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Business & Finance News Monday, September 22, 2003 Compiled by SDNP Head Lines
G-7 backs US call for currency
flexibility, pressuring Asia The Bangladesh Observer
DUBAI, Sept. 21:–Finance ministers and central bank
chiefs from the world’s seven richest countries here Saturday stepped up
pressure on Asian countries to reform their currency systems, backing a
US call for “flexibility” in global exchange rates, reports AFP.
The ministers of the Group of Seven (G-7) also struck an upbeat note on the global economy, saying that the long-awaited recovery was now “underway”.Although the final communique did not refer to any specific nations, the call for flexibility was a clear message to Asian countries–most notably China–to change currency regimes that Washington argues are hitting US exports.
American manufacturers say that China’s yuan–which has been pegged to the dollar at around 8.3 for the past nine years–is undervalued by 15 per cent and is unfairly eating away at US exports. “We emphasize that more flexibility in exchange rates is desirable for major countries or economic areas to promote smooth and widespread adjustments in the international financial system, based on market mechanisms,” said the statement.
While officials said the United States was largely behind the use of the word flexibility in the statement, Washington also found support from Europe, which fears undervalued Asian currencies could be bad news for its economy.
European policy makers are worried that the euro could undergo a damaging surge when the US current account deficit causes the dollar to fall, if the Asian countries do not let their currencies appreciate. European Central Bank President Wim Duisenberg expressed satisfaction over the statement, which he praised as “balanced”.
He also reaffirmed his belief that the eventual
adjustment of the major imbalances in the global economy was
“unavoidable but it has to be smooth and gradual.” The communique came
after US Treasury Secretary John Snow failed earlier this month to
persuade Beijing to give ground on the currency issue, which has become
a politically sensitive topic in the United States in the light of its
persistently high jobless rates.
Snow said after the G-7 meeting that “flexible exchange
rates are an antidote for global imbalances.”
China is not the only country whose currency is fretting Washington. Several other Asian countries have currency pegs to the dollar and Japan has intervened in the foreign exchange markets to curb the strength of the yen and boost its exports. But officials from the G7 (Britain, Canada, France, Germany, Italy, Japan and the United States) insisted that the Japanese delegation had raised no objections to the final version of the communique.
Snow said: “I thought they (Japan) were very supportive” of the G-7 call for flexibility. “I think they know the language well,” Snow added. The G7 leaders’ renewed optimism on the economy comes days after the relatively upbeat assessment from the International Monetary Fund in its World Economic Outlook released here, where growth estimates for the US and Japan were both raised.
The communique however referred to the “unbalanced”
nature of the global recovery, in an allusion to the key risks that
could still could still undermine the economy. The recovery is seen as
“unbalanced” by many economists as the United States charges ahead of
the rest of the world, leaving Europe trailing in its wake.
But high US growth rates have come at a price, with the country building up massive current account and budget deficits, which are seen as looming risks for the world economy.
“For growth to strengthen, to be sustained and less
unbalanced, structural reforms must be accelerated,” the communique
said. Meanwhile the G-7 released a statement urging increased financial
aid to the Palestinians after they requested 1.2 billion dollars in
emergency humanitarian and budgetary support for 2004. “We will advocate
that the World Bank replenish the Trust Fund for the West Bank and Gaza
this fall. We urge other members of the international community to
increase and accelerate their assistance provided to the Palestinian
Authority,” a statement said.
India considers gas and transit can reduce
Dhaka-Delhi yawning trade gap The Bangladesh Observer
India considers export of natural gas and offer of land
transit by Bangladesh as two effective means to reduce the yawning trade
gap between Dhaka and New Delhi, reports UNB. “ Export of gas and offer
of transit facilities for which bilateral agreement was reached way back
in 1972 are viable options,” Indian High Commissioner ML Tripathy told
the New Delhi-based Sahara Times.
However, he said increased export is the other option for
striking a balance in the two-way trade, and for that Bangladesh would
need to expand its export basket by offering goods and services that can
find a place in the Indian market on their own on a competitive basis.
Besides, duty-free access has been granted recently on 79
items. These have resulted in some increase in Bangladesh’s exports, but
he noted it had only a marginal impact on the country’s trade deficit.
“ Since we are an energy-deficient country and are
looking at all possible sources to meet our needs, we will certainly
consider buying gas from Bangladesh on mutually agreed terms,” the envoy
said.
“ We should, however, try to leverage the inherent
complementaries between the economies of the two countries,” Tripathy
said, citing Lafarge Surma cement plant as a good example where the
limestone from Meghalaya will be used to make cement in Bangladesh.
Similarly, an Indian business team recently discussed the possibility of
setting up fertiliser plants using Bangladeshi gas.
About bus services between the two countries, the envoy
said Dhaka-Kolkata bus service proved to be extremely popular and the
two sides were considering an increase in frequency of the service to
meet the growing demands.
He mentioned that a trial run was conducted in July 2001,
but this passenger train service is yet to be on a regular basis.
Tripathy said during the last JEC meeting, held in Dhaka in July, India
had expressed its keenness for the operationalisation of this service,
which had been available to the peoples of both sides till 1965. World Development Report 2004 released ECONOMIC REPORTER, The Independent 'The World Development Report 2004', published by the World Bank, painted a grim picture of rampant poverty and illiteracy in the region and advised the governments of Bangladesh, India, Nepal and Pakistan to take stock. The report was released globally yesterday. In this connection, local office of the World Bank organised a press conference in the city yesterday which was addressed, among others, by WB country director Christine I Wallich and team members of the WDR Dr Shekhar Shah, Dr Jeffery Hammer and Dr Junaid Kamal Ahmad. "A survey of primary health care facilities in Bangladesh found the absenteeism rate among doctors to be 74 per cent," said the report. "Much of public spending never reaches poor people. In Nepal, 46 per cent of education spending accrues to the richest fifth of the people and only 11 per cent to the poorest." Health care, education and basic sanitation remain elusive for the poor of South Asia, where state spending routinely fails to provide affordable and quality public services, the World Bank report said. The report said that even when poor people had access to basic services, the quality can be "distressingly low." "In random visits to 200 primary schools in India, investigators found no teaching activity in half of them at the time of the visits," said the report, released in Dubai during the World Bank and IMF joint annual meeting. India, with a population of more than one billion, accounts for one out of every five young children. UNICEF recently said there were about 65 million out-of-school girls globally-and of these, more than half lived in India. India has improved the overall literacy rate from 52 per cent in 1991 to 65 per cent in 2001 and female literacy has increased from 39 to 54 per cent during this period. The World Bank said the benefits of girls' education, such as improved community health and better development of children, should be brought home to help overcome cultural and social obstacles to schooling girls in South Asia. "Pakistan has not translated its respectable growth of income into better outcomes-enrolment in schools has been stagnant for almost a decade," said the World Bank. Pakistan achieved 5.5 per cent economic growth in 2002-2003 yet two-thirds of Pakistani girls over 10 are unable to read or write compared with 40 per cent of boys in the same age group, according to a 2001-2002 government survey. "Services work when they include all people, when girls are encouraged to go to school, when pupils and parents participate in the schooling process," James Wolfensohn, president of the World Bank, said in the report. "They work when we take a comprehensive view of development-recognising that a mother's education will help her baby's health," he said. On a more positive note, the World Bank noted Bangladesh had seen 10 per cent annual growth in enrolment at secondary schools, mostly ones that are not run by the government. "Most of this increase comes from enrolments of girls assisted by the Female Secondary School Programme which provides stipends to girls (who) attend school," said the report. The World Bank said there was no "silver bullet" and governments had to get down to the "hard slog of reforming institutions and power relations" to take care of the urgent needs of the poor. "Too often, services fail poor people. These failures may be less spectacular than financial crisis, but the effects are continuing and deep nonetheless," said Wolfensohn. The World Bank also called on governments in developing countries to allow poor communities to monitor more closely basic services such as health, education and water distribution, and improve their delivery. "A billion people worldwide lack access to an improved water source, 2.5 billion lack access to improved sanitation," it said. The report gave examples from India, where investigators found no teaching activity in over 200 schools at the time of the visit, and from Bangladesh, the rate of absenteeism among doctors in primary care clinics is 74 per cent. The report suggested three ways to improve the delivery of services, starting with "increasing poor clients' choice and participation in service delivery, so they can monitor and discipline providers. Govt plans to rehabilitate 36 sick tea gardens Star Business Report, The Daily Star The government has decided to rehabilitate 36 sick tea gardens now facing manifold problems, including lower yield and poor land utilisation. The decision was taken at a meeting of the Ministry of Commerce yesterday which discussed ways and means to resolve the problems. Chaired by Commerce Minister Amir Khosru Mahmud Chowdhury the meeting suggested making the sick gardens commercially viable. Commerce Secretary Suhel Ahmed, Bangladesh Tea Board (BTB) Chairman SAHM Tauhid and high officials of Bangladesh Krishi Bank were present. Presently, there are 157 tea gardens in Sylhet, Moulvibazar, Habiganj, Brahmanbaria, Chittagong and Chittagong Hill Tracts regions. "The performance of these 36 sick gardens is dismal and it has become necessary to take steps for their rehabilitation," said a commerce ministry official. The BTB has identified them as least developed gardens (LDG) because their yield is 340 kg per hectare, against a national average of 1,150 kg per hectare. Apart from facing management and legal problems, the LDGs are also burdened with Tk 5.53 crore overdue loan of the Bangladesh Krishi Bank. The average land utilisation of the LDGs is 29 per cent. The 36 LDGs have 11,906 hectares of land, which is over 10 per cent of the total land of the tea industry but their contribution to national tea output is only 1.19 per cent. "Some of the reasons behind the poor performance of these gardens are beyond the control of their owners," said an official of BTB. He said the LDGs are financially very weak and they do not have the requisite know-how and capacity to raise nursery for the high yield variety of tea. Experts say Bangladesh may lose its status as a tea exporting country in near future as the domestic consumption is increasing at a higher rate than the rate of production. |
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