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Economic Reforms Can Make Bangladesh Grow Faster

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Driven by strong domestic demand, Bangladesh’s economy remains among the fastest growing economies in the developing world and it would grow at an even faster pace if it implemented economic reforms, says a new World Bank report launched today.

The latest Bangladesh Development Update: Powering the Economy Efficiently, says that growth will remain resilient, underpinned by strong domestic demand and structural transformation, but there is no room for complacency. To achieve its growth aspirations, Bangladesh needs to create more and better jobs by boosting private investment, diversifying exports and building human capital. The country also needs to make doing business easier, complete its mega-projects on a fast track, improve financial sector governance and ensure a reliable supply of electricity. Further, sustaining its export and remittance growth will be important. It also needs to focus on improving infrastructure, urban management, and environment conservation.

Bangladesh is known for its remarkable progress in reducing poverty and creating opportunities for its citizens. It is among the 10 fastest growing economies in the world and has made commendable progress on human development,” said Qimiao Fan, World Bank Country Director for Bangladesh, Bhutan, and Nepal. “To maintain the current growth trajectory, it needs to promote entrepreneurship, innovation and structural transformation. Bangladesh should also focus on improving education, skills, nutrition and adaptability to enable its workforce to thrive in an environment of rapidly changing technology and global demands.” 

The report stresses the importance of increasing resilience to a possible slowdown in major export markets or a decline in donor support to address the influx of Rohingya refugees. The country also needs to improve financial sector governance, including banking sector performance, especially the high share of non-performing loans (NPLs), which reached 10.4 percent of all loans in fiscal year (FY) 2018.  These are concentrated disproportionately in the six state-owned commercial banks that accounted for 48 percent of total NPLs, while the 40 private commercial banks accounted for 44 percent of NPLs.

To realize its goals of achieving upper-middle income status, Bangladesh must make sure its economic fundamentals are sound,” said Zahid Hussain, World Bank Lead Economist and author of the report. “As immediate measures, the country needs policies to contain inflation, correct the exchange rate, and remove interest rate distortions.”

For the first time since FY2011, Bangladesh faces a deficit in the overall balance of payments, putting pressure on the exchange rate and international reserves.  This has resulted from a substantial widening of deficits on the trade, services and income accounts.

The report recommends expanding reliable electricity supply to meet the needs of a growing economy. Much progress has been made in recent years, with access to electricity increasing from 47 percent of the population in 2009 to 80 percent in 2017. But by 2030, electricity demand is expected to grow to 34 gigawatts, more than double the country’s current installed capacity.

This requires comprehensive reforms in the power sector, including addressing inefficiencies at different stages of power supply and distribution, and reducing dependency on imported fossil fuels. The report urges more efficient pricing and use of gas. By prioritizing more efficient plants, Bangladesh can reduce idled gas capacity by 8 percent and electricity shortages by 15 percent a year. Further, the government needs to focus on smarter pricing of electricity through a cost-based pricing mechanism, better load management, and increased efficiency in electricity generation. Better load management alone could save $1.65 billion annually in fuel cost. Bangladesh can also benefit from boosting regional trade and strengthening the cross-border electricity transmission network.

The World Bank was among the first development partners to support Bangladesh following its independence. Since then, the World Bank has committed more than $29 billion in grants and interest-free credits to the country.

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Most countries failing to protect women from COVID-19 economic and social fallout

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Photo: ILO

The COVID-19 pandemic is “hitting women hard”, but most nations are failing to provide sufficient social and economic protection for them, the head of the UN gender empowerment agency said on Monday.

And women have often become victims of domestic violence “locked down with their abusers, as unpaid caregivers in families and communities, and as workers in jobs that lack social protection”, adds the Executive Director of UN Women, Phumzile Mlambo-Ngcuka.

New data released by gender agency and the UN Development Programme (UNDP) taken from the COVID-19 Global Gender Response Tracker, reveal that most countries are not doing enough to protect women and girls from the economic and social fallout being caused by the virus.

Lacking support

The analysis signals that one-fifth of the 206 countries analyzed, or 42 States, had no gender-sensitive measures in place to respond to the pandemic.

And only 25 countries have introduced measures aimed at tackling violence against women and girls (VAWG), support unpaid care and strengthen women’s economic security. 

These may include helplines, shelters or legal support to counter the surge in violence; cash transfers directly targeted at women; or childcare services and paid sick leave.

“The COVID-19 crisis provides an opportunity for countries to transform existing economic models towards a renewed social contract that prioritizes social justice and gender equality”, said UNDP Administrator Achim Steiner. “This new gender response tracker can help accelerate policy reform by guiding on gaps in national efforts and funding and highlighting best practices”.

Breakdown

Across 135 countries, the tracker identified 704 measures to prevent and/or respond to VAWG. Of these, 63 per cent focused on strengthening essential services, such as shelters, helplines and other reporting mechanisms. 

However, only 48 countries, less than a quarter of those analyzed, treated VAWG-related services as an integral part of their national and local COVID-19 response plans – with very few adequately funding these measures.

At the same time, social protection, care crisis and jobs response has been largely blind to women’s needs, with only 177 measures in 85 countries explicitly aimed at strengthening women’s economic security, and just 60 taking action to support unpaid care and strengthen care services for children, older persons or persons with disabilities.

Varying responses

The tracker also shows that gender actions vary widely across countries and regions. 

According to the analysis, Europe is leading the response on addressing VAWG and unpaid care – accounting for almost 32 per cent of all violence measures and 49 per cent of all unpaid care measures. 

Meanwhile, the Americas has the largest number of measures aimed at strengthening women’s economic security, followed by Africa.

“The Global Tracker supports Governments in making the right policy decisions by sharing good practices and monitoring progress in care policies and measures to address violence against women”, said UN Women Executive Director Phumzile Mlambo-Ngcuka. 

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Technological Revolution Accelerated by Coronavirus Crisis in Latin America

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Latin America and the Caribbean is in the midst of a “Fourth Industrial Revolution” of technological innovation which requires enhancing the productivity of the services sector, investing in human capital and rethinking labor regulations and social protection policies, according to a new World Bank report.

These policy priorities have become all the more urgent now that the COVID-19 pandemic is fueling the biggest contraction in economic activity since the great depression. Digitization has become more important to support economic activity at a time of social distancing and is accelerating this technological transformation, potentially putting jobs at risk across Latin America and the Caribbean (LAC).

According to Going Viral: COVID-19 and the Accelerated Transformation of Jobs in Latin America and the Caribbean employment transformations that were already apparent in the last few decades are bound to deepen, and the question in this context is how to recover from the crisis and build back better.

We need to rethink the future and not just try to get back to where we were before the pandemic,” said World Bank Vice President for Latin America and the Caribbean Carlos Felipe Jaramillo. “Governments need to find ways to support the creation of new jobs, train workers to be ready for these new jobs and support their citizens through this disruptive transformation.”

Premature deindustrialization and rapid technological innovation will require policies to support a smooth transformation of jobs that is socially acceptable. The region was already struggling with the end of the so-called “Golden Decade” (2003-2013) of rapid development and strong improvements in social indicators. Economic growth and poverty reduction had stalled. The pandemic has only made things worse.

While fears of mass “technological unemployment” are largely unfounded, many jobs are at risk due to lower external demand, a protracted period of quarantines and lockdowns, solvency problems for firms, and financial crises in some cases. In addition, the social unrest seen in 2019 is a warning. It is urgent to restore economic growth and create more and better jobs.

However, this “Fourth Industrial Revolution” of technological innovation means that further industrialization or re-industrialization will be limited in many developing countries. Low-paid, uneducated workers and those in high-contact activities typical of the informal sector are at highest risk of being replaced by machines. In addition, informal workers are harder to reach with essential social protection programs. The COVID-19 crisis could accelerate these changes, bringing the future much closer than anticipated.

With limited scope for employment growth in manufacturing, modernizing the services sector is a priority. This calls for  an emphasis on removing the distortions that prevent competition and innovation from occurring at a rapid pace.

Preparing workers for the changes is also fundamental. “Education offers the best insurance against the risks of automation,” said the report’s lead author Guillermo Beylis, Research Economist in the World Bank’s Office of the Chief Economist for Latin America and the Caribbean. “Workers will have to adapt to demand for cognitive or analytical skills, as well as interpersonal skills.”

Adult learning and re-training will be key as new automation technologies are adopted in LAC countries. The focus should be on policy reforms to increase productivity in the services sector, which already employs 60% of the workforce and will play an increasingly important role in the future.

Finally, a rethinking of labor regulations and social protection policies is needed. This involves flexible regulation of the emerging forms of work in a way that encourages employment and supports formalization, thereby expanding the coverage of social protection to larger segments of the population.

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Progress on Sudan political transition, but challenges remain

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UN peacekeepers from Pakistan engage the local population in North Darfur, Sudan. Photo: UNAMID

Political developments in Sudan continue to move along a positive trajectory, while planning for a UN mission to assist the transitional government is progressing, the UN Security Council heard on Friday. 

Ambassadors met in person in the Economic and Social Council (ECOSOC) Chamber at UN Headquarters in New York, where they were briefed by UN political affairs chief Rosemary DiCarlo, and the head of UN Peacekeeping, Jean-Pierre Lacroix. 

“As the Secretary-General highlights in his report, Sudan’s political transition continues to move in the right direction”, said Ms. DiCarlo, speaking via video link.  

Developments on the political front 

After nearly a year of talks, the transitional Government of Sudan and two key armed movements from Darfur – the Sudan Revolutionary Front (SRF) alliance and the Sudan Liberation Movement/Minni Minnawi (SLM/MM) – initialed a peace agreement at the end of August.   

Signing is scheduled for 3 October, and the parties have agreed to a 39-month transitional period effective from that date.   

A faction from another group, the Sudan People’s Liberation Movement-North (SPLM-N), has also signed a declaration of principles agreement. 

Significant work ahead 

Ms. DiCarlo outlined other recent developments in Sudan, including the appointment of interim civilian governors in all 18 states, two of whom are women.   

She said the parties should be commended for persevering with the peace process, adding that “it is not too late” for others to join. 

“As we embrace the recent progress in the peace process, we are also mindful of the significant work ahead”, she cautioned.  

“The various accords and respective peace agreements on regional issues must be moulded into a single, coherent framework. Additionally, the parties and the Government must form a joint vision on the way forward and to uphold their respective commitments.” 

Goodwill into action 

For the UN’s peacekeeping chief, the initialling of the agreement marked an important milestone for Darfur, where years of brutal fighting have left some 300,000 people dead and millions of others displaced, according to UN estimates. 

Mr. Lacroix hoped the goodwill expressed by the parties will translate into lasting change on the ground, although some “key players” have yet to join the peace process.  

He urged the international community to work to bring all stakeholders on board. 

“Furthermore, the implementation phase which is now beginning will be just as crucial as the drafting of the agreement itself”, said Mr. Lacroix, who also briefed ambassadors via video-link. 

Among the key provisions is a 12,000-strong joint security force for Darfur, to be deployed within 90 days of the signing.  It will be made up of equal numbers of members of the Sudanese security forces and from the signatory armed groups. 

“As forces are deployed and resources are mobilized in support of the implementation, it is essential to ensure that local Darfuri communities feel ownership of the agreement and fully participate in the implementation,” he stressed. 

Progress on new UN mission 

Meanwhile, planning continues for the new UN Integrated Transition Assistance Mission in Sudan (UNITAMS), Ms. DiCarlo told the Council. 

UNITAMS will assist the political transition, and support implementation of peace accords in conflict areas, national-led peacebuilding efforts, and strengthening of human rights, among other tasks. 

“Gender issues are mainstreamed throughout the mandate of the mission, which will have dedicated gender expertise, including at the senior level, to implement our commitments to advance gender equality and the women, peace and security agenda”, said Ms. DiCarlo. 

UNITAMS is a follow-on to the African Union-United Nations Hybrid Operation in Darfur (UNAMID).  The Security Council authorized the establishment of the new mission in June and the start-up team is set to deploy to Sudan next month. 

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