Weekly News Clippings (June 6, 2013)

False dawn for power (The Daily Star, June 6, 2013)

·         The cost of power generation was Tk 2.5 per unit in 2009 and Tk 6.02 per unit in 2013

·         The Power Development Board (PDB) earned in revenue Tk 2.47 in 2009 and Tk4.7 in 2013.  While revenue has increased, there is still a need for a subsidy.

·         The subsidy for PDB was Tk 993 crore in 2009-2010 fiscal year and has risen to Tk 5140 crore in 2012-2013 fiscal year.

·         Oil based fuels made up 6% of inputs used for energy in 2009-2010 and 21% in 20012-2013.

 

FY14 budget deficit may fall to 4.6% of GDP (Dhaka Tribune, June 6, 2013)

The budget deficit for the next fiscal year is likely to be 4.6% of GDP (gross domestic product), slightly less than the estimated 4.8% for the outgoing fiscal year. The finance minister is scheduled to announce the 2013-14 national budget today. The deficit would stand at Tk550 billion. This high deficit is contrary to the International Monetary Fund’s (IMF) condition that the deficit should be 4.3% of GDP as part of its Extended Credit Facility arrangement of around one billion dollars.

 

Half of world’s food thrown away (Dhaka Tribune, June 5, 2013)

This year’s World Environment Day is aimed at raising awareness about the environmental impact of food choices, particularly household food waste. According to the United Nations Environment Programme, consumers in wealthy countries waste 222m tonnes of food every year, which is almost as much food as the entire net food production of sub-Saharan Africa. However, in Bangladesh, where around 30% of the population lives below the poverty line, food wastage is much lower.   

Rental power: a no-go (The Daily Star, June 4, 2013)

Bangladesh should not go for the costlier option of quick rental power plants as a temporary solution to electricity shortage. According to the Executive Director of The Centre for Policy Dialogue, the government should try to phase out the rental power plants as soon as possible. “On the one hand, consumers are paying higher power tariffs. On the other, the government is paying higher subsidies to the power sector,” he said. Subsidy on the rental power plants in 2011-12 accounted for about 44 percent of the total subsidy to the power and energy sector.

Costs of a day’s shutdown (The Daily Star, June 4, 2013)

A study by the Centre for Policy Dialogue estimates that a reduction in capital stock as a result of hartals will reduce GDP by 0.9 percent. [The article actually says that a single day of hartal reduces the GDP by this amount, but this is incorrect.] CPD estimates that hartals will cause exports to drop by 2.4 percent and imports by 0.8 percent. The government also risks losing 0.7 percent in revenue and its deficit would widen by 7.1 percent. The study used applied data from the early months of 2013 on the computable general equilibrium model, a class of economic models that use actual data to estimate how the economy would react to changes in policy, technology or other external factors.  [The original report can be found here.]

The influence of black money on economy (The Daily Star, June 2, 2013)

Black money has spread across the economy in various ways including tax evasion, sending the untaxed money abroad and investing in the stock market. Since 1976, all successive governments have provided opportunities to whiten black money. A finance ministry report prepared in 2011 shows that the amount of black money is within 45 percent to 81 percent of Bangladesh’s gross domestic product The main motive behind providing money whitening scopes has been to retain the money within the economy, so that it could foster development in certain sectors, like the housing industry.

 

Unions Press to End Special Trade Status for Bangladesh (The New York Times, May 30, 2013)

Labor advocates in the US are pushing the Obama administration to revoke the special trade status enjoyed by Bangladesh, to express its disapproval of the working conditions in the country. Bangladesh receives breaks on United States tariffs under a World Trade Organization program, the Generalized System of Preferences (GSP), a duty-waiver scheme introduced in 1976 by the US government for the least developed countries. The US GSP covers about 0.54 per cent of Bangladesh’s exports to the USA. A total of 97 per cent Bangladeshi export goods enter the US market without any duty. However, the garments sector generally has to pay 15.3 per cent duty. The United States trade representative is to decide the fate of the country’s trade status in this month.