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IMF Loan Talks: Here’s how we need to prepare

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By Ahmad Ahsan

Two points stand out in the International Monetary Fund’s (IMF) statement from last week about the current economic situation in Bangladesh. First, Bangladesh is “not in a crisis situation.” Second, any economic programme to address the current challenges to our economy will be the government’s programme. Specifically, the statement said, “It is the authority’s programme and our efforts will be focused on collaborating with them to design a programme which will support them in addressing their long-term structural issues.”

Bangladeshi economists have also pointed out we are not in a crisis but facing difficult external conditions that need firm handling so that they do not become one. With four to five months of foreign exchange reserves and low foreign debt, we have enough ammunition to address short-term needs, barring other big shocks. As announced by the Fund, the discussions on this programme will take place in October.

With these positive developments and government actions to lower imports, such as depreciating the currency and allowing banks to trade more freely, the dollar kerb market is calmer. As I write, the dollar has fallen there – i.e., the taka has regained value – by 10 percent over the last 10 days.At the same time, as the government knows, there is no room for complacency or errors made in haste. Instead, let us use the current challenge to strengthen our economy.

As a previous August 3 IMF statement puts it, the reality is that our economy faces “a sharp deterioration in external conditions.” The immediate issue is not foreign debt but rather the record-breaking trade deficit of USD 33 billion and the current account deficit of USD 19 billion – i.e., the deficit even after including the USD 22 billion of remittances receipts sent by heroic Bangladeshi workers abroad. To put things in perspective, last year’s current account deficit increased nearly five times over the FY 2021 deficit and is almost four times the average current account deficit of the past five years.

Current account deficits are fundamentally the result of spending more than our income or, what is the same, importing more goods and services than we export. So, managing the current account will mean that our imports will need to grow markedly less than our exports in the next few years.

The immediate driver behind the high external deficits has been the spike in energy, fertiliser, food, and edible oil import prices. But that is not all. Even without these import price increases the current account deficit of FY 2022 would have been significant – perhaps twice that of the previous year.

That is because long-pending unaddressed structural weaknesses have made the economy and exports less diversified and competitive. These problems include low revenues and inadequate public expenditures, made worse by weak management; a strained financial sector burdened by non-performing loans, weak governance and interest rate caps; weakness in infrastructure, energy and urban development planning – all of which lower our economy’s competitiveness.

More fundamentally, an insufficiently trained labour force and a burdensome investment climate constrain our economy, as evidenced by the minimal foreign direct investment inflows. These are not long-term but pressing matters. Because of these weaknesses, we excessively depend on foreign services and skilled expatriate workers. Thus, our gross external payments for these services have almost doubled over the past five years to approximately USD 14 billion.

One driver of our large deficit is that our real exchange rate appreciated by more than 70 percent over the past decade, which made imports cheaper and our exports more expensive. That needed a correction. The depreciation of the taka by about 10 percent over the past few months has been one response. However, signalling that the exchange rate may still be unsettled, the kerb rate premia – the difference between the interbank rate and the kerb rate – remains at about 14 percent.

Thus, we will need realistic thinking. Assuming that energy prices will steadily decline is not warranted, given that winter is coming to Europe and North America. Even if Iranian oil enters the global market, it will provide only one percent of demand. European countries are stocking up and contracting oil and LNG supplies to avoid the perils of an unheated cold winter. Facing these conditions and high inflation, European and American demand for our exports will likely be subdued, even with some switching to our cheaper garments products. A global food shortage and rising prices are also all but guaranteed. Together, these ingredients can lead to deeper and longer-term economic difficulties and even a crisis for globalised developing economies such as ours.

Further, economic events during times of uncertainty, such as now, can be sudden and unexpected, as we have already discovered. It becomes critical for governments to stay ahead of events by preparing a well-coordinated programme to stabilise the economy and be ready for contingencies.How should the government prepare such a coherent, well-coordinated programme? There needs to be three elements in it.First, as good civil servants will tell you, strong political leadership will be imperative. For speed and authority, it may be best to organise a small economic committee of ministers that has the confidence of the prime minister to prepare and implement such a programme.

They and their civil service team should prepare large parts of the economic stabilisation and recovery policy package in advance of the IMF’s visit, negotiate with them when they arrive, and steer it through Cabinet approval. That will enable better coordination and political support. Leaving this task alone with the Ministry of Finance and the Bangladesh Bank could slow things.

A historically good example of this comes from India during its foreign exchange crisis of 1991, when, with the support of the IMF, they prepared and implemented a path-breaking economic reforms package. Reputed Indian economists say that was the programme that generated 20 years of rapid economic growth. That reform programme was almost wholly Indian prepared by then Finance Minister Manmohan Singh with the partnership of Commerce Minister P Chidambaram, with technical inputs provided by then Finance Secretary Montek Ahluwalia and other civil servants. Certainly, the steadfast political support of PM Narasimha Rao made it possible. Other examples are Thailand’s Cabinet Committee for Economic Policy, Indonesia’s Industry and Economic Committee, and Malaysia’s Special Cabinet Committee to protect the Economy and Labour market against Covid-19.

Who should be the members of such a committee in Bangladesh? The ministers of finance, agriculture, commerce and planning perhaps, along with the participation of the Governor of the Bangladesh Bank. The Foreign Ministry can advise on fraught matters such as assuring Europe and the US if we import oil from Russia. Including the road transport and bridges minister can provide political heft.

Second, while the Finance Minister does not need to be the chair of such a committee, the secretariat of this committee has to be the Ministry of Finance, and it has to be staffed by the most experienced civil servants in finance and the other ministries. Finance, in particular, is a ministry where nothing can replace the experience of working there for years. Difficult policy decisions about revenues, expenditure, subsidies, exchange rates, interest rates, bank governance, food and energy prices, regulations and safety nets will be needed. Only civil servants with the experience and knowledge of their subject will have the confidence to lay down situations and options most starkly to their political superiors. If this link in the chain falls, the political masters will be uninformed and blindsided.

Third, outside experts and stakeholders need to be consulted not only for their advice, but also to communicate the objective situation and get their support. Bangladesh has several former governors, finance secretaries and other civil servants who have effectively dealt with the IMF and with difficult economic situations in the past. We also have competent economists, including some with first-hand experience working in crisis-prone countries. Bangladesh also has thoughtful stakeholders in the chambers of commerce and business associations who can offer valuable perspectives. Finally, major political figures should also be taken into confidence to at least attempt to get unity behind the recovery programme.

(Dr Ahmad Ahsan is the director of the Policy Research Institute (PRI) of Bangladesh and a former World Bank economist and Dhaka University faculty member. Views expressed in this article are the author’s own.)



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First leftist Mayor after NM: SJB, UNP beaten at their own game

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What’s in a vote? That which we call a show of hands could still be as concealed as a secret vote. The newly elected Colombo Municipal Council has chosen the NPP’s Vraie Cally Balthazaar as the City’s new Mayor, but on a secret vote and not in an open show of hands. The secret vote route appears to have caused much consternation among the SJB-UNP opposition forces at the Town Hall. The latter openly preferred an open show and are blaming the secret vote for the defeat of their candidate Riza Zarook.

On the face of it, the NPP with 49 of the 117 Councillors has a more legitimate claim to have one of own as Mayor rather than the SJB with 29 Councillors. In what has been described as a “desperate move”, the SJB forged a mayoral united front by fusing its 29 members with the UNP’s 13, the SLPP’s five and the singular member of the People’s Alliance (whoever the PA now is).

The beefed up SJB mayoral front total of 48 was close enough to the NPP’s 49 for claims of legitimacy, and both sides needed the support at least another 11 or 10 from the remaining 20 members to get the required majority of 59 votes. In the secret vote, the NPP’s candidate presumably got 12 of the non-allied votes to get 61 votes in total. The SJB mayoral front got only six for a total 54 votes. Two votes, there’s no certainty as to whose, were rejected.

Would the result have gone the other way if this municipal conclave had decided on an open show instead of papal secrecy? You do not need supernatural powers to determine that. Let alone a clairvoyant like Gota’s Gnanaka! The commonplace supposition would be that a secret vote may have allowed secret transactions to secure support with hidden hands.

But no one is accusing the JVP-NPP of resorting to such time-(dis)honoured tactics perfected for over 75 years by the UNP and later copied by all others, and most vigorously by the Rajapaksas. If I remember right or not mistaken, the Sunday Times Political Editor made the point after the May LG elections that there was no hanky-panky meddling in the elections by the NPP government – unlike (this is my parentheses) all previous governments in all previous elections.

As well, we may turn the question around and ask about the insistence on an open show of hands as against a secret vote. Is it because the SJB is now all for keeping its hands clean and asking others to show their hands of support in the open without receiving undue incentives? OR is it because the SJB and its allies wanted to see in the open which of the NPP councillors, who may have been beneficiaries of earlier incentives, would now betray them and support the NPP candidate?

Put another way, was it a stratagem to ask for a show of hands to see the breach of loyalty in the open in spite of past IOUs? The latter hypothesis has greater credibility because of the blessings given to the SJB alliance by two former presidents representing two fallen political houses.

No matter what happened secretly and how, the eventual victory of Ms. Balthazar as NPP Mayor chalks up a rare non-UNP victory in the history of Colombo Town Hall politics. After independence there have been only two non-UNP Mayors in Colombo. The first came as a progressive breakthrough when NM Perera became Mayor in 1954. The second came as a comical farce in 2006, when Uvais Mohamed Imitiyas, the leader of an independent group put up by the UNP after its botched up list of candidates had been rejected by the Election Commissioner. Ms. Balthazar is also the City’s second female mayor in quick succession after Rosy Senanayake herself an old school UNPer.

In NM’s Footsteps

News commentaries on Ms. Balthazar’s victory have made mention of the fact that she is the first leftist Mayor of Colombo in 70 years. The first and the last leftist Mayor so far has been Dr. NM Perera, the LSSP leader. NM had been a CMC member from July 1948 and became Mayor on 13 August 1954 after the municipal election on 24 July 1954. A New York Times news report called him the world’s first Trotskyite Mayor, a tongue-in-cheek shot that was characteristic of the Cold War era.

An era that the world badly misses now with an unstoppable Netanyahu and TACO (Trump always chickens out) Trump running amok. In this instance, with Middle East burning, Trump has chickened out to the war schemes of Netanyahu.

Back to Colombo of the 1950s, the LSSP fared well in the LG elections of 1954 including Colombo, a number of Urban Councils and many village councils. In Colombo, NM was accompanied by a strong LSSP contingent that included stalwarts like Bernard Soysa Osmund Jayaratne and a well known architect of the era, J. E. Devapura. Some years ago, Stanley Abeynaike recounted the saga of NM’s Mayorship in the Sunday Observer. Last week, Nandana Weerarathne (Nandana Substack) has recalled the old NM story in the current context.

The initiatives that NM spearheaded as Mayor are worthy of emulation even today. The first order of business was ridding Town Hall of bribery and corruption and implementing a purposeful budget. He took on the private omnibus system within Colombo, replacing it by a public trolley-bus service; and started planning a public bus service for the city and suburban travellers in collaboration with the local authorities of Kolonnawa, Wattala, Dehiwela, Mount-Lavinia and Kotte. City cleanup, slum clearance, small housing schemes, upkeep of rental housing neglected by landlords, and transferring ownership of rental housing to tenants after 30 years of occupancy – were among the progressive measures that were rapidly rolled out during NM’s methodical mayorship.

But all those initiatives of NM riled up the landlords and the private bus owners, and through them the entire UNP government of Prime Minister Kotelawala. Sir John and his cabal were not going to let NM to be the Mayor of Colombo’s even as the country was heading to the general election in 1956. A conspiracy was hatched, and a resolution was passed at an emergency UNP meeting at Sri Kotha, the UNP headquarters, “to remove the Colombo Mayor, Dr. NM Perera.” Even the courts got in on the act to facilitate a resolution at Council against NM as Mayor.

When the resolution to remove NM as Mayor finally came to the floor, Bernard Soysa, Osmund Jayaratne and JE Devapura took turns speaking for hours on end against the resolution. They were hoping to run the clock until the Supreme Court ruling came. But to no avail, and the resolution was passed on October 1st, 1955 by a majority of two votes. One of them was the Communist Party’s Kotahena Member Anthony Marcellus who was brought over to the UNP to vote against NM. Orchestrating the moves was R. Premadasa (father of the current SJB leader) who was brought from outside to oversee matters inside, replacing then Deputy Mayor T. Rudra, who was obliged to resign. All of that in time for the April 1956 election that the UNP lost anyway.

Even the 2006 election of Uvais Mohamed Imitiyas, a political nondescript, as mayor, was the result of the backfiring of a UNP plan to prevent Vasudeva Nanayakkara, another LSSPer, from becoming Mayor. The UNP even got the better of Milinda Moragoda, one time Wickremesinghe confidant, when he chose to make a run for the Mayorship with the support of the Rajapaksas in 2011. UNP fielded its own candidate, AJM Muzammil, who defeated Moragoda and stayed on as Mayor until Rosie Senanayake succeeded him as the next, and now likely the last, UNP Mayor.

So, one can imagine the consternation of Ranil Wickremesinghe in seeing even the last bastion of the UNP’s power legacy being taken away by the upstart NPP. After 1977, through constitutional chicanery and electoral subterfuge the UNP established its supremacy at all levels of government and in all elections. After Chandrika Kumaratunga’s spectacular victories in 1994, the UNP’s electoral superstructure has been steadily dismantled and the only elected body that has survived this debacle is the Colombo Municipality. Until now, that is.

And all of this has been on Ranil Wickremesinghe’s watch. He has been quintessentially a Colombo politician, albeit with an elitist base like JR Jayewardene, unlike the likes of Pieter Keuneman, Bernard Soysa or R. Premadasa who reached out to a broader cross-section of people in the City. Losing Colombo would be the bitterest pill to swallow.

If you are inclined to feel sorry for Mr. Wickremesinghe, save yourself some space to feel good about the future of the City and even the country. Leaving Colombo in the hands of an opportunistically cobbled up SJB-UNP-SLPP alliance would have been both an insult and an injury. The NPP deserved to have one from its ranks as Mayor and it has beaten the UNP in its own game to seal its victory. But having won to govern, will the NPP govern to win – again? That is the question.

by Rajan Philips ✍️

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Criminalise war and work tirelessly for peace: Dr. Mahathir Mohamad

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Dr. Mahathir Mohamad

Soon to be 100-years ( July 10 th 1925) the two times former Prime Minister of Malaysia’s advice to the world is to “Criminalize War” and work tirelessly for peace.

Q: What is the secret to your healthy happy life?

A: People ask me that question all the time and I say I think its just my good luck. If I have suffered from some kind of fatal disease like cancer, of course life would be different.

I have had heart attacks, and both times I had open heart surgery, but nowadays they don’t open your heart. They use stents. I survived and I recovered and I was able to function. After that I am more careful with what I eat. I keep my weight steady. I do not increase my weight.

In this world, food is the problem. On the one hand you have people who are obese and on the other hand, we have a world that is starving. So, I avoid being obese and eat only very little every day.

Q: What is your advice to the younger generation?

A: My advice is to be active. Active means not only physically active. The brain is an amazing muscle. You need to use it every single day. If you see weight lifters, they have big muscles because they do exercise, You must not become sedentary. Brain must be constantly exercised.

Q: Now that you have retired, what is your day like?

A: I want to take it easy, but most of the time, I come to work almost daily. Usually, people try to retire at 55 or 56. But they must not do that. I keep my body and mind active all the time. I still read, write and do whatever is needed of me.

Q: About the world and with all that is going on around us, what would your advice be to all nations, specially to the nations that are at war?

A: When I stepped down from being Prime Minister, I started a movement to ‘Criminalize War” to make war a crime. There was some support, it took a long time. I believe that any conflict should be resolved. Not through killing each other. You should resolve conflicts through peaceful means like negotiations. That is what we practice here. We are a multinational country, normally there would be many conflicts, but we do not have war in Malaysia. We sit down and talk.

Q: If you had one more opportunity to be Prime Minister of Malaysia, what would you do differently this time?

A: When I stepped down after 22 years, there was still a lot of things to be done. These 22 years were a time of very high tension that came from developed countries. So, at that time, I had to know how things should be done and when things should be done. When I stepped down, unfortunately, my successors were focused on other things. In fact, making money became their priority, so the focus on the country, diminished.

Q: What is the one thing you would like to see happen in your country or in the world as a whole?

A: There are developed countries and there are under developed countries. We want to be a developed country. Developed countries have many assets. For example, economically our people have a fairly good life, our people are involved in activities that contribute to the wellbeing of each other and to other nations. Countries need to help each other, for example in the sciences. There are many areas of research that still need to be done. I would like to see developed countries, reach out to developing countries and form healthy alliances to make each other prosperous.

I have lived a fruitful life. I am happy and I wish to see all nations prosperous and live in peace.

Anusha Rayen, Freenlance Journalist (Formerly ‘The Island Newspaper’ staff member & Parliament reporter) sits for an exclusive interview with former PM of Malaysia Dr. Mahathir Mohamad in Puthrajaya.

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Price of Netanyahu’s Iran Offensive

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Nathanyahu and Khamenei

That was brutal, and predicated on years of fabricated deceit. But that is how power operates. Netanyahu is not acting in isolation; he was ushered into this calamity with calculated endorsement from the West. For both Iran and Israel, this is a zero-sum confrontation—a tragic entanglement where ancient antagonisms, contemporary geopolitics, and enduring colonial residues violently intersect. What is most intellectually arresting is the glaring paradox Western powers routinely embrace. When Netanyahu launches a premeditated and unlawful assault on Iran, it is euphemistically labelled as a measure of self-defence. Yet when Vladimir Putin deploys forces into Ukraine, the West decries it as an unprovoked invasion. This hypocrisy in moral reasoning illustrates the incoherence of Western ethical frameworks—marked by selective outrage, selective jurisprudence, and selective memory.

Netanyahu is actively courting American bombardment of Tehran, even venturing so far as to suggest the types of ordnance most suitable for maximum devastation. Trump, meanwhile, hesitates—not over Iran’s fate, but because the ensuing ramifications will inevitably encircle him. This cynical arithmetic typifies the geopolitical stage on which empires perform their cruelties. A week has now passed since Netanyahu’s incursion into Iran—a deliberate campaign tacitly sanctioned by the United States and its constellation of affluent allies, whose modern prosperity is inseparable from centuries of extraction and systemic plunder. War, whether desirable or not, remains the central mechanism by which empires assert dominion, redraw territories, and dismantle resistance. Israel’s open defiance of international law—manifest in its missile barrage on Iranian soil—lays bare an unsettling truth: if global powers truly revered international legal norms, Netanyahu’s actions would face unequivocal denunciation. Instead, one could argue—chillingly—that he affirms history’s most ominous prophecies.

Western media, complicit in sanitising this act of aggression, frames it as an “unprecedented” strike—yet again resorting to euphemism to mask illegality. This was not an improvisational operation; it was the culmination of extensive clandestine preparation by Netanyahu and his ultranationalist Orthodox coalition. Israel’s intelligence apparatus has, over decades, embedded itself within the architecture of Iranian society, executing key figures and orchestrating strategic assassinations. The latest Friday strikes were not merely military engagements—they constituted a coordinated political decapitation, targeting senior officials central to the Iranian state.

Iranian society today endures compounded crises. Their tenacity and national pride remain steadfast, yet they are economically suffocated by Western sanctions, which have induced runaway inflation and scarcity. From first-hand experience in Tehran, Iranians are not consumed by a siege mentality; rather, they display a cautious hospitality that, once trust is earned, transforms into deep generosity—qualities starkly misrepresented in Western discourse. In contrast, Israelis are socialised into a perpetual state of existential fear. “Security” is not merely policy—it is a psychological infrastructure, permeating every aspect of public and private life. Israel’s economy thrives not only through sanctioned trade but through its robust arms industry and cyber-warfare enterprises, often exported under the guise of national expertise. This divergence in societal conditioning is critical: it reflects distinct historical wounds and geopolitical compulsions.

To grasp Israel’s war on Iran, one must situate it within the long arc of Western imperial entrenchment in West Asia. This history is punctuated by covert operations, artificial borders, and a strategy of managed chaos. The 1953 CIA-backed coup in Iran—toppling the democratically elected Prime Minister Mohammad Mossadegh and reinstating the autocratic Shah—is emblematic of this trajectory. For decades, Western powers suppressed indigenous sovereignty while installing compliant strongmen. The 1979 Islamic Revolution was not merely theological upheaval; it was a radical assertion of national agency forged in the crucible of sustained foreign domination. In the revolution’s wake, Iranian society was reconstituted through a deep-rooted collectivism and assertive nationalism that continues to shape its resistance against external coercion.

Viewed through this prism, Netanyahu’s tenure may be remembered as one of the most corrosive in Israel’s history. By fusing religious chauvinism with militaristic expansionism, he has eviscerated Israel’s democratic ethos, transforming “security” into a tool of territorial expropriation and systemic Palestinian disenfranchisement. His escalation against Iran is not merely a tactical error; it is an incitement to regional disintegration. Framed as a crusade for “unconditional surrender,” his belligerence risks igniting a broader conflagration whose consequences will inevitably recoil upon Israel itself. Netanyahu, then, appears less as a strategist than as a provocateur, recklessly agitating the region’s deepest historical and sectarian fissures.

According to Haaretz, an independent Israeli media outlet operating despite a severely censored and often propagandistic Israeli media environment, several prominent progressive Jewish groups were notably absent from the so-called “joint unity statement” backing Israel’s strikes on Iran. These groups contend that while Iran should not acquire nuclear weapons, military action will at best delay the threat and more likely strengthen hardliners. They argue that diplomacy, not bombs, has proven effective in preventing nuclear proliferation—revealing significant divisions within the Jewish community over Netanyahu’s war.

Meanwhile, a report in the Financial Times captures the civil dimension of this confrontation. Despite sustained bombardment, millions of Iranians remain in Tehran. “Trump and Netanyahu say ‘evacuate’ as if they care about our health. How can a city of 10 million evacuate? My husband and I are not going to pave the ground for them. Let them kill us,” Shirin, a private sector employee told the newspaper. Their refusal to flee is not naïveté—it is a visceral affirmation of identity and resistance. The Iranian public consciousness, hardened by decades of war, sanctions, and subterfuge, manifests a collective defiance often misread in the West. The state’s nationalist discourse resonates beyond clerical authority; it channels a cultural memory of resistance against imperial intrusion.

Moreover, the disproportionate risk to civilians is staggering. Israeli operations ostensibly targeting senior military personnel inevitably endanger entire urban populations, as these individuals live and operate within densely populated civilian zones. The echoes of Israel’s operations in Lebanon—where missile strikes against Hezbollah figures claimed high civilian casualties—are unmistakable. The Iranian Health Ministry’s figure of nearly 1,500 casualties reveals the raw human cost beneath the rhetoric of strategic necessity.

This episode also exposes the profound hypocrisy embedded in Western narratives on nuclear proliferation. The International Atomic Energy Agency has repeatedly found no conclusive evidence that Iran is pursuing a nuclear weapon systematically. Yet, Western powers wield this unverified threat as a pretext for military aggression. The contradictory statements from US officials—from intelligence directors denying Iran’s weaponisation efforts to presidents asserting Tehran is “very close” to the bomb—reflect a politicisation of intelligence designed to justify interventionism.

History has shown the futility of liberal interventionist fantasies: that democracy can be air-dropped or imposed through market restructuring. The Arab Spring, once heralded as a democratic revival, instead expedited the collapse of fragile states and exacerbated regional instability. The supposed liberal order in West Asia has devolved into a transactional, militarised regime wherein peace is manufactured, not cultivated.

Netanyahu’s war on Iran is not an anomaly—it is the terminal result of accumulated imperial failures, ideological rigidity, and historical amnesia. It confirms a grim axiom: when utopias collapse, it is always the powerless who bleed. His offensive, cloaked in the pieties of national security, belongs to a longer, darker chronicle—one whose conclusion will define the fate of West Asia and the very contours of justice in our century.

by Nilantha Ilangamuwa ✍️

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