Around 5 lakh people in Bangladesh likely fell into extreme poverty between the fiscal years 2022-23 and 2023-2024, based on the erosion of their purchasing power due to persistently high inflation, according to the World Bank. "Weak private consumption growth and high inflation have halted poverty reduction. Higher food prices particularly impacted poor households, which allocate over half of their budget towards food expenditures," it said.

In addition, 8.4 lakh people are projected to join the ranks of the moderately poor, who earn $3.65 a day in purchasing power parity (PPP), said the bank in its Poverty Macro Update on Bangladesh. PPP is a measure that compares the relative value of currencies by examining the prices of a fixed basket of goods and services in different countries. The World Bank defines extreme poverty as income below $2.15 a day. Bangladesh's extreme poverty rate is forecast to rise to 5.1 percent in FY24 from 4.9 percent the previous year.

Metro rail authorities will ask the National Board of Revenue (NBR) to reconsider its decision to impose 15 percent VAT on metro rail fare from July 1. NBR today wrote to DMTCL saying they will not extend the exemption of 15 percent VAT, which was supposed to be imposed from December 28, 2022 when the metro rail service launched, after June 30. "We will try our best to halt the decision. There is still some time, so we will go to the highest level in this regard," Mohammad Abdur Rouf, company secretary of Dhaka Mass Transit Company Ltd (DMTCL), the operating agency of metro rail.

Rouf said they had requested NBR not to impose VAT as it would have an impact on passenger fare. The country's first metro rail service was opened to public partially in December 2022 and fully from September last year. Around 2.95 lakh passengers used the trains daily before Ramadan and earned around Tk 1.5 crore daily.

Bangladesh finds itself in a precarious fiscal position, with a significant portion of its revenue dedicated to debt repayment, as revealed by Dr. Debapriya Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue (CPD). Dr. Debapriya emphasised the gravity of the situation, stating, "34 percent of Bangladesh's revenue expenditure till July has been allocated to debt repayment." This figure, he noted, includes 28 percent for domestic debt and 5 percent for foreign debt, marking a significant increase from 26 percent to 34 percent in just three years.

Reflecting on the broader implications of debt repayment, Dr. Debapriya criticized the dismissive attitude of policymakers towards economists' warnings. He recounted his own predictions made two years ago about the challenges facing Bangladesh in 2024, emphasising the anticipated discomfort in debt repayment starting from 2025 and escalating in 2026. Dr. Bhattacharya underscored the burden of per capita liability, which stands at $310 for foreign debt alone and escalates to approximately $850 when domestic debt is factored in.

State-run Bangladesh Development Bank is set to merge with Sonali Bank, while Rajshahi Krishi Unnayan Bank will be taken over by Bangladesh Krishi Bank as part of reforms in the banking sector. They are the 2nd and 3rd such mergers announced in the industry, following the one of Padma Bank with Exim Bank.They came on the same day that Bangladesh Bank issued its guideline for successful bank mergers.

According to the guideline, the acquiring bank or company cannot terminate transferred employees for three years. If a bank fails to merge voluntarily, even though its capital deficit, non-performing loans, liquidity and governance deficit are ongoing, Bangladesh Bank may take compulsory amalgamation measures. When a weak or distressed bank merges with another, the acquiring bank's capital, liquidity, non-performing loans and other financial indicators may be affected post-merger. To ensure stability and protect public interest, the central bank will provide necessary policy support and monitor the merged entity's activities.

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