Staff Reporter :Bangladesh has suffered a severe financial loss of some $2.2 billion or 1.0 per cent of the GDP in the last three months of the current fiscal (2014-15) due to blockade and hartals called by the BNP-led opposition alliance, according to the World Bank (WB).The WB came up with the estimate on Sunday at the launch of Bangladesh Development Update Report- 2015 held at its Dhaka office. Unveiling the report, WB’s Chief Economist in Bangladesh Dr Zahid Hussain said, Bangladesh economy appears to have incurred a total loss of about $2.2 billion or 1.0 per cent of GDP from the direct impact on political turmoil from January to March period.The WB report said, “Political turmoil in particular is taking a heavy toll on the economy. Economic losses this time are likely to be more severe than earlier periods of turmoil because of the timing, duration, and the depth of uncertainty surrounding how the crisis may be resolved.”The resilience of the Bangladesh economy continues to be tested by faltering political stability, weak global markets and structural constraints. These are inhibiting the economy’s growth as well as progress on shared prosperity, it added. The WB report predicted that the country’s GDP would grow at 5.6 per cent in the fiscal year 1014-15 compared with 6.1 per cent during last fiscal because of the impact of political turmoil. “Assuming stability and coupled with sound fiscal and monetary management, growth may recover to 6.3 per cent in the fiscal year 2015-16 and 6.7 per cent in fiscal year 2016-17,” it said.Highlighting impact bearing capacity of the Bangladesh economy, the report said that a job friendly growth appeared to be gaining momentum until the resurgence of political turmoil since early January 2015, with improved capacity utilisation and investments. It continued to do well in containing inflation due to favourable international commodity price movements and sound macroeconomic management. “But the resurgent of political turmoil has severely disrupted supply chain across the country dampening the growth prospects as well as fuelling inflationary expectations. If political stability could sustain, Bangladesh’s GDP growth for FY 2015 would be better,” it added.Accelerating the GDP growth, the biggest challenge remains how to ensure durable political stability. This is a precondition for accelerated, inclusive and sustainable growth. Other challenges include preserving fiscal space, ensuring exchange rate flexibility, and improving financial sector accountability, boosting private investments through faster progress on establishing special economic zones and implementing faster structural, regulatory and policy reforms and addressing transport problem to improve connectivity.The WB report also highlighted the vulnerability of the country’s banking sector saying that the financial health of state-owned commercial banks (SCBs) are still weak with rising nonperforming loans and capital shortfall. “This is the consequence of lingering impact of a series of financial scams and resultant loan defaults in the SCBs. The top management of these banks collaborated with some unscrupulous borrowers to swindle large amounts of money under different instruments,” it said. It also said that the private banks are not immune from corporate governance failures, either. Weak corporate governance in private banks prompted the central bank to appoint observers in two of them and to issue a circular requiring its approval before firing or making the Chief Executive Officers (CEOs) of private banks.
