Kong 7.2

Singapore 2.9 Japan 6.9

Japan 2.7 India 6.4

Iran 1.5 China 6.3

USA 5.0

a 1991/92.


Bangladesh: Merchandise trade 37


Foreign exchange and trade regulations

In August 1993 the Bangladesh Bank (the central bank) liberalised foreign exchange

regulations, allowing dealers in effect to fix exchange rates. Their holding limit on

foreign currency was also raised. The taka was made convertible for all current-account

transactions in March 1994. Foreigners are allowed to invest in the capital market and

can freely repatriate their proceeds.

The proportion of imported goods subject to quantitative restrictions (QRs) fell from

33% of imports in fiscal 1988/89 to 10% in 1992/93 as the government liberalised

trade. Textiles head the list of goods subject to QRs for trade reasons. In 1992/93 tariff

rates were simplified and compressed into a 7.5-100% range, and in the 1994/95

budget import duties on basic raw materials and semi-processed materials were re-

duced, so that the highest rate of duty was 60% (down from 100% or more in some

cases). In the 1995/96 budget import tariffs were brought down further and the duty

on intermediate raw materials was reduced from 30% to 22.5%; in the 1996/97

budget the highest rate of import duty was cut to 45%.

Invisibles and the current account

The deficit on theinvisibles account has

been rising—

Bangladesh runs a large deficit on its invisibles account. Much of the deficit isaccounted for by the costs of freight and insurance on imports, as well as by thecost of technical and financial services for development projects and interest onforeign debt. Exports of services have been rising steadily, but the near-doublingof the invisibles balance in 1995 was the result of a 50% rise in imports ofservices to $1.5bn, caused by rising interest payments on foreign debt and byincreased demand for trade and related financial services as both exports andimports soared. (For detailed breakdowns of the balance of payments, on thebasis of both IMF estimates and national figures, see Reference tables 33 and 34.)

Current account, 1995($ m)

Trade balance –2,324

Services balance –833

Net income 68

Net transfers 2,265

Current-account balance –824Source: IMF, International Financial Statistics.

—but the current accountwas in surplus between

1991 and 1994

Bangladesh’s current account is undermined by perennial large deficits on themerchandise trade account. However, the growth of remittances fromBangladeshis working abroad (private transfers) and a steady level of foreigngrants and food aid (official transfers) pulled the current account out of deficitfor the first time ever in 1991, as falling imports, rising remittances and aninfusion of official transfers in the form of aid for cyclone damage pushed theaccount into surplus. (For more detail on remittances, see Reference table 32.)Strong export growth in 1992 and 1993 reduced the trade gap in both years, andthis fact, combined with further strong growth in remittances, led to the

38 Bangladesh: Invisibles and the current account


country’s biggest ever surplus on the current account, at $359m, in 1993. In1994 the surplus on the current account fell back to just under $200m, as inwardtransfers remained static and both the merchandise trade and invisibles deficitsgrew. In 1995 the trade deficit jumped by almost $1bn, the invisibles deficitgrew by $400m and, despite higher inflows of interest, profit and dividends andan 8% rise in inward transfers, the current account recorded a deficit of $824m.The deficit has continued to grow in 1996.

Private and official transfers, 1994/95($ m)

Private transfers 1,198

Official transfers 889Source: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh.

Capital flows and foreign debt

Foreign loans account formost capital flows—

Almost all of the inward flow of capital consists of foreign loans for develop-ment projects, much of which is channelled through the BangladeshDevelopment Aid Consortium (BDAC). (For information on internationalliquidity, foreign economic assistance and external debt, see Reference tables 35,36 and 37.) Between independence in 1971 and April 1996 the total of foreignaid commitments to Bangladesh amounted to $36.2bn; 46% was in the form ofgrants and 54% in loans. The total pledged by the BDAC for 1996/97 was$1.9bn, down by $50m on the previous year’s commitment. Much of the projectaid committed, however, has not been disbursed ($5.7bn by April 1996), mainlybecause of a lack of matching taka funds. The problem had been addressed bythe Bangladesh National Party (BNP) government, and the Awami League (AL)government seems likely to continue policies which aim to generate more dom-estic resources (see Economic policy).

Loans have assumed an increasing proportion of all aid received in recent yearsand total debt service will increase substantially for the rest of the 1990s. How-ever, most of Bangladesh’s debt is on concessional terms, with long maturities,low rates of interest and ten-year grace periods before interest becomes due. Thismakes the debt burden considerably easier for the country to bear. The ratio ofinterest payments to exports of goods and services (the debt-service ratio) was15.1% in 1994; this ratio would have been much higher but for the concessionalterms of the loans.

—as foreign directinvestment proves

disappointing

Attempts have been made in recent years to attract foreign direct investment asa means of accelerating economic growth. The BNP government tried to createan agreeable environment for private investment and the new AL governmenthas pledged to do likewise. However, the total amount of inward direct invest-ment has been disappointing despite the range of new incentives offered. Themain reason why potential investors have shied away must lie with theperceived political instability of the country.

Bangladesh: Capital flows and foreign debt 39


Foreign investment regulations

In 1980 the Foreign Private Investment (Promotion and Protection) Act was the first

signal of a more liberal attitude towards private investment. In 1989 the Ershad

government announced an extremely liberal investment regime with extensive tax

breaks, import concessions and profit repatriation. It was hoped that light manufac-

turing industries, in particular, would be able to take advantage of this. With the

advent of the government of Begum Khaleda Zia and the BNP, further incentives to

encourage foreign investors were offered.

In the private sector overseas investment is favoured where technical expertise is not

available locally, where the technology is particularly complex or the skills are partic-

ularly important to Bangladesh, where capital outlay is high, where the raw materials

are locally produced or where the output is geared to export. In the private sector

foreign investment no longer has to take the form of a joint venture with a local partner

and foreign investment in ventures in collaboration with the public sector is also

permitted. All investments require approval by the Board of Investment (BOI). A large

part of recent investment has been channelled into the country’s EPZs.

Portfolio investment tookoff in 1994, but fell back

again in 1995

Portfolio investment, which had previously been negligible, grew in 1994 tonearly $106m as foreign investors bought shares on the Dhaka Stock Exchange.Their enthusiasm proved shortlived, however, and in 1995 an outflow of portfo-lio funds was recorded. Their change of heart was blamed largely on the tighterrestrictions on overseas investors introduced in February 1995, which lockedthem into shares purchased at initial public offerings (IPOs) for a minimumperiod of one year. It was hoped that the removal of the lock-in period and theexemption of bonus shares from capital gains tax, announced in August 1996,and the renewed prospects for political stability after the June 1996 generalelection would again attract foreign portfolio investment. The spectacular rise inshare prices following these announcements suggests that at least part of the risewas caused by foreign investors’ return to the stock market, although localspeculative buying was probably the main cause.

Foreign reserves and the exchange rate

Foreign reserves grewstrongly in 1992-94

Strong aid inflows prompted by the floods disaster of 1988 raised Bangladesh’sforeign reserves to levels that provoked World Bank concern and criticism (forinformation on foreign reserves, see Reference table 35). Reserves minus goldtouched $1.1bn in February 1989 but were halved later that year, due mainlyto the current-account crisis. As the balance-of-payments position improved inthe early 1990s, reserves increased steadily, reaching over $3.4bn by April 1995,sufficient at the time to pay for a generous eight months of import cover.However, the deterioration in the current-account balance in 1995 and 1996has led to a large reduction in foreign reserves, which fell to $2.3bn inDecember 1995 and to $1.9bn by the end of May 1996, before recoveringslightly to around the $2bn mark, sufficient for less than four months ofimports.

40 Bangladesh: Foreign reserves and the exchange rate


The competitive realexchange rate of the takahas not been maintained

The BNP government followed a policy of allowing the value of the taka to driftdown against the US dollar, the currency which dominates the basket ofcurrencies against which the taka is measured (for exchange rate information,see Reference table 38). However, competitive real exchange rates were notmaintained, particularly as aggressive devaluations were also undertaken bysome of Bangladesh’s main trading competitors. Since mid-1995 there havebeen a series of small devaluations of the taka which have resulted in a 4%nominal devaluation and a 2.4% real exchange rate depreciation. This shouldgo some way to boosting exports.

Foreign reserves, 1995($ m; end-period)

Foreign exchange 2,180

SDRs 159

Reserve position with the IMF 0

Total reserves excl gold 2,340Source: IMF, International Financial Statistics.

Bangladesh: Foreign reserves and the exchange rate 41


Appendices

Sources of information

National statistical sources Bangladesh Bank, Annual Report

Bangladesh Bank, Bangladesh Bank Bulletin (quarterly)

Bangladesh Bank, Economic Trends (monthly)

Bangladesh Bureau of Statistics, Bangladesh Census of Agriculture and Livestock,1983/84

Bangladesh Bureau of Statistics, Bangladesh Education in Statistics, 1991

Bangladesh Bureau of Statistics, Bangladesh Health and Demographic Survey: Findings in Brief, 1994 and 1995

Bangladesh Bureau of Statistics, Child Nutrition Survey of Bangladesh, 1992

Bangladesh Bureau of Statistics, Contraceptive Prevalence Survey, November 1995

Bangladesh Bureau of Statistics, Labour Force Survey, 1990/91

Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh

Bangladesh Bureau of Statistics, Population Census, 1991

Bangladesh Bureau of Statistics, Report on the Bangladesh Census on Manufacturing Industries, 1989/90

Bangladesh Bureau of Statistics, Report on the Poverty Monitoring Survey, 1994

Bangladesh Bureau of Statistics, Statistical Pocketbook of Bangladesh, 1995 (annual)

Bangladesh Bureau of Statistics, Statistical Yearbook of Bangladesh, 1994

Bangladesh Bureau of Statistics, Yearbook of Agricultural Statistics of Bangladesh,1994

Ministry of Finance, Annual Budget

Ministry of Finance, Bangladesh Economic Review, June 1995 (replaced Ministryof Finance’s Bangladesh Economic Survey) (annual)

International statisticalsources

Bank for International Settlements, International Banking and Financial MarketDevelopments (quarterly)

Food and Agriculture Organisation, Quarterly Bulletin of Statistics, Rome

IMF, International Financial Statistics (monthly)

International Institute for Strategic Studies, Military Balance (annual), London

OECD, Financial Statistics Monthly

OECD, Geographical Distribution of Financial Flows to Developing Countries (annual)

42 Bangladesh: Sources of information


World Banks, World Debt Tables (annual), Washington

World Bank, World Development Report (annual), Washington

World Bank, World Tables (annual), Washington

Select bibliography Emajuddin Ahamed and D R J A Nazeen, Revivalism or Power Politics, AsianSurvey, Vol XXX, No 8, August 1990

Emajuddin Ahamed, Military Rule and the Myth of Democracy, University Press,Dhaka, 1988

Moudud Ahmed, Democracy and the Challenge of Development: A Study of Politicaland Military Interventions in Bangladesh, University Press, Dhaka, 1995

C E Humphrey, Privatisation in Bangladesh: Economic Transition in a PoorCountry, University Press, Dhaka, 1992

Sirajul Islam (ed), History of Bangladesh, Asiatic Society of Bangladesh, Dhaka,1992

Shakeeb Adnan Khan, The State and Village Society—The political economy ofagricultural development in Bangladesh, University Press, Dhaka, 1989

Azizur Rahman Khan and Mahabub Hossain, The Strategy of Development inBangladesh, Macmillan, London, 1990

Anthony Mascarenhas, Legacy of Blood, Hodder and Stoughton, London, 1986

S Rashid (ed), Bangladesh Economy: Evaluation and a Research Agenda, UniversityPress, Dhaka, 1995

Francis Rolt, On the Brink in Bengal, John Murray, London, 1991

Mizanur Rahman Shelley (ed), The Chittagong Hill Tracts of Bangladesh: TheUntold Story, Centre for Development Research, Dhaka, 1993

Lawrence Ziring, Bangladesh from Mujib to Ershad: An Interpretive Study, OxfordUniversity Press, Karachi, 1992

Bangladesh: Sources of information 43


Reference tables

Reference table 1

Central government finances(Tk bn unless otherwise indicated)

1990/91 1991/92 1992/93 1993/94 1994/95

Total revenue 80.0 98.9 113.6 125.3 141.8 Tax 65.2 79.5 91.2 96.3 111.9 Non-tax 14.8 19.4 22.4 29.0 29.9

Total expenditure 139.9 152.4 169.2 186.8 221.5 of which: current expenditure 72.3 75.6 84.6 91.2 103.1 Annual Development Plan 52.0 57.0 67.5 87.1 100.9

Budget balance –59.9 –53.5 –55.6 –61.5 –79.7

Budget balance (% of GDP) –7.2 –5.9 –5.9 –6.0 –6.8Sources: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh; Ministry of Finance, Bangladesh Economic Review,

June 1995.

Reference table 2

Current revenue receipts(Tk m)

1990/91 1991/92 1992/93a 1993/94a 1994/95a

Customs duty 23,627 27,460 28,757 29,832 36,767

Excise tax 17,654 14,033 3,309 1,596 1,776

Income tax 10,996 12,940 16,132 16,986 14,514

Sales tax 7,931 0 0 0 0

Value-added tax Domestic 0 4,655 8,320 10,166 12,648 Imports 0 12,697 17,318 17,135 22,180

Supplementary tax Domestic 0 257 9,812 11,938 13,427 Imports 0 260 311 686 1,887

Total tax revenue incl others 65,200 78,450 91,200 96,290 111,900

a Provisional.

Sources: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh; Ministry of Finance, Bangladesh Economic Review,

June 1995.

Reference table 3

Money supply(Tk m unless otherwise indicated; end-Jun)

1991 1992 1993 1994 1995

Currency outside banks 36,118 40,726 44,801 54,160 65,651

Demand deposits 35,919 41,846 45,825 57,511 66,143

M1a 72,037 82,572 90,626 111,671 131,794

M1 growth (%) 13.1 14.6 9.8 23.2 11.8

M2b 250,044 285,259 315,356 364,030 422,123

M2 growth (%) 12.1 14.1 10.6 15.4 16.0

a Currency outside banks and demand deposits. b M1 plus time deposits.


44 Bangladesh: Reference tables


Reference table 4

Domestic credit(Tk m; year-end)

1991 1992 1993 1994 1995

Government 19,915 30,383 22,939 33,528 48,571

Official entities 41,417 44,061 46,548 34,325 32,308

Private sector 175,944 173,881 191,744 220,332 245,918

Other financial institutions 14,305 19,774 23,335 27,797 29,669

Total 251,581 268,099 284,566 315,982 356,466Source: IMF, International Financial Statistics.

Reference table 5

Gross domestic product(market prices)

1991/92 1992/93 1993/94 1994/95 1995/96a

Total (Tk bn)At current prices 906.5 948.1 1,030.4 1,170.3 1,301.2 At constant (1984/85) prices 536.2 560.2 583.8 609.8 638.2 Real change (%) 4.2 4.5 4.2 4.5 4.7

Per head (Tk)At current prices 8,137 8,374 8,913 9,443 10,816 At constant (1984/85) prices 4,813 4,949 5,051 5,181 5,305 Real change (%) 2.5 2.8 2.1 2.6 2.4

a Provisional.


Reference table 6

Gross domestic product by expenditure(market prices; Tk bn; % of GDP in brackets)

1991/92 1992/93 1993/94 1994/95 1995/96

Private consumption 728.6 747.7 806.3 918.8 1,022.1 (80.4) (78.9) (78.3) (78.5) (78.6)

Government consumption 124.9 134.3 147.3 160.8 178.9 (13.8) (14.2) (14.3) (13.7) (13.7)

Investment 109.9 135.2 158.9 194.7 221.2 (12.1) (14.3) (15.4) (16.6) (17.0)

Exports 90.7 104.2 121.9 165.7 184.5 (10.0) (11.0) (11.8) (14.2) (14.2)

Imports –147.6 –173.5 –187.7 –263.1 –316.1 (–16.3) (–18.3) (–18.2) (–22.5) (–24.3)

GDP at current market pricesa 906.5 948.1 1,030.4 1,170.3 1,301.2

(100.0) (100.0) (100.0) (100.0) (100.0)

Net factor income from abroad 33.9 38.8 48.6 55.7 63.5

(3.7) (4.1) (4.7) (4.8) (4.9)

GNP at current market prices 940.3 986.8 1,079.0 1,225.9 1,364.7

(103.7) (104.1) (104.7) (104.8) (104.9)

a Includes stockbuilding.


Bangladesh: Reference tables 45


Reference table 7

Gross domestic product by sector(Tk bn; constant 1984/85 market prices)

1991/92 1992/93 1993/94 1994/95 1995/96a

Agriculture 197.7 201.2 201.9 199.8 203.5 % change 2.2 1.8 0.3 –1.0 1.9 % of GDP 36.9 35.9 34.6 32.8 31.9 Crops 155.1 156.4 153.9 148.1 149.0 % change 1.7 0.8 –1.6 –3.8 0.6 % of GDP 28.9 27.9 26.4 24.3 23.4 Forestry 13.1 13.5 14.1 14.7 15.3 % change 2.4 3.0 4.0 4.5 4.3 % of GDP 2.5 2.4 2.4 2.4 2.4 Livestock 14.6 15.5 16.8 18.2 19.7 % change 3.6 6.2 8.5 8.3 8.0 % of GDP 2.7 2.8 2.9 3.0 3.1 Fisheries 14.8 15.8 17.1 18.8 19.5 % change 6.5 6.6 8.7 9.7 3.7 % of GDP 2.8 2.8 2.9 3.1 3.0

Mining & quarrying 0.1 0.1 0.1 0.1 0.2 % change 17.5 13.8 13.1 13.5 15.0 % of GDP 0.0 0.0 0.0 0.0 0.0

Industry 54.1 59.0 63.7 69.2 73.3 % change 7.3 9.1 7.9 8.6 6.0 % of GDP 10.1 10.5 10.9 11.3 11.5 Large-scale 32.3 36.6 40.4 44.9 48.1 % change 10.5 13.2 10.2 11.2 7.1 % of GDP 6.0 6.5 6.9 7.3 7.5 Small-scale 21.8 22.4 23.3 24.3 25.2 % change 2.9 2.9 4.0 4.2 3.9 % of GDP 4.1 4.0 4.0 4.0 4.0

Construction 32.5 34.0 36.1 38.6 40.0 % change 4.5 4.8 6.0 7.0 3.5 % of GDP 6.0 6.1 6.2 6.3 6.3

Power, water & sanitation 7.9 8.9 10.2 11.3 12.6 % change 17.5 13.4 14.0 11.3 11.1 % of GDP 1.5 1.6 1.8 1.9 2.0

Transport, storage & communications 63.3 66.4 70.1 74.2 77.4 % change 4.1 4.8 5.5 5.9 4.3 % of GDP 11.9 11.9 12.0 12.2 12.1

Trade 48.6 50.6 53.3 58.7 64.1 % change 4.0 4.3 5.2 10.1 9.2 % of GDP 9.0 9.0 9.1 9.6 10.0

Banking & insurance 10.0 10.3 10.7 11.1 11.5 % change 2.5 3.0 3.5 4.0 3.5 % of GDP 1.9 1.8 1.8 1.8 1.8

Professional & miscellaneous services 57.2 61.1 65.6 70.4 75.1 % change 6.4 6.8 7.3 7.3 6.7 % of GDP 10.7 10.9 11.2 11.5 11.8

continued



1991/92 1992/93 1993/94 1994/95 1995/96a

Housing 40.7 42.2 43.8 45.5 47.2 % change 3.4 3.8 3.8 3.8 3.8 % of GDP 7.6 7.5 7.5 7.5 7.4

Public administration & defence 24.2 26.2 28.5 31.0 33.4 % change 8.3 8.5 8.6 8.7 7.9 % of GDP 4.5 4.7 4.9 5.1 5.2

Totalb 536.2 560.2 583.8 609.8 638.2 % change 4.2 4.5 4.2 4.5 4.7 % of GDP 100.0 100.0 100.0 100.0 100.0

a Provisional. b Totals may not add due to rounding.


Reference table 8

Consumer prices(1991=100; period averages)

1991 1992 1993 1994 1995

Consumer price index 107.2 111.8 111.8 115.8 122.5

% change 7.2 4.3 0.0 3.6 5.8Source: IMF, International Financial Statistics.

Reference table 9

Consumer prices by income and location(1973/74=100 unless otherwise indicated)

1990/91 1991/92 1992/93 1993/94 1994/95

Higher-income families, Dhaka 662 691 700 710 748 % change 7.3 4.4 1.3 1.4 5.3

Middle-income families, Dhaka 689 724 734 747 786 % change 8.8 5.1 1.4 1.8 5.2

Lower-income families, Dhaka 704 736 735 754 813 % change 10.2 4.5 0.0 2.6 7.8

Rural population, Dhaka region 556 591 593 606 650 % change 9.0 6.3 0.3 2.2 7.3

Rural population, Khulna region 524 560 565 588 629 % change 11.5 6.9 0.9 4.1 7.0Source: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh.

Reference table 10

Wage rate indices(1969/70=100 unless otherwise indicated; period averages)

1990/91 1991/92 1992/93 1993/94 1994/95

Manufacturing 1,575 1,641 1,724 1,828 1,947 % change 4.9 4.2 5.1 6 6.5

Construction 1,487 1,512 1,579 1,598 1,613 % change 0.8 1.7 4.4 1.2 0.9

Agriculture 1,321 1,425 1,523 1,593 1,653 % change 6.1 7.9 6.9 4.6 3.8

All occupations 1,482 1,553 1,638 1,709 1,786 % change 3.9 4.8 5.5 4.3 4.5Source: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh.



Reference table 11

Population

1991/92 1992/93 1993/94 1994/95 1995/96a

Total population (m) 111.4 113.2 115.6 117.7 120.3

% change 1.6 1.6 2.1 1.8 2.2

a EIU estimates.


Reference table 12

Labour force and unemploymenta

(m unless otherwise indicated)

1983/84 1984/85 1985/86 1989b 1990/91b

Labour force 28.5 29.5 30.9 50.7 51.2 Employed 28.0 29.0 30.5 50.1 50.2 Unemployed 0.5 0.5 0.4 0.6 1.0

Participation rate (%) 44 44 46 75 70

a Labour force surveys are carried out intermittently, hence the break in sequence. b Includeswomen working in rural areas.

Source: Bangladesh Bureau of Statistics, Statistical Yearbook of Bangladesh, 1994.

Reference table 13

Employment by sectora

(’000)

1983/84 1984/85 1985/86 1989b 1990/91b

Agriculture, forestry & fisheries 16,448 16,712 17,464 32,573 33,303

Mining & quarrying 46 3 3 89 15

Manufacturing 2,483 2,688 3,019 6,977 5,925

Electricity, gas & water 68 91 38 17 40

Construction 487 552 646 662 525

Trade, hotels & restaurants 3,255 3,610 3,832 4,130 4,285

Transportation, storage & communications 1,088 1,170 1,321 1,278 1,611

Finance, business & services 136 199 367 238 296

Community & personal services 2,294 2,550 2,563 1,794 1,909

Household sector & others not adequately defined 1,671 1,402 1,308 2,390 2,249

Total 27,976 28,977 30,562 50,148 50,159

a Labour force surveys are carried out intermittently, hence the break in sequence. b Includes women working in rural areas.

Source: Bangladesh Bureau of Statistics, Statistical Yearbook of Bangladesh, 1994.



Reference table 14

Energy: production of natural gas(m cu metres)

1990/91 1991/92 1992/93 1993/94 1994/95

Titas 2,326 2,605 2,869 n/a n/a

Habiganj 783 799 1,294 n/a n/a

Sylhet 58 55 55 n/a n/a

Kailashtila 234 207 224 n/a n/a

BGSL 1,459 1,499 1,377 n/a n/a

Kamta 33 5 0 n/a n/a

Feni 0 167 154 n/a n/a

Total 4,893 5,337 5,973 6,338 7,006Sources: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh; Statistical Yearbook of Bangladesh, 1994.

Reference table 15

Transport

1990/91 1991/92 1992/93 1993/94 1994/95a

Railway trafficFreight carried (’000 tons) 2,517 2,506 2,450 2,390 3,350 Passengers carried (m) 48 52 50 46 40 Passenger km (m) 4,587 5,348 4,918 4,451 4,091

1991 1992 1993 1994 1995a

Air trafficAir traffic movements (’000) 26 69 26 47 68 Passengers carried (’000) 1,912 2,133 2,143 2,376 2,536 Freight/mail carried (’000 tons) 38 49 50 68 74

1990/91 1991/92 1992/93 1993/94 1994/95a

Sea transport (Chittagong & Mongla ports)Vessels handled 1,486 1,439 1,465 1,436 1,552 Cargo handled (’000 tons) 9,670 8,323 8,255 8,192 10,960

a Provisional

Sources: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh; Statistical Yearbook of Bangladesh, 1994.

Reference table 16

Banking

Number Branches

Nationalised commercial banks 6 3,619

Specialised financial institutions 6 1,168

Private banks 8 1,000

Foreign banks 7 19Source: Bangladesh Bank, Economic Trends.



Reference table 17

Banks, assets/liabilities(Tk m; year-end)

1990 1991 1992 1993 1994

Nationalised commercial banks 2,514 2,613 2,828 4,476 11,292

Specialised financial institutions 617 775 881 946 1,412

Private banks 1,051 1,207 1,512 1,689 2,269

Foreign banks 460 509 392 412 517

Total assets/liabilities 4,642 5,103 5,614 7,523 15,490Source: Bangladesh Bank, Bangladesh Bank Bulletin.

Reference table 18

Stock-market indices(1986/87=100; average)

1990/91 1991/92 1992/93 1993/94 1994/95

Banks & financial institutions 138.9 138.8 146.6 162.0 190.2

Engineering & construction 111.6 111.2 111.5 168.7 459.5

Food 117.5 92.5 104.4 180.9 263.2

Jute industries 108.1 118.1 120.6 160.8 213.1

Pharmaceuticals & chemicals 120.4 106.9 145.3 347.1 520.4

Textiles industry 131.5 118.4 133.0 141.8 190.0

Power & fuel 93.9 82.5 102.7 192.2 267.1

Paper & printing 210.6 209.4 190.0 164.8 119.4

Transport & communications 56.5 51.6 52.6 80.0 97.7

Miscellaneous 99.0 121.6 179.9 244.3 320.9

General index 124.5 120.6 135.9 189.5 260.4Source: Bangladesh Bank, Economic Trends.

Reference table 19

Average stock-market capitalisation(Tk m)

1990/91 1991/92 1992/93 1993/94 1994/95

11,426 10,048 12,816 21,700 34,965Source: Bangladesh Bank, Economic Trends.

Reference table 20

Tourist arrivals and spending

1991 1992 1993 1994 1995

Arrivals (no) 113,242 110,475 126,785 140,122 156,231

Spending (Tk m) 331.5 329.1 594.4 759.4 9,552Source: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh.



Reference table 21

Indices of manufacturing production by sector(1981/82=100)

1990/91 1991/92 1992/93 1993/94 1994/95

Food, beverages & tobacco 147 140 135 153 171 Fisheries products 480 513 480 564 645 Flour milling 145 154 189 191 218 Sugar 122 97 93 110 134 Tea 114 117 126 132 121 Vegetable oil & soybeans 113 115 39 58 50 Cigarettes 86 80 73 80 110

Jute, cotton textiles & leather industry 206 236 273 288 327 Cotton 120 128 124 115 96 Jute 74 71 76 72 72 Garments 6,894 8,646 10,579 11,702 14,079 Leather tanning 166 184 215 244 251

Paper & paper products 200 250 262 297 341

Chemicals, fertilisers, petroleum & rubber products 174 200 240 275 282 Pharmaceuticals 98 128 164 188 233 Soap & detergents 110 113 128 144 173 Matches 92 103 115 127 100 Fertilisers 369 417 493 569 516 Paints & varnishes 152 159 174 189 270 Petroleum products 96 90 116 105 121

Non-metallic products 217 189 210 225 215 Glass 88 200 218 211 278 Cement 84 84 63 99 97

Basic metal products 51 39 42 74 127 Re-roll mill products 51 40 45 80 132

Fabricated metal & machinery 134 144 146 150 156 Engines & turbines 89 23 20 25 21 Electrical machinery 128 149 202 202 122 Cable wires 224 255 293 310 459 Motor vehicles 94 65 30 38 69 Motorcycles 169 145 146 104 130 Radio, TV & telephones 120 92 125 144 145

All manufacturing 171 189 214 235 262Source: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh.



Reference table 22

Production and value of selected manufactured items

1990/91 1991/92 1992/93 1993/94 1994/95

Jute manufactures ’000 tons 434 416 446 421 425 Tk bn 12.9 11.2 11.4 10.3 10.5

Cotton cloth m metres 60 59 45 32 17 Tk bn 1.1 1.3 1.0 0.8 0.4

Cotton yarn m kg 56 60 61 58 49 Tk bn 6.7 9.5 8.0 6.9 6.3

Ready-made garments m items for export 169 212 259 286 345 Tk bn 21.3 26.2 29.7 34.1 46.1

Leather for export m sq metres 10 11 13 15 15 Tk bn n/a 5.5 5.7 6.6 7.8

Cement ’000 tons 275 272 207 324 316 Tk bn 1.0 1.0 0.8 1.2 1.3

Steel ingots ’000 tons 58 37 7 6 25 Tk m 710 522 101 75 36

Paper ’000 tons 90 88 90 90 83 Tk bn 2.6 2.4 2.7 2.8 2.7

Chemical fertilisers ’000 tons 1,533 1,736 2,051 2,366 2,145 Tk bn 6.4 7.5 9.1 9.7 8.3

Sugar ’000 tons 246 195 187 221 270 Tk bn 6.8 4.9 4.7 5.7 7.3

Tea ’000 tons 44 46 49 51 47 Tk bn 2.2 2.2 2.2 2.6 2.0

Shrimps & froglegs ’000 tons 6.2 6.3 6.2 7.2 8.3 Tk bn 1.3 1.6 1.7 1.5 1.7

Cycles no 34,373 16,657 12,965 12,784 13,223 Tk m 53 31 25 23 23

Motorcycles no 9,918 8,537 8,610 6,136 7,625 Tk m 400 395 450 338 429

Motor vehicles no 1,481 1,083 807 610 610 Tk m 474 400 366 338 338

Diesel engines no 2,235 343 103 491 520 Tk m 124 12 3 32 33

Televisions ’000 57 44 61 77 79 Tk m 497 407 555 641 748

Dry-cell batteries m 62 58 58 65 62 Tk m 562 585 583 647 620Source: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh.



Reference table 23

Production and value of non-energy minerals

1990/91 1991/92 1992/93 1993/94 1994/95

Limestone tons 42,484 42,569 23,209 23,872 26,126 Tk m 27.9 25.5 14.6 14.3 15.7

China clay tons 7,338 2,317 1,637 2,753 6,597 Tk m 5.0 1.6 1.2 2.1 5.4Source: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh.

Reference table 24

Agricultural crop production(’000 tons)

1990/91 1991/92 1992/93 1993/94 1994/95

CerealsRice 17,852 18,252 18,341 18,041 16,838 Aus 2,328 2,199 2,075 1,850 1,791 Aman 9,167 9,269 9,680 9,419 8,509 Boro 6,357 6,804 6,587 6,772 6,538Wheat 1,004 1,065 1,176 1,131 1,245

FibresJute 962 957 892 808 964Cotton 16 14 16 143 73

VegetablesPotatoes 1,237 1,366 1,384 1,438 1,468Sweet potatoes 483 470 434 427 435

Other cropsPulses 523 519 517 530 535Oilseeds 449 462 474 470 480Spices & condiments 319 322 320 325 320Sugar cane 7,682 7,446 7,507 7,111 7,446Tea 46 45 49 51 52Tobacco 34 34 36 38 38Sources: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh; Statistical Yearbook of Bangladesh, 1994.

Reference table 25

Fish catch(’000 tons)

1987/88 1988/89 1989/90 1990/91 1991/92

Inland 599 608 613 654 707

Marine 228 233 235 239 245

Total 827 841 848 893 952Source: Bangladesh Bureau of Statistics, Statistical Yearbook of Bangladesh, 1994.



Reference table 26

Foreign trade(Tk m)

1990/91 1991/92 1992/93 1993/94 1994/95a

Merchandise exports fob 60,272 74,198 88,215 98,000 131,310

Merchandise imports cif –111,877 –132,756 –158,073 –167,660 –234,550

Trade balance –51,605 –58,558 –69,857 –69,660 –103,240

a Provisional.

Sources: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh; Bangladesh Bank, Economic Trends.

Reference table 27

Terms of trade(1979/80=100)

1990/91 1991/92 1992/93a 1993/94a 1994/95a

Import price index 107.4 104.4 107.6 110.8 121.3

Export price index 101.9 100.4 107.3 113.3 113.3

Terms of trade 94.9 96.2 99.7 102.3 93.4

a Estimates.

Source: Ministry of Finance, Bangladesh Economic Review, June 1995.

Reference table 28

Imports by commodity group(Tk m; cif)

1988/89 1989/90 1990/91 1991/92 1992/93

Food & beverages 22,423 20,799 18,747 22,887 20,703 Unprocessed for industry 9,426 5,666 7,944 8,473 8,012 Unprocessed for households 1,756 3,295 2,582 3,532 2,957 Processed for industry 5,531 4,758 4,852 8,128 6,473 Processed for households 5,710 7,080 3,369 2,754 3,261

Industrial supplies 41,285 49,608 53,954 66,583 74,870 Primary 3,193 5,334 3,649 3,565 4,440 Processed 38,092 44,274 50,304 63,018 70,430

Fuel & lubricants 11,304 18,562 12,714 16,092 54,644 Primary 4,542 11,454 7,634 7,511 46,951 Processed 6,762 7,108 5,080 8,581 7,693

Machinery & other capital equipment 11,846 15,926 17,998 19,880 17,556 Machinery 7,986 10,408 11,742 12,098 11,931 Parts & accessories 3,860 5,518 6,256 7,782 5,625

Transport equipment & accessories 5,428 4,651 4,906 3,270 5,704 Passenger motor cars 884 923 824 567 1,081 Other industrial 1,606 586 1,269 492 955 Other non-industrial 423 409 684 412 416 Other parts & accessories 2,515 2,734 2,128 1,798 3,252

Consumer goods 2,319 3,054 3,100 3,546 3,385 Durable 688 592 810 1,265 1,375 Semi-durable 909 1,823 1,448 1,377 965 Non-durable 723 640 843 905 1,044

Others 469 704 458 497 848

Total 95,075 113,305 111,877 132,756 177,710Source: Bangladesh Bureau of Statistics, Statistical Yearbook of Bangladesh, 1994.



Reference table 29

Exports by commodity group(Tk m; fob)

1988/89 1989/90 1990/91 1991/92 1992/93

Food & beverages 7,520 7,282 7,512 7,955 10,319 Unprocessed for industry 21 10 8 7 39 Unprocessed for household 6,177 6,475 6,769 7,051 9,050 Processed for industry 42 3 11 10 6 Processed for household 1,279 794 724 887 1,224

Industrial supplies 17,997 21,059 19,460 21,379 22,645 Primary 2,982 3,570 3,381 3,823 3,231 Processed 15,015 17,489 16,079 17,556 19,414

Processed fuel & lubricants 520 658 1,243 548 754

Machinery & other capital equipment 1,220 424 883 2,557 811

Transport equipment & accessories 231 74 80 333 174

Consumer goods 15,138 21,868 31,021 41,346 53,414 Durable 91 82 74 150 230 Semi-durable 8,499 13,476 17,643 23,880 31,326 Non-durable 6,548 8,309 13,304 17,316 21,858

Others 61 51 72 80 97

Total 42,686 51,415 60,272 74,198 88,215Source: Bangladesh Bureau of Statistics, Statistical Yearbook of Bangladesh, 1994.

Reference table 30

Main export markets(% of total)

1988/89 1989/90 1990/91 1991/92 1992/93

USA 26.2 31.6 28.9 33.9 36.4

Germanya 5.2 5.4 9.6 8.2 8.2

UK 6.2 6.2 7.7 5.9 7.2

France 2.8 4.0 5.4 5.6 5.1

Italy 7.7 8.1 5.5 6.0 4.9

Belgium 4.2 4.1 4.5 4.1 3.6

Netherlands 1.9 2.1 3.2 3.1 3.2

Singapore 6.3 4.2 3.8 4.1 2.9

Japan 5.0 4.2 3.4 2.8 2.7

Iran 1.2 3.3 1.9 2.8 1.5

a West Germany only until July 1991.




Reference table 31

Main sources of imports(% of total)

1988/89 1989/90 1990/91 1991/92 1992/93

EU 14.3 13.2 12.8 11.3 10.9

Germanya 3.2 3.7 3.5 3.5 2.7

UK 4.3 3.7 2.9 3.2 2.6

UAE 7.1 7.3 0.0 4.6 10.4

South Korea 6.4 6.6 9.4 8.9 n/a

Singapore 5.4 5.9 6.6 7.4 7.2

Hong Kong 3.6 5.0 6.8 7.4 7.2

Japan 10.8 9.2 10.5 7.2 6.9

India 5.7 6.2 6.3 6.6 6.4

China 4.1 4.4 5.8 7.3 6.3

USA 11.8 5.7 7.0 6.3 5.0

a West Germany only until July 1991.


Reference table 32

Remittances from Bangladeshis working abroad(Tk bn)

1990/91 1991/92 1992/93 1993/94 1994/95

27.3 32.4 37.0 43.5 48.1Source: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh.



Reference table 33

Balance of payments, IMF estimates($ m)

1991 1992 1993 1994 1995

Goods: exports fob 1,689 2,098 2,545 2,934 3,733

Goods: imports fob –3,075 –3,354 –3,657 –4,351 –6,057

Trade balance –1,386 –1,256 –1,113 –1,416 –2,324

Services: credit 431 483 529 590 698

Services: debit –695 –789 –932 –1,025 –1,531

Income: credit 70 100 100 151 270

Income: debit –167 –166 –176 –189 –202

Current transfers: credit 1,812 1,809 1,952 2,091 2,267

Current transfers: debit 0 0 –2 –2 –2

Current-account balance 65 181 359 200 –824

Direct investment abroad 0 0 0 0 0

Direct investment in Bangladesh 1 4 14 11 2

Portfolio investment assets 0 0 0 0 0

Portfolio investment liabilities 2 9 8 106 –15

Other investment assets –267 –196 –178 –169 –293

Other investment liabilities 731 722 425 801 485

Financial balance 468 538 269 749 179

Capital account nie credit 0 0 0 0 0

Capital account nie debit 0 0 0 0 0

Capital account nie balance 0 0 0 0 0

Capital-account balance 468 538 269 749 179

Errors & omissions –98 –84 69 –257 133

Overall balance 434 635 698 691 –512

Financing (– indicates inflow)Movement of reserves –545 –670 –647 –636 573Use of IMF credit & loans 111 35 –51 –55 –61Liabilities constituting foreign authorities reserves 0 0 0 0 0Exceptional financing 0 0 0 0 0Sources: IMF, International Financial Statistics.



Reference table 34

Balance of payments, national figures(Tk bn)a

1990/91 1991/92 1992/93 1993/94 1994/95

Goods, services & income –65.2 –60.3 –72.2 –67.1 –99.1 Merchandise fob –52.0 –46.3 –56.1 –49.6 –71.6 Shipment –12.2 –13.2 –16.1 –16.9 –23.5 Other goods, services & income –1.0 –0.8 0.0 –0.6 –4.0

Unrequited transfers 59.8 68.4 73.7 78.3 93.1 Private 30.2 37.2 41.7 49.8 57.3 Official 29.7 31.2 32.0 28.4 35.8

Capital account 19.7 17.5 22.7 23.2 20.0 Long-term capital 24.6 21.4 24.2 25.2 23.8 Resident official sector Drawings & repayments on loans/credits (net) 24.0 19.5 22.1 21.3 20.6 Other assets/liabilities (net) 0.0 0.4 0.6 2.7 2.7 Other sector assets/liabilities (net) 0.6 1.5 1.5 1.2 0.5 Short-term capital –4.9 –3.8 –1.5 –2.1 –3.8 Resident official sector assets/liabilities (net) 0.0 0.0 0.0 0.0 4.7 Deposit money banks’ assets/liabilities (net) –4.7 –3.4 –1.5 –2.1 –8.5 Other sector assets/liabilities (net) –0.2 –0.4 0.0 0.0 0.0

Reserves –10.9 –22.7 –23.2 –28.5 –18.3 Bangladesh Bank (net) –10.5 –22.5 –21.6 –26.4 –17.3 Deposit money banks (net) –0.5 –0.2 –1.6 –2.1 –1.0

Errors & omissions –3.4 –3.0 –1.1 –6.0 4.2

a Totals may not add due to rounding

Source: Bangladesh Bank, Economic Trends.

Reference table 35

International liquidity($ m unless otherwise indicated; end-period)

1991 1992 1993 1994 1995

Foreign exchange 1,207 1,783 2,388 3,103 2,180

SDRs 71 41 23 36 159

Reserve position with the IMF 0 0 0 0 0

Total reserves excl gold 1,278 1,825 2,411 3,139 2,340

Golda 23 22 26 27 27

Total reserves incl gold 1,301 1,847 2,437 3,166 2,367

Memorandum itemGold (m fine troy oz) 0.084 0.087 0.092 0.094 0.094

a Valued at 75% of the fourth-quarter London price.

Source: IMF, International Financial Statistics.

Reference table 36

Foreign economic assistance($ m)

1990/91 1991/92 1992/93 1993/94 1994/95

Committed 1,370 1,916 1,275 2,525 1,423

Disbursed 1,733 1,612 1,675 1,672 1,738Source: Bangladesh Bureau of Statistics, Monthly Statistical Bulletin Bangladesh.



Reference table 37

External debt($ m unless otherwise indicated; debt stocks as at year-end)

1990 1991 1992 1993 1994

Total external debt 13,070 13,812 14,167 14,939 16,569 Long-term debta 12,289 12,867 13,203 14,106 15,713 Short-term debt 156 218 231 150 186 Use of IMF credit 626 727 732 682 669

Public & publicly guaranteed long-term debt 12,289 12,867 13,203 14,106 15,713 Official creditors 12,072 12,617 12,939 13,847 15,463 Multilateral 6,497 7,091 7,477 8,074 9,260 Bilateral 5,576 5,526 5,462 5,773 6,203 Private creditors 216 250 264 260 250

Total debt service 809 634 583 576 653 Principal 586 430 398 387 431 Interest 223 204 185 189 222 of which: short-term debt 9 13 15 10 11

Ratios (%)Total external debt/GNP 58.7 59.3 59.8 62.5 63.4Debt-service ratiob 29.6 21.6 17.1 14.6 15.1Short-term debt/total external debt 1.2 1.6 1.6 1.0 1.1Concessional long-term debt/total long-term debt 97.5 97.7 97.8 98.0 98.3Variable interest long-term debt/total long-term debt 0.0 0.0 0.3 0.3 0.2

a Long-term debt is defined as having original maturity of more than one year. b Debt service as a percentage of earnings from exports of goodsand services.

Source: World Bank, World Debt Tables.

Reference table 38

Exchange rate(period averages)

1991 1992 1993 1994 1995

Real effective exchange rate (1980=100) 86.960 82.120 82.100 78.530 75.100

Tk:$ 36.596 38.951 39.567 40.212 40.278

Tk:£ 64.753 68.768 59.430 61.589 63.579

Tk:DM 22.052 24.941 23.932 24.779 28.106

Tk:¥100 27.167 30.755 35.582 39.343 42.822Source: IMF, International Financial Statistics.

Editor:All queries:

Sophie LewisohnTel: (44.171) 830 1007 Fax: (44.171) 830 1023



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