How to overcome economic recession in Bangladesh?

INTRODUCTION
The Bangladesh economy has shown reasonable stability till now despite the threats
from depressed external developments in the back drop of the global financial turmoil.
Bangladesh’s exposure to the contagion effects of the global financial markets has been
little and the country’s financial sector remains largely immune to the global financial
turmoil. With continuation of the present economic trends, the economy is likely to grow
at around 6 percent in FY09. In addition, major macroeconomic indicators have
remained reasonably stable in recent times which may continue in the near term
provided no major shock afflicts the economy.

The financial year 2009-10 (FY10), however, faces multiple downside risks. In addition
to the risks of natural calamities and other unexpected developments that the economy
routinely faces, the major additional risk for FY10 emanates from the fallout effects of
the global financial crisis. At present, the world economy especially the developed
economies have entered into a major downturn. Along with substantial growth
slowdown, the global economic situation is highly uncertain and subject to considerable
downside risks.

RECESSION
In economics, a recession is a general slowdown in economic activity in a country over a
sustained period of time, or a business cycle contraction. During recessions, many
macroeconomic indicators vary in a similar way. Production as measured by Gross
Domestic Product (GDP), employment, investment spending, capacity utilization,
household incomes and business profits all fall during recessions.Governments usually
respond to recessions by adopting expansionary macroeconomic policies, such as
increasing money supply, increasing government spending and decreasing taxation.

Many professionals and experts around the world believe that a true economic recession
can only be confirmed if GDP (Gross Domestic Product) growth is negative for a period
of two or more consecutive quarters. The roots of a recession and its true starting point
actually rest in the several quarters of positive but slowing growth before the recession
cycle really begins. Often in a mild recession the first quarter of negative growth is
followed by slight positive growth, then negative growth returns and the recession trend
continues.

Mohammad Badrul Alam, I.D: 091-062-E2 1

 How to overcome economic recession in Bangladesh?

CAUSES OF ECONOMIC RECESSION

An economic recession is primarily attributed to the actions taken to control the money
supply in an economy. The Federal Reserve is the agency responsible for maintaining the
delicate balance between money supply, interest rates, and inflation. When this delicate
balance is tipped, the economy is forced to correct itself.

The Fed sometimes deals with these situations by dumping huge amounts of money
supply into the money market. This helps to keep interest rates low, even as inflation
rises. Inflation is the rise in the prices of goods and services over a period of time. So, if
inflation is increasing, it means that goods and services are costing more now than they
did before. The higher the level of inflation, the smaller the percentage of goods and
services is which can be bought with a certain amount of money. There can be many
contributing factors for inflation, which include but are not limited to increased costs of
production, higher costs of energy, and/or the national debt.

In an environment where inflation is prevalent, people tend to cut out things like leisure
spending. They also budget more, spend less on things they usually indulge in, and start
saving more money than they did. As people and businesses start finding ways to cut
costs and derail unneeded expenditures, the GDP begins to decline. Then,
unemployment rates will rise because companies start laying off workers to cut more
costs, because consumers are not spending like they were. It is these combined factors
that manage to drive the economy into a state of recession.

EFFECTS OF ECONOMIC RECESSION

Generally, an economic recession can be spotted before it actually happens. There are
ways to spot it before it actually hits by observing the changing economic landscapes in
quarters that come before the actual onset. We will still see GDP growth, but it will be
coupled with signs like high unemployment levels, housing price declines, stock market
losses, and the absence of business expansion. When an economy sees more extended
periods of economic recession, it goes beyond a recession and is declared that the
economy is in a state of depression.

The only real benefit of an economic recession is that it will help to cure inflation. In fact,
the delicate balancing act that the Fed struggles to pursue is to slow the growth of the
economy enough so that inflation will not occur, but also so that a recession will not be
triggered in the process. Now, the Fed performs this balancing act without the help of

Mohammad Badrul Alam, I.D: 091-062-E2 2

 How to overcome economic recession in Bangladesh?

fiscal policy. Fiscal policy is usually trying to stimulate the economy as much as is
possible through such things as lowering taxes, spending on programs, and ignoring
account deficits.

WORLD ECONOMIC CRISIS AND BANGLADESH

Now the world economy is moving towards recession and will only grow by 0.5 per cent
in 2009. The 2009 World Economic Outlook (WEO) shows that the global economy was
expected to come to a virtual standstill this year. In the last three months, the global
economy has taken a turn for the worse, as financial markets have remained under stress
and global output and trade have sharply decreased. The advanced economies to
experience the sharpest contraction in the post-war period with the United States’ real
economic activity to contract by one per cent, the Euro zone will contract by two per cent
and two and half per cent for Japan and emerging and developing economies will also
suffer serious setbacks, as a result global growth is projected to decline sharply to 0.5 per
cent in 2009.

The global financial crisis had taken an increasingly heavy toll which was penetrating
through different channels across countries. The crisis had also made it much more
difficult and costly for
consumers and firms to
borrow, hence dragging
down activity and trade
and in emerging
economies.World Bank
in a recent press
briefing in Dhaka
projected that GDP
growth in Bangladesh
might come down to 4.8% in the current fiscal year from the Government projected 6.5%
as readymade garments and remittance inflow will suffer due to global financial crisis.
One international organization, ESCAP, said recently that fallout from global recession
to be less severe for Bangladesh. The organization mentioned in 2007 Bangladesh had a
good growth rate of 6.4 percent, despite recession and a devastating cyclone in 2008
Bangladesh achieved 6.2 percent and in 2009 it is expected that, with all limitations,
growth rate will be more than 5.5 percent. Experts said that it could be as the economy of
Bangladesh has a unique character that help the country to survive; as example the Asian

Mohammad Badrul Alam, I.D: 091-062-E2 3

 How to overcome economic recession in Bangladesh?

crisis of last century jolted Indonesia, Malaysia, Thailand and many more. But
Bangladesh economy was intact with expected level of growth rate and to face that crisis
agriculture sector’s contribution along with the indigenous survival technique of rural
poor were the main factors active in economy and society. These factors are yet an
important strength for the government to overcome the adverse impact of global
recession on Bangladesh.

Recent global economic recession in Bangladesh is one of the major challenges to be

addressed by government of Bangladesh. As part of this problem, labor forces working
abroad, especially in Malaysia, are already facing the adverse impact of the global
economic downturn. Although the foreign Ministry and labor ministry of Bangladesh
said that this is not a very big crisis, initiatives have already been taken by concerned
ministries to resolve concern. By the time government of Bangladesh also constitutes a
high power committee including ministers, high officials and prominent economists.
Government also put its eyes on the labor force working in garment sector that almost
filled up by women. It is apprehended that export in coming years could be reduced from
expected level for the adversity of world economic recession. Cost of import, in many
cases, could also be enhanced, government and economists assumed, in coming years for
the same causes.

RECENT DEVELOPMENTS AND IMPLICATIONS TO

OVERCOME RECESSION
At present, economic recession is the most talked about phenomenon in global arena and
revitalizing the economy is the common concern for the nations irrespective of wealthy
or poor. Very recently, finance
minister Abul Maal Abdul
Muhith announced a stimulus
package of 34.24 billion Taka,
which will be effective as blanket
coverage of power, agriculture
and export sectors to help the
national economy from the
impact of the fallouts of global
crisis.The fund meant to be used over the last quarter of the current fiscal year includes
Tk 450 crore in cash subsidies for the export industries already hit by the recession.

Mohammad Badrul Alam, I.D: 091-062-E2 4

 How to overcome economic recession in Bangladesh?

Of the measures, some will be implemented on an urgent basis during the last three
months of this fiscal year and the others in 2009-10. In April-June period, cash
assistance for export of jute goods, leather and leather goods, and frozen foods will be
increased by 2.5 percentage points. To foot the bill for the package, an additional Tk
3,424 crore will be allocated in the revised budget for the current fiscal year. Of the
amount, Tk 450 crore will be spent on cash subsidies to exporters, Tk 1,500 crore on
agriculture, Tk 600 crore on power sector, Tk 500 crore on agriculture loans and Tk 374
crore on social security. With this, the budgetary allocations will mount up to Tk 14,554
crore, from Tk 11,130 crore originally.

The additional funding for the social safety programmes will translate into a rise in the
number of pensioners and the amount of pensions. Tk 1,500 crore allocated for the
agriculture sector will be used to ensure smooth flow of agri-loans through
recapitalisation of Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank and
Karmasangsthan Bank.

The amount set aside for power sector will be used to shore up the financial base of the
Power Development Board (PDB). Of the exports, jute and jute-made goods will see cash
incentives rise to 10 percent from 7.5 percent, leather and leather products to 17.5
percent from existing 15 percent, frozen foods and fish to 12.5 percent from 10 percent.
There is however no cash incentive for the ready-made garments and ceramics exporters.
The package will be implemented through immediate, medium and long term
programmers. Besides giving financial, fiscal and policy supports, the government will
bring about major administrative reforms. The policy supports to be executed during the
last quarter include disbursing 70 percent of the incentives immediately after primary
assessment of the claims and the rest 30 percent after necessary audits.

As the government excluded the garments sector and since the government did not grant
any cash subsidy for the garments sector, so government should a full-fledged
implementation of the policy support. Proper implementation of those demands will
help offset losses from the recession. The government could provide bank loans at a
single digit interest rate, relaxation of the Credit Information Bureau rules, termination
of the 0.25 percent tax at source, extension of loan rescheduling from the three-and five-
year terms to seven and 10 years and withdrawal of VAT on utilities. The government
should extend incentives to the textile industry and provide a Tk 3,424 crore stimulus
package that excluded the textile and RMG sectors.

Mohammad Badrul Alam, I.D: 091-062-E2 5

 How to overcome economic recession in Bangladesh?

The present developments bring out nine areas that need priority attention within the
existing framework of the national budget of FY10 to help overcome from economic
recession. These are:
• Setting investment priorities: The portfolio of public investment needs
to target productivity gains in key sectors including agriculture; electricity and energy
development; removing major bottlenecks in infrastructure; improvement in investment
climate.
• Management of likely economic and social impact of global
recession: The adverse impact of the recession is likely to affect the country’s
economic and social life during the fiscal year, the extent of which is difficult to predict.
The budget needs to accommodate counter measures especially covering the external
sector and related domestic activities.
• Resource mobilization: Measures to broaden the tax base and increase the
efficiency of tax administration; tax rationalization; increase non-tax revenues, capital
market Development.
• ODA inflows: Increase inflows along with urging the international financial
institutions to come up with lending without the overly burdensome conditionality of the
past along with quick disbursing facilities since Bangladesh has sound economic policies
but is likely to face greater resource shortfalls during the year due to global crisis.
• Size and quality of public expenditure: Align the public expenditure
program to strike the right balance between sectoral priorities and long and short term
exigencies; ensure project quality.
• Sustaining export growth and remittances inflow: Export
diversification and attraction of higher remittance inflows through formal channels.
• Support to agriculture and the rural economy: Areas of support;
adequate and timely supply of credit and inputs at reasonable prices; ensuring fair prices
and supply management; rural non-farm enterprises and SME development.
• Human resource development-quality and equity issues:
Adequate, affordable, and equitable access to quality education and healthcare services.
• Social protection issues: Need to adopt cohesive and strategic vision and integrated
strategy for safety net programs; strengthening of existing programs and wider coverage for
hardcore and vulnerable poor and displaced persons due to adverse impact of global recession.

CHALLENGES TO OVERCOME RECESSION

Mohammad Badrul Alam, I.D: 091-062-E2 6

 How to overcome economic recession in Bangladesh?

Bangladesh is passing a crusial time in economic sector. Though till now Bangladesh is
not seriously affected by the recession, but it could be affected in near future. So in
coming budget a number of objectives and targets which are in fact key challenges that
will need to be addressed in order to implement the various proposals in the Budget
FY10 “Overcoming of the Crisis” will indeed hinge on the efficacy with which the CTG,
and subsequently, the newly elected government, is able to address these emergent
challenges.

Enhance prospects of labor intensive growth

Higher and sustainable GDP growth requires policies to bring more complementarities
between agriculture and industry. Similarly, pro-poor growth can be achieved through
more labor intensive investments. This is needed especially since recent Labor Force
Survey (LFS) data show an increase in the underemployment rate. In this context, growth
of agriculture and small and medium industries (SMEs) can have a positive impact. In
fact many of the export sectors have higher capital intensity compared with those
producing for the domestic market. Therefore, if world economic recession slows down
the export sector, policies for encouraging labor intensive sectors geared to domestic
demand can help achieve both ends: acceleration of GDP growth and pro-poor growth
through higher employment generation.

Support to agriculture
After the declaration of budget forFY2009 on 9 June 2008, the government has
increased administered price of urea fertilizer which came into effect on 11 June 2008.
The mill-gate price
of urea has been re-
fixed at Tk 10,000
per tonne or Tk 10
per kg while the new
rate will be at Tk
10,700 per ton or Tk
10.70 per kg at the
level of buffer stocks. The new farmgate price of urea fertilizer is fixed at Tk 12 per kg in
remote areas and Tk 11.50 in areas with well developed transport facilities which were Tk

Mohammad Badrul Alam, I.D: 091-062-E2 7

 How to overcome economic recession in Bangladesh?

6.00 per kg. Prior to the increase, the official prices of urea were Tk 4,800 per ton or Tk
4.80 per kg and Tk 5,300 per ton or Tk 5.30 per kg at the mill-gate and the buffer stock
levels respectively. As is known, the government will continue to provide subsidy at the
rate of 15 per cent on the sale of other imported non-urea fertilizers TSP, DAP, MOP at
farmers levels.

In my view, this is grossly under estimated. Because of high price of agricultural

commodities and export restrictions imposed by major exporters of agricultural
commodities particularly food grains, Bangladesh must aim for “high yield goal” for
agricultural production. The CPD using recommended fertilizer doses to achieve “high
yield goal” by the Bangladesh Agricultural Research Council (BARC) published
“Fertilizer Recommendation Guide 2005” has estimated demand to the tune of 35.2 lakh
metric tons of Urea, 5.9 lakh metric tons of TSP, 5.0 lakh metric tons of Mop and 3.2
lakh metric tons of DAP in FY2008/09. It is felt that the fertilizer demand in FY2009
should be revised by taking cognizance of the increased demand so that adequate
amount of fertilizer may be made available to the farmers.

If cash subsidy is given to fertilizer and diesel together (or fertilizer and electricity
together), the two may be integrated into a general farm subsidy. However, problems of
high or other costs may arise when supply or availability becomes limited. In view of this,
(i)the current practice of providing fertilizer subsidy may be continued along with
bringing more efficiency in domestic fertilizer production. (ii) Provide special allowable
facilities under WTO
rules to firms
adopting integrated
contract farming,
processing, and
marketing; (iii)
Rationalize the
agricultural extension
services for technology dissemination and for producing quality and new products for
exports; (iv) Review the current distribution system of fertilizer and frame transparent
and well-defined criteria for allocating dealership of fertilizer at the farmers’ level to
ensure timely availability; (v) Support the development of vertically integrated
marketing systems (for example, involving the NGOs, private firms, supermarkets) for

Mohammad Badrul Alam, I.D: 091-062-E2 8

 How to overcome economic recession in Bangladesh?

agricultural products; (vi) Encourage increased output of the fishing, poultry, and
livestock sub-sectors especially through providing improved veterinary services and
remaining alert against the outbreaks of diseases like Avian flu.

Agricultural Credit: Increased target for disbursement of agricultural credit

is fixed at Tk 9,000 crore in FY2009 against targeted Tk 6,351 crore in FY2008 and
actual disbursement up to April 08 was Tk 6,731.35 crore. Some private sector banks are
also coming up with initiatives to disburse agricultural credit through a number of
NGOs. Experience is showing that agriculture credit disbursement could be a profitable
business. If new technologies are encouraged through these credit facilities this would
help adoption of modern technology in agriculture.

Reigning-in High Inflation, Particularly Food Inflation

Although point to point inflation rate posted some decline (about 7 per cent in April,
2008 compared to April 2007), average inflation in FY2008 remained high at double-
digit figures. This average figure, however, does not fully capture the implications of
price rise for the gene ral consumers since prices of essential items such as rice, wheat,
milk powder and vegetable oil, comprising a significant component of household
expenditure, outpaced the average food inflation in the past year. Whilst the possibility
of reducing the
prevailing high
prices in any
substantial way is
unlikely, and will
depend on both
domestic and global
factors, maintaining
stability in the food
market must be
seen as a key objective in implementing the budget in FY2008-09. Both market and non-
market interventions will need to be brought into play to achieve this. These will include
open market sales, a focused and strengthened role of Trading Corporation of
Bangladesh (TCB), inducement to broad based private sector imports, continuous
monitoring of the dynamics of supply and demand situation, maintaining appropriate
stocks, and carrying out fiscal interventions when required. For essential items such as

Mohammad Badrul Alam, I.D: 091-062-E2 9

 How to overcome economic recession in Bangladesh?

rice, key to stabilizing price levels will be higher domestic Production in the upcoming
aman and boro seasons for which availability of good quality seeds and inputs, at
affordable prices, on time and in the required amount, will be necessary.

Augmenting Remittance Flow

As is known, remittance flow has emerged as a major source of foreign exchange earning
for Bangladesh. So it can play a vital role to overcome recession. While remittance
earning was less than $2.0 billion in FY2001, it is expected to exceed $8.0 billion in
FY2008. It is currently the single most important foreign exchange earner (in net term)
of Bangladesh. The number of workers leaving Bangladesh has risen three-times over the
last four years. Given the demographic dynamics, in coming years the market for service
and care-providers is likely to increase manifold in the developed world. Bangladesh lags
far behind
countries such
as Philippines
in terms of per
capita
remittance
earnings
because only
about 3 per
cent of her
migrant
workers belong to the category of professionals, and more than 50 per cent belong to the
unskilled category. There is a need to design a comprehensive medium term strategy to
augment the skills of the migrant workers. It has been seen that remittance earnings also
play a highly positive role in augmenting income of poor households, and reducing
income inequality. However, hardcore poor households have not been able to tap into
this market because of inability to mobilize the initial capital. There is thus an urgent
need to set up an appropriate mechanism (e.g., provide loan against future earnings,
impart skills) to enable these households to participate in the overseas labour market. In
this context, recent initiative of the Palli Karma Shahayak Foundation (PKSF) to
facilitate participation of hardcore poor households calls for careful examination for the
purpose of replication.

Mohammad Badrul Alam, I.D: 091-062-E2 10

 How to overcome economic recession in Bangladesh?

Improving Quality and Enhancing Implementation of ADP

Public sector continues to remain a major source of service delivery in Bangladesh,
particularly in areas related to human resource development such as education and
health. The sector also plays a crucial role in terms of providing infrastructure and other
services that augment
private sector investment
and create conducive
environment for private
entrepreneurs. However,
in recent years ADP
implementation record
has tended to be quite
discouraging, in the
range of 75-80 per cent of
even the revised ADP, in most instances. Disbursement of ADP has been particularly low
in the case of a number of critically important sectors including power and energy which
have tended to adversely impact investment and productivity. There is a need to
strengthen institutional capacity of the government to properly allocate, implement and
monitor the ADP. It may be necessary to revisit the procurement policy to examine
whether amendments are required to expedite decision making in the course of ADP
implementation.

Support to rural economy

The government should set and ensure transparent and consistent rules for developing
the rural non-farm sector for as a part to overcome economic recession. Especially for
the (i) agro-farm system and agro-enterprise development including guidelines for food-
safety and negotiate favorable terms of access to international markets for rural
products; (ii) Facilitate the development of marketing facilities, knowledge-building to
accelerate agribusiness development and create environment for better participation of
the private sector; (iii) Invest in rural infrastructure especially energy and transport; (iv)
Address market failures through sharing regular information and adopting transparent
rules and regulations.

Energy Security

Mohammad Badrul Alam, I.D: 091-062-E2 11

 How to overcome economic recession in Bangladesh?

Energy has emerged as a key constraining factor that inhibits investment in Bangladesh.
This is true for both domestic investment and foreign direct investment (FDI). Per capita
energy availability is the lowest in Bangladesh compared to other regional countries.
Potential growth in agriculture, industry and services has been severely limited on
account of lack of electricity and gas. What is particularly disturbing is that in spite of
having been declared a priority sector, pace of ADP implementation has been
consistently low in this sector. There is an urgent need to revisit the energy strategy if
Bangladesh is to register high GDP growth rate and ensure high pace of poverty
reduction. The draft Coal Policy needs to be finalized speedily. The CTG has initiated
offshore bidding process for exploration of gas and oil resources in the Bay of Bengal (28
blocks).

Legalizing ‘black money’

The issue is contentious and needs careful consideration keeping both equity and
productivity implications. Decision in this regard may be taken based on a study to
assess the issues of ‘black money’, impact of past policies of legalizing ‘black money’, and
identify future course of action. If such studies support, the government may consider
giving an opportunity to legalize ‘black money’ in future under certain conditions. For
instance, the legalization process might (i) involve payment of appropriate taxes (and
penalties) such that those who pay taxes regularly are not penalized and people in
possession of ‘black money’ are discouraged to carry on with such money in future; (ii)
impose strict conditions such as the legalized money can only be used for investment in
productive sectors such as manufacturing, SMEs, and other priority sectors specified by
the government and would not be directed to real estate, land purchase, or similar
activities.

Improving Terms of Trade

Bangladesh’s export sector has demonstrated commendable resilience at a time of
challenging global environment (declining world trade, recession in major economies,
lower consumer spending). However, it is equally true that Bangladesh’s terms of trade
has been experiencing a secular fall in the recent past. At a time when global commodity
prices are rising, Bangladesh’s average export prices are on the decline. There is an
urgent need for intra and extra-RMG diversification as well as diversification of markets
to ensure higher value addition, movement up the value chain and better prices in the
global market. Technology up gradation, productivity enhancement, process and product

Mohammad Badrul Alam, I.D: 091-062-E2 12

 How to overcome economic recession in Bangladesh?

modification and design capability improvement are becoming key factors in translating
Bangladesh’s comparative advantages into competitive advantages. Realizing potential
export opportunities in ship-building, pharmaceuticals, light engineering and home
textile will require significant investment in technology and skills development. A
dedicated “Technology Development Fund” needs to be set up towards this.

Higher Mobilization of Investible Resources

Mobilization of greater investible resources for the entrepreneurs will be key to higher
GDP growth in Bangladesh. It needs to be ensured that government borrowings,
particularly from the banking sector, do not crowd-out the private entrepreneurs from
the credit market. The current buoyancy in the capital market will need to be supported
through appropriate incentives to business enterprises with good track record to get
listed in the capital market. Off loading of public sector enterprises, securitization, etc.
will need to be encouraged. Of crucial importance will be appropriate monitoring of the
securities market to guard against manipulation, insider trading, and creation of “boom
and bust” situations. Bangladesh Bank’s monetary policy, particularly interest rate
policy, will play an important role in terms of creating an environment that stimulates
savings and generates credit and equity for investors.

Moving Ahead with Institutional Reforms

The CTG has set up Better Business Forum (BBF) and Regulatory Reform Commission
(RRC) with a view to putting in place an investment-friendly environment for the
entrepreneurs. Both the BBF and the RRC have put forward a number of
recommendations which relate to introduction of e-commerce, doing away with
unnecessary regulatory barriers and putting in place systems that facilitate quality
service delivery by state owned entities and, at the same time, are consumer and investor
friendly. These initiatives are expected to reduce cost of doing business in Bangladesh
and provide encouragement to both domestic and foreign investors.

There is a need to vigorously pursue and continue with these reforms. It is hoped that the
newly elected democratic government will ensure sustainability of these reforms and
continuity of the functioning of these bodies so that reforms towards business friendly
and consumer-friendly environment in Bangladesh remain an ongoing endeavor.

Mohammad Badrul Alam, I.D: 091-062-E2 13

 How to overcome economic recession in Bangladesh?

An Effective Safety Net Programme

Bangladesh has passed through a challenging time in FY2007. Consecutive floods, Sidr,
production losses and high inflation have led to a situation where food security of people
below the poverty line has come under severe strain. It is to Bangladesh’s credit that she
has been able to tackle the situation by bringing more than 10 million people under one
or other form of safety net programmes to overcome recession. Targeting and
entitlement of such social programmes need to be improved further to ensure that a
speedy and flexible response can be ensured depending on the needs of the hour. There
is a need for closer cooperation with local government bodies to raise the effectiveness of
such programmes.

Social welfare programs

(i)Undertake measures to improve the design, targeting and effectiveness of existing
programs; (ii) Undertake a comprehensive review of all programs and, if necessary, re-
orient the focus of government ministries from micro credit programs to other
innovative programs targeting specific disadvantaged population groups and locations;
(iii) Encourage and develop partnerships, if necessary, to introduce health insurance
schemes for the poor and vulnerable groups within the purview of developing
community health insurance; (v) Move toward an integrated social security policy
(following the example of the comprehensive social security scheme for agricultural
workers in West Bengal) in a phase-wise manner. This may start with a low-cost health
and safety insurance scheme for the RMG workers for which a fund may be created with
contributions from the RMG factory owners/workers/government and relevant
international organizations; (vi) Ensure effective management and operation of emigrant
workers’ resource and welfare centers to enhance their skills and ensure their health
needs and well-being. Give priority to emigrant women and men under the SME
development program.

CONCLUDING REMARKS
The government is well aware of the ongoing global economic recession impacts, and is
trying to overcome the problem successfully. The global recession could not weaken the

Mohammad Badrul Alam, I.D: 091-062-E2 14

 How to overcome economic recession in Bangladesh?

country's economic base because of the government's efficient economic management.

The government should proper adjustment within the medium-term macroeconomic
framework (MTMF) so that the present realities and recent macroeconomic and sectoral
developments are reflected.
The government should also be given special attention in two issues, order to ensure its
proper implementation. First, revitalization of the institutional framework to ensure that
(i) ministries and agencies work together effectively and efficiently; (ii) various agencies
and ministries adopt effective ways of communicating and coordinating on strategic
issues relating to budget implementation; and (iii) effective donor coordination is
forthcoming to support the budget priorities. Second, effective and regular monitoring of
budget implementation, at both ministry/agency and national levels, needs to be carried
out using both input and output indicators to overcome the economic recession from
Bangladesh.

--------------

Mohammad Badrul Alam, I.D: 091-062-E2 15