P------------ angladesh Promoting Higher Growth and Human Development H - 4 . A WORLD BANK COUNTRY STUDY Bangladesh Promoting Higher Growth and Human Development The World Bank Washington, D.C., U.SA. Copyright ©) 1987 The World Bank 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing October 1987 World Bank Country Studies are reports originally prepared for internal use as part of the continuing analysis by the Bank of the economic and related conditions of its developing member countries and of its dialogues with the govemments. Some of the reports are published infornally with the least possible delay for the use of govenmments and the academic, business and financial, and development communities. Thus, the typescript has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors. The publication is supplied at a token charge to defray part of the cost of manufacture and distribution. Any maps that accompany the text have been prepared solely for the convenience of readers. The designations and presentation of material in them do not imply the expression of any opinion whatsoever on the part of the World Bank, its affiliates, or its Board or member countries concerning the legal status of any country, territory, city, or area or of the authorities thereof or concerning the delimitation of its boundaries or its national affiliation. The most recent World Bank publications are described in the catalog New Publications, a new edition of which is issued in the spring and fall of each year. The complete backlist of publications is shown in the annual Index of Publications, which contains an alphabetical title list and indexes of subjects, authors, and countries and regions; it is of value principally to libraries and institutional purchasers. The latest edition of each of these is available free of charge from the Publications Sales Unit, Department F, The World Bank, 1818 H Street, N.W., Washington, D.C. 20433, U.S.A., or from Publications, The World Bank, 66 avenue d'I&na, 75X16 Paris, France. Library of Congress Cataloging-in-Publication Data Bangladesh : promoting higher growth and human development. p. cm. -- (A World Bank country study) ISBN 0-8213-0983-3 1. Bangladesh--Economic policy. 2. Bangladesh--Economic conditions. 3. Bangladesh--Social policy. 4. Bangladesh--Social conditions. I. International Bank for Reconstruction and Development. II. Series. HC440.8.B362 1987 338.9549'2--dcl9 87-22920 CIP ABSTRACT This report explores the potential for accelerating the rate of economic and social development in Bangladesh. Part I reviews recent developments and provides a macroeconomic framework for achieving higher overall growth. Part II then discusses the key areas of policymaking where better progress is required and suggests how the Government's policy adjust- ment program can be supported by more generous and appropriate foreign assistance. However, higher economic growth will not be sufficient to make serious progress in alleviating poverty in Bangladesh. Special interventions are required to assist the most vulnerable -- especially the landless and women -- who tend to be by-passed by the development process. And, despite recent progress, more attention needs to be given to education, health, family planning and nutrition. Part III therefore documents recent progress in promoting human development and suggests directions for the future. ACKNOWLEDGEMENTS The preparation of this report was greatly assisted by the active cooperation of the Government of Bangladesh. The authors wish to thank officials in the Ministry of Finance, Planning Commission, Bangladesh Bank and many other departments and agencies for generously sharing their time, ideas and data. A draft of the report was discussed with the Governmert in February/March 1987. The report was prepared by a team led by Andrew Steer, consisting of: for Part I, David Hughart, Syed Nizamuddin and Vidya Shetty; for Part II, Ataman Aksoy, Dipak DasGupta, Guenter Reif and Ellen Schaengold; and for Part III, Om Nijhawan, Helena Ribe, Sam Onwona and Janice Jiggins (consultant). Inputs were also provided by Wahida Huq, Pradeep Mitra, Werner Roider, Thomas Schmidt, Bonita Stanton, Fred Temple and Peter Whitford. Administrative and secretarial support was provided by Sultan Ahmed Khan, Linda Reese and Ceny Sauz. New data have become available since the report was discussed at the Aid Group Meeting in Paris in April 1987. These have been incorporated. However, it should be noted that references to FY87 data (July 1986-June 1987) are preliminary estimates. Vidya Shetty prepared the report for its final "red cover" publication. List of Abbreviations and Acronyms Used ADP - Annual Development Program BADC - Bangladesh Agricultural Development Corporation BARC - Bangladesh Agricultural Research Council BARD - Bangladesh Academy of Rural Development BARI - Bangladesh Agricultural Research Institute BAU - Bangladesh Agricultural University BBS - Bangladesh Bureau of Statistics BCS - Bangladesh Civil Service BCSIC - Bangladesh Cottage and Small Industries Corporation BHB - Bangladesh Handloom Board BIDS - Bangladesh Institute of Development Studies BJC - Bangladesh Jute Corporation BKB - Bangladesh Krishi Bank BRAC - Bangladesh Rural Advancement Committee BRDB - Barngladesh Rural Development Board BSB - Bangladesh Sericulture Board BSS - Bittaheen Samabaya Samity - cooperative society for the resourceless BUET - Bangladesh University of Engineering and Technology BWDB - Bangladesh Water Development Board CARE - Cooperative for American Relief Everywhere CDST - Customs Duties and Sales Taxes Comilla Proshika - Centre for Development CPR - Contraceptive Prevalence Rate CSP - Civil Service of Pakistan DDS - Drug and Dietary Supplement DFC - Drainage and Flood Control DFCI - Drainage and Flood Control with Irrigation DFi - Development Finance Institution Dheki - Foot-operated mortar and pestle for rice husking DOF - Directorate of Fisheries DPEC - Departmental Project Evaluation Committee DTW - Deep Tubewell ECNEC - Executive Committee of National Economic Council EFAS - Exchange Fluctuation Absorption Scheme EPI - Expanded Program on Immunization ERD - External Resources Division FPC - Food Policy Committee FPO - Family Planning Officer FWA - Family Welfare Assistant FWP - Food-for-Work Program FWV - Family Welfare Visitor -vi- GB - Grameen Bank (Village Bank) GCB - Government of Bangladesh GII - Groundwater Irrigation HA - Health Assistant HES - Household .-lpenditure Survey HaW - HIand Tubewell HYV - High Yielding Variety IAT - Institute of Appropriate Technology ICDDRB - International Center for Diarrheal Disease, Bangladesh ICOR - Incremental Capital Output Ratio IFPRI - International Food Policy Research Institute IMED - Implementation, Monitoring and Evaluation Division IMP - Irrigation Management Program IRDP - Integrated Rural Development Programme IRR - Internal Rate of Return KSS - Krishi Samabaya Samity - farmers' coope-ative society LCG - Local Consultative Group LD - Land Development LLP - Low Lift Pump MBSS - Mahila Bittaheen Samabaya Samity - cooperative society for resourceless women MCH - Maternal-Child Health Care MCC - Menonite Central Committee MIDAS - Micro Industries Development Assistance Society MOE - Ministry of Education MOHFP - Ministry of Health and Family Planning MSS - Mahila Samabaya Samity - women's cooperative society MSWWA - Ministry of Social Welfare and Women's Affairs MDV - Manufactured Unit Value NBR - National Board of Revenue NCB - Nationalized Commercial Bank NEC - National Economic Council NGO - Non-Government Organization NNC - National Nutrition Council O&M - Operation and Maintenance OMS - Open Market Sales OXFAM - Oxford Committee for Famine Relief PATC Public Administration Train-ng Center PC - Planning Commission PEC - Project Evaluation Committee PFDS - Public Food Distribution System PMR - Post Monsoon Rehabilitation PP - Project Proforma PPI - Primary Pumping Irrigation Proshika - Proshika Manobik Unnayan Kendra- Proshika rural development centre PSE - Public Sector Enterprise QR - Quantitative Restriction RD - Rural Dispensary RFEP - Rural Finance Experiment Project RMP - Road Maintenance Program RPA Reimbursable Project Aid SAFE - Special Accounts in Foreign Exchange Saptagram - Saptagram Nari Swanirvar Parishad - seven village women's self-reliance movement SFYP - Second Five-Year Plan (FY81-FY85) SSP - Senior Service Pool STW - Shallow Tubewell SWARNIVAR - Self-reliance Movement TA - Technical Assistance TACC - Technical Assistance Coordination Cell TAPP - Technical Assistance Project Proforma TBA - Traditional Birth Attendant TFYP - Third Five-Year Plan (FY86-90) TIP - Trade and Industrial Policy UERC - Upazila Employment Resource Center UGC - University Grants Commission UHC - Upazila Health Center UHFWC - Union Health and Family Welfare Center UMR - Usual Marketing Requirement UNO - Upazila Nirbahi Officer VGF - Vulnerable Group Feeding WbP - World Food Program XPB - Export Performance Benefits Scheme -viii- CURRENCY BQUIVALENTS The external value of the Bangladesh Taka (Tk) is fixed in relation to a basket of reference currencies, with the US Dollar serving as intervention currency. The official exchange rate on March 7, 1987 was Tk 30.77 buying and Tk 30.83 selling per US Dollar. Unless noted otherwise, the rates shown below have been used throughout this report: US$ 1 = Tk 30.80 Tk 1 = US$ 0.0325 Tk 1 million = US$ 32,468 The average annual exchange rate for recent fiscal years is shown in Statistical Appendix Table 3.13. In this report US$ is sometimes abbreviated to $. WEIGHTS AND MEASURES 1 acre (ac) = 0.405 hectare (ha) 1 maund (md) = 82.27 pounds (lbs) = 37.3261 kg 1 seer (sr) = 2.056 pounds (lbs) = 0.933 kg 1 cubic foot per second (cusec) = 0.0283 cubic meter per second 1 mmcf = 1 million standard cubic feet 1 crore = 10 million FISCAL YEAR (FY) July 1 - JuiLe 30 -ix- TABLE OF CONTENTS Pte'e No. COUNTRY DATA xv EXECtTTIVE SUMMARY xvii INTRODUCTION 1 PART I: RECENT DEVELOPMENTS AND MEDIUM-TERM OPTIONS 2 Chapter 1: RECENT ECONOMIC DEVELOPMENTS 2 Sources of Growth .......................................... 3 Economic Management ........................................ 6 Savings and Investment ..................................... 9 The Balance of Payments .................................... 11 Public Income and Expenditure ....................................15 Food Availability and Real Wage Developments .....................18 Chapter 2: MEDIUM TERM OPTIONS AMD CAPITAL REQUIREMENTS 23 I. OVERVIEW OF THE HIGH POLICY CASE ..................... 23 Policymaking Under the High Case ................... 24 Sources of Growth ...................................... 25 Food Availability and Distribution ................. I. .... 30 II. PUBLIC EXPENDITURE X.AD FINANCE ........................ 30 III, THE BALANCE OF PAY11ENTS ...............................* 35 IV. THE ROLE OF EXTERNAL ASSISTANCE ......................... 41 V. UNCERTAiTNTIES IN THE ANAL4YSIS .......................... 50 The Base Poli.cy Case ........................................ 50 Foreign Assi;tance and the External Environment ........ 52 PART II: POLICIES FOR HIGHER GROWTH 53 Chapter 3: PROMOTING EFFICIENT PRIVATE-ORIENTED GROWTH 53 I. ISSUES IN AGRICULTURE POLICY ................................ 53 Water Development ............................................. 54 Rainfed Crop Development .................................... 57 E'isheries Development .................................. 58 The Efficiency of Agricultural Institutions ..................59 II. INDUSTRIAL POLICY ...................................... 60 Export Promotion Policies .............................. 62 The Structure of Protection .............. .............. 63 Investment Sanctioning ................................ 65 Public Sector Enterprises ................. ............. 66 The Need for Coordinated Policy - The Experience of FY86 and FY87 ......... . ................. , 66 Page No. III. OPTIONS FOR THE JUTE SECTOR .................................. 68 The Origins of the Present Difficulties ................. 69 The Medium-Term Outlook ...................* 71 Policies for Jute Sector Growth ..............................73 IV. THE ROLE OF THE FINANCIAL SYSTEM ....................... 76 The Origins of the Present Difficulties ......................77 Resolving the Present Crisis .................................81 Longer-Texm Reforms ................................... 82 Chapter 4: MANAGING PUBLIC EXPENDITURE 85 I. DEVELOPMENT STRATEGY - THE ROLE OF THE PLANNING COMMISSION ........................................... 85 II. PROJECT INITIATION AND APPROVAL ..............................86 III. BUDGETING PUBLIC EXPENDITURE ................................. 91 The Revenue Budget .................................... 91 The Annual Development Program (ADP) ................... 93 IV. PROJECT IMPLEMENTATION ...................................... 96 Fund Release Procedures ............................... 98 Physical Implementation ..................................... 98 V. THE QUALITY AND MOTIVATICN OF PUBLIC EMPLOYEES .......... 100 The Size and Composition of Public Employment ........... 100 Raising the Efficiency and Motivation of Class I Officers ....... ... 11 ... 102 Chapter 5: FINANCING PUBLIC EXPENDITURE 106 I. PRINCIPLES OF PUBLIC RES)URCE MOBILIZATION .............. 106 Public Revenue Versus Efficiency - Is There a Trade-off? .................. ............... 107 Public Revenue Versus Equity - Is There a Trade-off? ... 108 II. TAX POLICY ............................................. 108 Indirect Taxation - Status and Issues .......................111 Direct Taxation - Status and Issues .........................113 Property Taxation ............................................ 115 Tax Administration ..................................... 115 III. PUBLIC PRICING POLICIES ................................ 116 The Potential for Revenue Enhancement .......................116 Implementing Reforms in Public Pricing. FY88-90 ........... 123 PART III: PROMOTING HUMAN DEVELOPMENT 130 Chapter 6: TRENDS IN POVERTY, NUTRITION AND REAL WAGES 131 The 1974-82 Period .........................................133 The 1982-86 Period ......................140 Issues for the Future ............................................ 142 -xi- Page No. Chapter 7: PROMOTING INCOME EARNING OPPORTUNITIES AMONG THE POOR 147 I. PROMOTING SELF-EMPLOYMENT AMONG THE ASSETLESS .......... 149 II. INFRASTRUCTURE PROGRAMS FOR EMPLOYMENT CREATION ........e .154 III. ASSISTING ThE URBAN INFORMAL SECTOR ......................... 156 IV. STRENGTHENING INSTITUTIONS FOR EMPLOYMENT PROMOTION .... 157 Chapter 8: PROMOTING ECONOMIC OPPORTUNITIES FOR WOMEN 161 I. CURRENT STATUS AND TRENDS .............................. 162 II. PROGRAMS FOR WOMEN ..................................... 169 III. A STRATEGY FOR IMPROVING WOMEN'S ECONOMIC OPPORTUNITIES ........................................ 179 Chapter 9: EDUCATION, HEALTH, POPULATION AND NUTRITION 182 I. HUMAN RESOURCE DEVELOPMENT - THE CURRENT STATUS .......... 182 II. PUBLIC EXPENDITURES FOR HUMAN DEVELOPMENT .............. 184 III. HEALTH, NUTRITION AND FAMILY PLANNING ...................... 186 Issues in Health, Nutrition and Family Planning ............ 190 IV. EDUCATION .................................................... 193 Key Issues in Education ................................ 194 Annex 1 - Organization of Health and Family Planning Program .......................... 197 STATISTICAL APPENDIX 198 MAPS -xii- List of Text Tables Page No. Chapter 1 1.1 GDP Growth - A Comparative Perspective ........................ 2 1.2 GDP Growth by Sectors, FY73-FY87 ............................. 3 1.3 Trends in Agricultural Production and Value Added, FY81-FY87 ................................................ 4 1.4 Key Policy Indicators, FY82-FY86 ............................. 8 1.5 Macroeconomic Balances, FY81-FY86 .......................... 10 1.6 Export Volumes and Values, FY81-FY87 ....................... 12 1.7 Import Volumes and Values, FY81-FY87 .......................... 14 1.8 Balance of Payments, FY83-FY87 ............................... 16 1.9 Income and Expenditure of the Central Government, FY83-FY87 ....................................................... 17 1.10 Summary of the Foodgrain Situation, FY81-FY87 ....................19 Chapter 2 2.1 Macroeconomic Indicators - The High Case ..................... 26 2.2 Financing the Investment Program - The High Case ...............29 2.3 Foodgrain Availability and Distribution Under the High Policy Case, FY81-FY95 ...............................31 2.4 Annual Development Expenditures in the Second and Third Plan Periods ..............................................32 2.5 Sources and Uses of Government Funds - High Case, FY81-FY95 ................................................ 34 2.6 Foreign Exchange Earnings - High Case, FY86-FY95 .............. .37 2.7 Share of Bangladesh's Major Exports in World Trade, FY81-FY84 ................................................38 2.8 Projected Imports - The High Case, FY81-FY95 ............... 38 2.9 The Balance of Payments - The High Case, FY86-FY95 ............. 40 2,10 Foreign Exchange Requirements and Souarces, FY81-FY95 ............41 2.11 Foreign Aid - Commitments and Disbursements, FY81-FY95 ..... 43 2.12 Aid Pipeline, FY81-FY90 ................................... 49 2.13 Comparison Between "High" and "Base" Policy Cases .............. 51 Chapter 3 3.1 Effects of Irrigation and 'Modern Inputs on Production and Labor Absorption ......................................56 3.2 Large and Medium Scale Manufacturing Output, Investment, and Exports, FY80-FY86 .................................... 61 3.3 Key Developments in the Jute Sector, FY84-FY89 ............. 70 3.4 Long-Term Jute Price and Supply Assumptions and Projections, 1976-1995 ............................. 72 3.5 Structure of Scheduled Bank Advances, FY78-FY86 ............. 78 3.6 Disbursements and Collections in Agriculture and Industry 79 -xiii- Page No. Chapter 4 4.1 ADP Budgets and Actuals, FY84-FY87 ... ........... 94 4.2 Project Aid Disbursement Performance ....................97 4.3 Government Service as of May 31, 1985 ...................101 Chapter 5 5.1 Central Government Revenues, FY81-FY95 ......................106 5.2 Tax Structure in Selected Countries .........................109 5.3 Central Government Revenue, FY83-FY87 .......................110 5.4 Collections of Trade-Based Taxes by Category, FY85 ......... 111 5.5 Comparative Characteristics of Income Taxation in Selected Asian Countries ..................................114 5.6 Public Pricing - Unit Subsidies and Taxes, FY87 ............. 118 5.7 Distribution of Economic Subsidies by Main Sectors, FY82-FY87 ................................................121 5.8 Financial Performance of Public Enterprises, FY86 ...........123 5.9 Public Pricing Adjustments (Nominal and Real), FY81-FY87 124 5.10 Illustrative Public Sector Price Adjustments and Resource Mobilization, FY88-FY90 ...................................127 5.11 Estimated Impact of Public Pricing Adjustments on Different Income Groups in Urban Areas, FY90 ....................... 129 Chapter 6 6.1 Dimensions of Poverty, FY74-FY82 ............................137 6.2 Changes in the Food Basket, Selected Items, for the Total Population and the Poor ...................................138 6.3 Income Distribution, FY64, FY74 and FY82 ....................139 6.4 Trends in Real Wages by Sector, 1969/70-1985/86 .............141 6.5 Distribution of Agricultural Holdings, 1960-1984 ............145 6.6 The Pattern of Labor Use by Size of Farms, 1982 .............146 Chapter 8 8.1 Women in Bangladesh - Key Indicators ........................164 8.2 The Most Vulnerable - Women's Participation in Food and Work Programs ............................................. 172 8.3 Female Membership in Selected Group Programs ................. 174 8.4 Description of Major Women's Group Programs ......... 175 Chapter 9 9.1 Human Development Indicators ............................... .183 9.2 Public Expenditures in Human Resource Development ...........185 -xiv- List of Figures Page No. Chapter 1 1.1 Bangladesh: Export Volume and Value Index ................. 13 1.2 Representative Daily Wage Rates .............................20 Chapter 2 2.1 Key Indicators Under High and Low Policy Scenarios .......... 27 2.2 Terms of Trade, Import and Export Price Indices ............ ...36 2.3 Bangladesh: Aid Commitments and Disbursements............ 44 2.4 Bangladesh - Aid Flows (FY73-FY87) .......................... 46 Chapter 3 3.1 Raw Jute Stocks, Export and Real Producer Prices ............ 74 3.2 Disbursements and Collections of Agricultural and Industrial Credit ........................................ 80 Chapter 4 4.1 Project Processing Procedures for Category 'IC" Projects: Process of Projects Proforma (PP) ........................ 88 Chapter 6 6.1 Daily Per Capita Caloric Intake by Expenditure Group in FY82 .................................................. 135 6.2 Incidence of Poverty - 1981/82 ............................. 136 -xv- Page 1 of 2 COUNTRY DATA - BANGLADESH AREA POPULATION (1985) DENSITY (1985) 143.998 km2 100.6 million 699 per km2 of total area Rate of Growth: 2.4% 1,062 per km2 of cultivable land POPULATION CHARACTERISTICS /a HEALTH /a Crude Birth Rate (per '000) 39.0 Population per physician: 5.900 Crude Death Rate (per '000) 15.0 Population per hospital bed: 3,600 Infant Mortality (per '000 live births) 125.0 INCOME DISTRIBUTION (1982) DISTRIBUTION OF LANDi OWNERSHIP (1978) % of national income, highest quintile: 42 % owned by top 10% of owners: 49 % of national income, lowest quintile: 12 % owned by smallest 10% of owners: 2 ACCESS TO PIPED WATER (1980) ACCESS TO ELECTRICITY (1980) % of population - urban: 26 % of population - urban: 3.5 % of population - rural: 40 % of population - rural: NUTRITION (1983) EDUCATION Calorie intake as % of requirements: 84 Adult literacy rate (%) (1980/81) 29% Per capita protein intake (grams): 42 Primary school enrollment (%) /a 62% GNP PER CAPITA IN 1985: US$150 /b GROSS DOMESTIC PRODUCT (1985/86) ANNUAL RATE OF GROWTH (%, constant prices) mill. US$ % FY70-75 FY75-80 FY80-86 GDP at Market Prices 15,381 100 -0.8 7.5 3.9 Gross Domestic Investment 2.039 13 0.4 0.1 6.5 Gross National Saving 956 6 Current Account Balance -1.084 -7 Exports of Goods, fob 819 5 0. 4.7 1.3 Imports of Goods, cif -2,364 -15 1.3 6.2 1.1 OUTPUT, LABOR FORCE. AND PRODUCTIVITY IN 1985/86 Value Added /c Labor Force /d V. A. Per Worker /e mill. US$ % mill. -% US$ % Agricv.1ture 7,180 46.7 16.8 59 403 82 Industry 2,210 14.4 3.1 11 659 134 Services 5,991 38.9 8.6 30 604 123 Total/Average 15.381 100.0 28.5 100 492 100 CENTRAL GOVERNMENT FINANCE /f (mill. Taka) % of GDP 1985/86 1974/75 1985/86 Current Revenues 42,280 5.1 9.2 Current Expenditures 34,560 6.8 7.5 Current Surplus 7.720 -1.7 1.7 Capital Expenditures 40,130 4.1 8.7 External Assistance (net) 31,510 6.2 6.9 /a Data for 1985. /b World Bank Atlas methodology; base 1983-85. /c At market prices. /d Civilian labor force; 1983/84 data. Sectoral distribution data shown are extrapolated from available data on distribution of employed persons. /e 1983/84 data. /f Preliminary actual. = Not available. Not applicable. -xvi- Page 2 of 2 COUNTRY DATA BANGLADESH MONEY, CREDIT AND PRICES June 1979 June 1980 June 1981 June 1982 June 1983 June 1984 June 1985 June 1986 (billion Taka outstanding, end of period) Money and Quasi Money 29.0 34.3 41.3 45.5 59.0 83.9 105.3 123.4 Bank Credit to Public Sector 18.2 25.4 36.9 43.9 44.4 50.0 55.7 65.1 Bank Credit to Private Sector 11.0 14.3 17.6 23.6 31.0 49.1 68.9 83.6 (Percentages or Index Numbers) Money and Quasi Money as % of GDP 16.9 17.3 17.8 17.2 20.5 24.0 25.1 26.4 General Price Index (1973/74=100)/a 191.3 226.6 255.0 296.5 325.9 357.5 396.6 436.0 Annual percentage changes in: General Price Index /a 8.3 18.5 12.5 16.3 9.9 9.7 10.9 9.9 Bank credit to Public Sector 13.8 39.6 45.3 19.0 -1.1 12.6 11.4 16.9 Bank credit to Private Sector 45.9 30.0 23.1 34.0 31.3 58.4 40.3 21.3 BALANCE OF PAYMENTS MERCHANDISE EXPORTS (1984/85) (mill. US$) 1976/77 1985/86 mill. US$ 2 Exports of Goods, fob 411 819 Raw jute 124 15 Imports of Goods. c&f -865 -2,364 Jute goods 293 36 Trade Gap (deficit = -) -454 -1.545 Tea 33 4 Non-factor services, net 2 -2 Leather 61 7 Workers' Remittances 81 586 Fish & shrimps 113 14 Other Factor Payments (net) -31 -123 All other commodities 195 24 Current Account Balance -402 -1.084 Total 819 100 Direct Foreign Investment Net MLT Borrowing 247 605 EXTERNAL DEBT, June 30. 1986 (Disbursements) (277) (722) (Amortization) (-30) (-117) mill. US$ Capital Grants 256 546 IMF facilities. net -2 -3 Other Capital. net 18 17 Public Debt, incl. Guaranteed Private Debt 6,762.3 Non-Guaranteed Private Debt .. Change in Reserves (- = increase) -81 -81 Total Outstanding & Disbursed 6,762.3 Gross Reserves (end of year) 294 476 DEBT SERVICE RATIO FOR 1985/86 RATE OF EXCHANGE (May 1987) ) US$1.00 = Taka 30.9 Public Debt. incl. Guaranteed Private Debt 20.1 Non-Guaranteed Private Debt Total 20.1 IBRD/IDA LENDING, June 1986 (million US$) IBRD IDA Outstanding & Disbursed 52.7 2,215.3 Undisbursed - 1.347.4 Outstanding. incl. Undisbursed 52.7 3,562.7 = not available. /a Consumer Price Index for middle-income families in Dhaka; annual averages. July 1987 -xvi i- EXECUTIVE SUMMARY 1/ i. Bangladesh is now two years into its Third Five Year Development Plan (TFYP; FY86-FY90). There has been progress and many reasons for encouragement, but also causes for concern. Overall economic growth-- averaging about 4% per year so far in the 1980s--is respectable when compared with low income countries generally. But it is not sufficient to permit much progress in tackling the problem of poverty, which remains overwhelming, and the economy continues to perform below its potential. This report therefore assesses the scope for accelerating development in Bangladesh. What are the policy adjustments that would be required to attain the kind of development envisaged in the TFYP? How can foreign donors support this effort? And how can human development programs and special measures to assist the most vul- nerable complement the policies designed for higher and more efficient growth? I: RECENT DEVELOPMENTS AND MEDIUM-TERM OPTIONS Recent Economic Developments (Chapter 1) ii. FY86 and FY87 have witnessed significant improvements in economic policymaking in Bangladesh. Macroeconomic management has been sound, and the authorities have embarked upon an ambitious program to improve efficiency and competitiveness in the economy. The current account of the balance of pay- ments and the budget deficits have been brought down to manageable levels, and over the last few months serious efforts have been initiated to restore discipline to the troubled domestic financial system. At the same time, there is some evidence to suggest, albeit tentatively, that real wages and incomes may be rising in rural areas. iii. But there have also been disappointments. Overall GDP growth in FY86 was 4.4Z, well below the TFYP target of 5.4%. Industrial expansion--at about 2% in FY86--has been well below expectations, and agricultural growth (3.4% in FY86) has been due more to special circumstances than to strong policies and programs that can be expected to continue. There is a sense that in some areas progress is slipping. iY, Economic Management. The Government has continued to make progress towards creating a stable and undistorted economic environment. Monetary 1/ This summary follows the same format as the main report to permit cross-reference. -xviii- expansion has been brought under control and in response to prudent demand management, the rate of inflation fell below 10% in FY86, although higher food prices have caused it to rise to about 12% in FY87,:,: The real effective exchange rate depreciated by about 10% between July 1986-June 1987, and the gap between the official and secondary exchange rate has narrowed from 15% in FY85 to about 7% in FY87. v. The deterioration in credit recovery has been the greatest threat to stability over the last eighteen months. With recovery rates falling to 27% in agriculture and 10% for DFI term loans to industry in FY86, the situation has undermined longer-term growth prospects and permitted serious resource misallocation and harsh inequities. The Government has recently taken strong steps to improve recovery rates, and preliminary data for July-December 1986 suggest some progress. Restoring discipline in the financial sector itself poses difficult issues of macroeconomic management for the Government, since the denial of new credit to defaulters has inevitably resulted in a net contraction of formal credit available in some areas. Some compensatory injection of economic demand may therefore be warranted, possibly in the form of stepped up rural works programs, earlier and more aggressive procurement of rice and wheat crop, and a higher priority to the expansion of innovative credit programs to assetless and near-assetless rural groups. vi. The Balance of Payments. The current account deficit fell from 8.2% of GDP in FY85 to 7% in FY86, and to 5.6% in FY87. But unfortunately this has been due to a reduction in import demand as investment and consumption growth has slumped, rather than to a growth in exports. The terms of trade fell by more than 20% in FY86 due to falling jute prices, offsetting the gain of 24% in the previous year. Average jute prices were again lower in FY87, but gains in other primary export prices resulted in a largely unchanged terms of trade. Non-traditional exports--notably, ready-made garments and frozen shrimp--continue to perform well. vii. Aid inflows rose by $39 million to $1,306 million in FY86 and are expected to rise by over $100 million to $1460 million in FY87. The improved project disbursement performance has been more apparent than real, however, being due mainly to exchange rate changes and to the establishment of special disbursement accounts within Bangladesh. The overall balance of payments moved into surplus in FY86 and is expected to remain in surplus in FY87. Official reserves remain at a comfortable level. viii. Public Income and Expenditure. Domestic fiscal revenues rose by 17% (in current prices) in FY86, and the FY87 budget proposed another substantial increase this year. However, revenues in the first eight months of FY87 have been disappointing, primarily due to unexpectedly low import levels, once again illustrating the vulnerability of the fiscal balance to the external sector. Substantial additional revenue measures will be required over the next two years to reach the Government's targets. -xix- ix. Expenditures were slightly below what had been expected in FY86, and another larger shortfall is expected in FY87 due to implementation problems. As of May 1987, it appears that ADP expenditures will be about 13% below targeted levels. The shortfalls in revenue and expenditure in FY87 roughly offset each other, which has tended to lead to a lack of urgency in dealing with both. The overall budget deficit (including the development budget) in FY87 is estimated to have risen slightly to Tk 36 billion, but to have declined as a proportion of GDP from 7.4% to 7.0%. x. Food Availability and Real Wage Developments. Mediocre production performance coupled with delayed imports of foodgrains has recently resulted in an apparent reduction in overall foodgrain availability and sharply lower foodstocks. While there is no immediate cause for alarm, continued low levels of stocks could spark speculative activity and may result in the PFDS being unable to cope with a severe flood or other emergency. More encourag- ing is the continued expansion of food programs for the poor. The combined distribution of the Food-ior-Work Program (FWP), and the Vulnerable Group Feeding (VGF) and Relief Program is expected to amount to about 701,000 tons in FY87; about 80 million days of work is now generated annually by the FWP. Recent assessments of the FWP and VGF are positive and suggest that continued but careful growth is warranted. xi. Average real wage rates have risen over the last two years in both rural and urban areas and appear to have finally reached their pre-Liberation levels for the first time. An unskilled agricultural laborer now earns an average of 4 kg of rice per day or about Tk 30, up from an average of about 2.8 kg of rice in the 1970-82 period. This data does not provide conclusive evidence that the standard of living among the poor is improving in Bangladesh and it is not clear whether these trends anyway are due to an underlying strength in rural areas. In addition, even at these higher levels, wage rates (at an average of $1 per day) remain absolutely inadequate to meet even the most basic needs of a family. Nevertheless, if sustained and built upon, these trends represent an encouraging achievement and provide preliminary support for the general direction of government programs and policy in rural areas. Medium Term Options and Capital Requirements (Chapter 2) Xii. At is unlikely that the small gains in real incomes which appear to have beeni achieved over the last few years can be sustained without healthy economic growth and specific directed efforts to aid those who tend to be by-passed by the development process. The TFYP emphasis on the need for higher economic growth--5.4% per year in comparison with 3.9% per year achievement during the SFYP--is appropriate. This report suggests that in the coming years this kind of economic growth is feasible and indeed neces- sary in Bangladesh, but it will require better progress in policy reform and more generous and appropriate foreign assistance. -xx- xiii. This conclusion is not inconsistent with previous analyses which have suggested that the rate of economic growth is expected to be somewhat lower (4.2-4.5% per year) than the TFYP target. The focus of this report is on a "High Policy Case"; what rate of economic growth is feasible and what are the policy and program adjustments and aid levels that will be required to achieve this higher growth rate? The High Case could be a realistic alterna- tive to current trends if the GoverXnment were aggressively to address a number of important structural macroeconomic and sectoral issues. It requires good--but not spectacular--progress in a number of areas, most of which have already been identified by the Government. It also incorporates fairly conservative assumptions concerning the external environment. A "Base Case" Is also described; what can be expected under a "business as usual" approach to policy reform and aid flows? xiv. Over the last two years--FY86 and FY87--policymakers in Bangladesh have necessarily focused a good part of their energies on urgent issues of monetary control, fiscal and external balance, and domestic financial discipline. Failing to come to grips with these immediate concerns would have undermined any long-term growth prospects. While these issues will continue to be important--especially raising credit recovery rates--the Government can now afford to devote more of its attention to implementing the development strategy that it laid out in its Third Plan. The Government's strategy to promote higher economic growth can be broadly categorized into three sets of policies corresponding to the three chapters in Part II of this report: Promoting Efficient Private-Oriented Activity. This involves regain- ing the momentum of growth in the agricultural sector, continued progress in industrial policy, and reform of the financial system. Promoting Efficient Public Expenditure. This requires strengthening the capacity to efficiently plan, appraise and implement an expanded public expenditure program. Procedural changes are required and efforts to improve the quality and motivation of public employees need to be strengthened. Raising Public Revenues. Even with more generous foreign assistance, the current revenue base remains quite inadequate. Tax reform and enhanced revenues from public pricing policies are required for both efficiency and revenue reasons. xv. Combined, these policies constitute the High Policy Case. In com- bination these policies are assumed to have three effects. First, the level of investment and savings would be higher. Second, the efficiency of invest- ment would be higher, due to a less distorted incentive framework and improved public expenditure planning. And third, export growth would be faster and import growth slower, due to trade and industrial policy reforms and to more rapid agricultural growth. -xxi- xvi. These policies to promote overall economic efficiency must of course be complemented by special interventions to provide economic opportunities to the poor and by social programs--education, health, family planning, nutrition--which raise the quality of life for all income groups. These human resoutce policies and prog-ams, which are the theme of Part III of this report should also be regarded as components of the High Policy Case; they too are powerful tools for promoting economic growth, although their effect is longer term. The Overall Outlook xvii. For the remaining three years of the TFYP period (FY88-90), an annual growth of GDP of 5.1% is feasible under the High Case, while growth of 5.4% per year is projected for the first half of the 1990s, when some of the longer-term policy initiatives begin to bear fruit. Agricultural growth is projected to grow by 3.4-3.6% per year and industry by 7.3-7.5% per year. These growth rates are not unrealistically high in view of the Government's stated program of policy reform. Under the High Case, GDP per person would rise from $146 in 1986 to about $190 (in constant 1986 prices) by 1995. Under the Base Case, the economy would grow by 3.9% per year, the average rate for the 1980-1986 period; by 1995, GDP per person would rise to $170. Under both cases, it is assumed that population grows at a rate of 2.4% per year between 1987 and 1990, and falls to an average of 2.2% in 1990-95. xviii. Investment and Savings. In order to reach GDP growth of over 5% per year, the proportion of GDP allocated for investment would have to rise by about 2 percentage points--from its FY80-87 average of 13.8% to about 16%. By the standards of most developing countries, this is still modest. The High Case projections suggest that: - both public and private investment would have to rise, but the priva-te sector would take the major share of investment resources. - foreign savings (mainly foreign aid) must rise as a proportion of GDP, but would not reach the level of the SFYP period (9%) and would fall as a proportion of total investment. - domestic savings would have to rise from 3.0% of GDP to 5.7%, not only to finance increased investment but also to compensate for the declining remittances; with the projected growth in income this would still permit average private per capita consumption to rise by 1.8% per year. xix. Foreign Exchange Earnings. Raw jute prices are now at their lowest level since 1973, and while other export prices are expected to display greater buoyancy than jute, this will not fully compensate for jute's gloomy outlook. The terms of trade are expected to improve slightly in FY88 and thereafter to remain constant or decline well into the 1990s. This will make -xxii- the transition to greater self-reliance in financlng imports very difficult; it illustrates the urgent need to rationalize the jute sector and to continue diversifying exports. xx. Non-traditional exports are, over the next three years, expected to overtake traditional exports For the first time. Garments and frozen seafood are expected to continue growing rapidly although not at the extremely high rates witnessed over the last few years. Bangladesh's share in world trade in garments remains sufficiently small that, even with stagnant growth in world demand, its share would remain well below 1% by 1995. World trade in frozen shrimp is certainly more buoyant than for garments, but Bangladesh's share would nonetheless have to rise from 1.1% in FY84 to about 3% in FY95 to achieve the projected 15-20% volume expansion each year. The outlook for remittances, which remain the single largest source of foreaign exchange earnings, is highly uncertain despite their unexpected reboDund in FY86. With continued low and unpredictable world oil prices, it would be prudent to assume no real growth from this source in the future. The share of imports financed by remittances is projected to fall from 23.5% in FY86 to 18% in FY90 and 14% in FY95. xxi. The Balance of Payments. The current account defic:it as a percentage of GDP is projected to remain in the 6.5% to 7.5% range for the indefinite future. This is judged to be an appropriate and sustainable level given Bangladesh's economic structure and its acute poverty. On the assumption that foreign aid disbursements are available to fill the foreign exchange gap--i.e., that no commercial borrowing will be required--debt service obligations will not be a serious problem. Following, the repayments of commercial food loans and repurchases with the IMF in FY87 and FY88, the debt service ratio will fall from about 28% to an average of 21% for the remainder of the decade. The Role of External Assistance xxii. About $5.4 billion in disbursements of foreign aid will be required during the remainder of the TFYP (FY88-90) in order to reach the High Case growth rates. This compares with disbursements of $3.9 billion over the last three years (FY84-86). For the Fourth Plan period, aid disbursements of almost $12 billion would be required. Foreign aid disbursements should continue to finance between 50% and 55% of import needs. This level of dependence, however, should not be interpreted in any way as a sign that progress is not being made in self-financing of imports through improved export performance. Export earnings would finance a growing share of imports--from an average of 31% in the SFYP to 37% in FY90 and 44% in FY95. However, the growth of exports would be required to compensate for the declining role of remittances and to substitute for non-concessional borrow- ing from the IMF and from other sources. This level of foreign aid disburse- ment should therefore be regarded as an appropriate complement to the policy reforms adopted by the authorities. -xxiii- xxiii. Commitments of aid in FY86 and FY87 have fallen below expectations, averaging only $1.6 billion each year in comparison with $1.7 billion during the FY81-85 period. It is important that for the remaining three years of the TFYP, real commitment levels be restored to the FY81-85 level. This would imply average annual commitments approaching $2 billion; rising from $1.8 billion to about $1.9 billion in FY88, to $2.1 billion in FY90. In real terms this is equivalent to the level during the FY81-85 period. xxiv. Project Aid. The undisbursed project aid pipeline is now (mid-1987) estimated at over $4.7 billion, equivalent to about 37% of GDP, or 75% of the total disbursed outstanding debt. This is too high. Accelerating the rate of project implementation is an important goal of the Government and progress can be made. The High Case projections assume that the ratio of annual disbursements to the beginning year project pipeline will continue to rise from about 17% in FY86 to 20% by FY91. This results in a real increase in project aid disbursements of about 10% per year during the remainder of the TFYP period, even with ao real increase in project aid commitments. xxv. The pipeline of undisbursed project aid may give Bangladesh some breathing space. Aid disbursements can rise fairly rapidly at least until FY90, even with constant project commitment levels; a current account deficit of about 7% of GDP can be comfortably financed if progress is made in project implementation. Thereafter, however, commitments would have to rise substan- tially if this level of current account deficit is to continue. This enhanced donor support would be fully warranted, however, if Bangladesh undertakes many of the policy measures suggested in this report. It is important, therefore, that over the next two or three years a preliminary investment analysis be undertaken for increased project aid commitments in the early 1990s. In this regard, a comprehensive public expenditure review is required. A first stage of such a review will be undertaken over the next twelve months with assistance from IDA. xxvi. Commodity Aid. Several donors are finding it difficult to justify commodity aid programs, some because of disbursement problems that seem to undercut the argument that this form of aid is urgently needed, and others because they cannot make a sufficiently strong case that the economic policies implicitly supported by this type of aid adequately address the issue of poverty. In this regard, a Commodity Aid Utilization Study, to be completed during the second half of 1987, is currently exploring options for overcoming these constraints and for streamlining procedures on the part of both the donors and the Government. For the coming years it is recommended that commodity aid commitments be expanded by 5% annually in real terms. A shift towards these quick-disbursing funds untied to specific investments is necessary to support the Government's new emphasis on O&M expenditures and to provide foreign exchange urgently needed for private importation of inter- mediate and capital goods. xxvii. Food Aid. In the immediate future an increase in food aid would be appropriate, for two reasons. First, stocks are at low levels and food -xxiv- availability over the last year has apparently declined, leading to higher food prices and inflationary pressures which could undermine the Government's structural adjustment policies. Second, the Government is making serious efforts to redirect food distribution to those needy population groups who cannot be reached through the ration system. Increased food aid, therefore, can have both macroeconomic and humanitarian benefits. Uncertainties in the Analysis xxviii. The High Case outlook which is presented in detail in this report assumes good progress in the Government's adjustment program, moderately generous foreign assistance, and the absence of any further sharp fluctua- tions in Bangladesh's terms of trade or any serious worsening in protective barriers facing Bangladesh's exports. While not unrealistic, these factors should not be taken for granted. xxix. The Base Policy Case. The policy adjustment program that Bangladesh has embarked upon will not be easy. Many developing countries have attempted such reforms and a good number have failed in the face of political pressure or destabilizing economic shocks. A "Base Policy Case" is therefore also presented to illustrate the probable outcome under a "business as usual" policy environment. It assumes no serious progress in domestic resource mobilization or in improving the efficiency of investment. Annual investment under the Base Case is therefore 12% lower than under the High Case by FY90 and 24% lower by FY95, and the economy could only afford to grow by 3.9% per year. By FY95 the total size of the economy under the Base Case would be about 12% smaller than under the High Case; per capita incomes would be $19 per year lower (in FY86 prices), investment per capita $6 lower, and foodgrain availability tighter despite higher food imports. xxx. Foreign Assistance and the External Environment. The mediocre per- formance projected under the Base Case could occur even if the Government were successful in implementing its policy reform package. This would happen, for example, if aid commitments remained at their current levels. Even with an improved policy environment, Bangladesh needs to be able to sustain a current account deficit equivalent to 6.5-7.5% of its GDP. Without increased aid, its sustainable deficit would continuously fall. If, for example, Bangladesh were required to limit its deficit to say 5% of GDP, it could probably only afford to grow by about 3.5% per year. The role of donors would become even more significant in the event that the international marketplace deteriorates for Bangladesh. If for example, the Government is unable to negotiate continually rising quotas for its garment exports, or if the price of jute were to fall further, additional increases in commodity aid would be needed to achieve the High Case growth rates. -xxv- II: POLICIES FOR HIGHER GROWTH Promoting Efficient Market-Oriented Growth (Chapter 3) xxxi. The report describes four components of the Government's strategy for promoting higher and more efficient market-oriented growth; these are policies with regard to agriculture, trade and industry, the jute sector and the domestic financial system. Issues in Agriculture Policy xxxii. Agricultural production has grown at a rate of about 3.0% per year during the period FY80-85--a sound performance, by any standards. But recent developments are cause for concern. FY86 was a disappointing year with foodgrain production, fertilizer consumption, agricultural credit, and investment in minor irrigation equipment all falling for the first time in many years; and the rebound in FY87 is not expected to be robust. If potential growth rates in agriculture are to be met and if other related objectives--agricultural diversification, adequate nutrition and rural employment growth--are to be achieved, difficult issues will have to be addressed in the near future. xxxiii. Water Devielopment. Despite major investment in water development, there remains a huge untapped potential; coverage of low-cost drainage and flood control coulid be raised from 15% of inland cultivable areas to 35-40%, and irrigation from 22% of cultivated area to at least 50%. The draft National Water Plan, which was completed in July 1985, but which still needs to be operationalized, provides a good framework for the Government's program. Achieving the TFYP targets will require progress in two related areas. First, implementation of the minor irrigation program--which has been the major engine of development over the last decade but which has slumped badly over the last two years. While solutions are not clear-cut, it is clear that the institutional weaknesses of BADC will need to be addressed. Second, the efficiency of investment must be raised. Average investment costs of water development are much higher than they need be. The average command area for irrigation equipment is only about 35% of its potential, indicating great inefficiency. Expanding command areas will require major institutional support to the Irrigation Management Program (IMP). xxxiv. Rainfed Crop Development. The potential for progress in rainfed crops is impressive. While the proportion of cereals produced using High Yielding Variety (HYV) seeds--which can do-ble average yield--has risen from 8% to 16% over the last decade, the potential is estimated at 50% under existing conditions. But realization of this will require an expansion of research and extension services on rainfed areas, and a renewed effort to develop and disseminate improved varieties and practices for non-cereal crops (pulses, oilseeds, vegetables, fruits, sugarcane, and cotton). -xxvi- xxxv. Fisheries Development. The natural resources to support a growing fisheries sector are abundant, but fish production has grown at only 3% per year since 1980. Rapid growth in inland fisheries will require investment in hatcheries, the establishment of a system of leasing of public water bodies and a mechanism for resolving conflicts with other water users. Coastal brackish water shrimp farming also offers excellent scope for continued rapid growth. This will require resolution of conflicts with rice farming in coastal areas and public investments in polder development for which cost recovery measures will be needed. And the Directorate of Fisheries will need staffing and management improvements to facilitate more effective policy analysis and investment planning. Slow progress in these areas is currently causing delays in obtaining external assistance to finance required invest- ments in the sector. xxxvi. The Efficiency of Agricultural Institutions. Examples of inadequate services are a weak cooperative system which has failed to resolve difficul- ties in farmer group formation and input supply, inefficiency in sales and servicing of irrigation equipment, reduced effectiveness of extension and research services, low efficiency of water use, and a credit system which reaches only 15% of farm households and where many farmers don't repay their debts. The Government has recognized the need for institutional strengthening, and has begun studies on the reorganization of BWDB and BADC, and initiated reforms of the agricultural credit system. An analysis of the appropriate role for BRDB is also expected to be undertaken in the near future; emphasis here should be given to defining priorities and desirable shifts in current activities, and identifying managerial and staffing constraints. Industrial Policy xxxvii. Over the last five years significant progress has been made in shifting to a more efficient and Laster pattern of industrial growth. Major industrial policy reforms have included exchange rate adjustments, import liberalization, and improved support for the private sector through reduced controls on private investment and privatization of state-owned enterprises. In response, manufacturing output grew by an estimated 9% in both FY84 and FY85. FY86, however, was a disappointing year with growth slllmping to only 2%, due primarily to special problems in jute, textiles and engineering. In addition to addressing the problems in these 3ectors, it will be important for the Government to strengthen industrial policy reforms in a number of areas, in order to accelerate potential industrial sector growth to 7-8% per year. Preliminary production figures for FY87 are encouraging in this regard, but much still remains to be done. xxxviii. Export Promotion Policies. Over the last eighteen months the Government has made progress in exchange rate management, export finance, improving the duty drawback system, and in strengthening the administration of the Export Processing Zone. However, an efficient system of export -xxvii- administration that can react swiftly to the changing needs of exporters is still lacking. In addition, backward linkages from garment exports are currently hampered by the lack of a simple, well-defined system for duty and restriction-free importation of raw materials for fabric, yarn and acces- sories industries. Export diversification will soon require similar capabilities for a larger number of products. xxxix. The Structure of Protection. The Government is in the process of implementing a medium-term tariff and import regime reform to rationalize the tariff structure, to gradually replace Quantitative Restrictions (QRs) with tariffs, and to move towards unification of the dual exchange rate system. Anomalies in the tariff structure are especially acute in texLiles and steel and engineering, which combined account for over half of value added in the manufacturing sector; protection should be lowered to a range of 10-75% from approximately 25-100% in textiles and 2.5-200% in steel and engineering. After changing to a negative and restricted list of imports in FY86, the Government's FY87 Import Policy Order liberalized imports further by short- ening the negative and restricted lists. However, the restricted list continues to limit the import of certain raw materials to industrial users only, therefore still penalizing thousands of small and cottage industries. xl. Public Sector Enterprises. Although significant progress has been made in developing a framework for better performance evaluation of the public sector enterprises (PSEs) by developing a technical unit, an account- ing system and, in FY87, by promulgating a Public Corporations Ordinance, the speed and magnitude of implementation has not been sufficient to arrest the deterioration in PSE financial performance. Profits as a percentage of sales of public industrial corporations have consistently declined since FY83 and are now negative. Unless clearer performance criteria are established and greater operational autonomy granted to meet these criteria, public enterprises will continue to be a burden on the economy instead of contributing to industrial growth. Options for the Jute Sector xli. The future of the Jute sector will significantly influence the rate of economic growth that Bangladesh can afford in the coming decade. While remaining by far the most important source of foreign exchange export earnings--still accounting for half of all exports--it has paradoxically become a large financial drain on the economy; losses of jute mills totaled Tk 2.5 billion in FY86, equivalent to 0.5% of GDP. There are two sets of issues that must be resolved if the sector is to contribute to Bangladesh's development rather than hinder it. First, how can the structural instability in world and domestic markets be ameliorated? Second, how can the longer- term competitiveness of the sector be improved so that Bangladesh can capi- talize on its low costs and good quality jute in world markets? While progress will require a major reorientation of institutions to improve their effectiveness, it would also entail significant social costs and sizable financial investments over an extended period of time. -xxviii- xlii. Instability in the Market. An immediate priority here should be given to the collection, monitoring and dissemination of adequate information on jute market conditions. Absence of such information has been a major cause for inefficiency of the market. The Government is strengthening the jute research and strategy section of the Jute Ministry, but so far, progress has been slow. Direct intervention by the Government is also required; this could be accomplished--over time--by a combination of variable export tax/subsidy policies and direct public buffer-stock operations. The efficiency of such intervention, however, will require organizational improvements of BJC and the Jute Division, improved storage facilities, and sizable financial resources. xliii. Raising Efficiency in Jute Manufacturing. Current production capacity (up to 1 million tons per annum) is far in excess of demand in the short-term (525,000 tons), and even in the long term (700,000 tons), and a number of units are very inefficient. None of the mills are operating close to capacity levels, and average costs of production as a result are 20-30% higher than they need be. Despite the political and social difficulties, there appears to be no solution possible other than to phase out inefficient mills. In the private sector, this process is inevitable over time, as large annual losses cannot be indefinitely continued. The costs of such a process of slow attrition rather than a managed one is that in the interim, all mills, including potentially efficient ones, will suffer from reduced Drodu<- tion and efficiency. The social costs of closing-down inefficient mills in either case are high, and need to be managed carefully; programs to retrain employees could be supported by donors. Rationalizing the jute mill sector would also require further injection of financial resources in the form of much needed write-offs of past accumulated debt (or conversion of debts to equity) and investment in modernization. The Role of the Financial System xliv. Resolving the Present Crisis. Restoring discipline in domestic financial markets will be a tough long-term process. However, important preliminary steps have been taken over recent months. Industrial credit recoveries rose by over 200% in July-December 1986 in comparison with the previous year, and agricultural collections were up by 30%. In the industrial sector, defaulters have been denied access to new credit and facilities. The DFIs have initiated legal cases against numerous defaulters, although processing has often been slow. The legal process is being expedited and a new Loan Recovery Act was submitted to the Cabinet during January 1987. A recovery program for agricultural credit is also in place to put pressure on borrowers and rural branches to pay and collect overdue agriculture loans. In particular, banks have been instructed to start cer- tificate cases for all borrowers whose outstanding loans are more than Tk 10,000, and procedural changes to expedite the processing of these cases have been made. Legislation has been introduced which would ban defaulters from holding elected office at the local level, and disbursements of the -xxix- second installment of Upazila block grants have been tied to agricultural loan recoveries in each Upazila. xlv. Longer-Term Reforms. According to policies pursued in the coming years, the financial system will either facilitate efficient economic growth or it will hinder it. As in many developing countries, Bangladesh's finan- cial and monetary control systems are characterized by a heavy reliance on credit ceilings for monetary control, an emphasis on directed lending towards priority sectors and activities--financed by generous rediscount facilities at the Central Bank--and limited concern for credit recoveries on the part of banks and specialized lending agencies. Experience suggests that this kind of structure often leads to a breakdown in credit discipline and usually leads to a high cost, low efficiency intermediation process. For this reason, many countries are seeking to increase the autonomy and account- ability of banks, while increasing the supervisory capacity of the Central Bank and relying increasingly on more modern "fractional reserve" and open- market operation methods to control money supply. Bangladesh is now in a good position to begin to move in this direction. Recent reforms have laid the groundwork, and the Banking Commission Report (issued June 1986) provides an important framework for more fundamental change. Four components will be the keys to a successful longer-term reform: (a) providing a more appropriate incentive system to the lending institutions; (b) strengthening che lending institutions and the Central Bank; (c) making costs and subsidies explicit; and (d) changing the methods of monetary management. Managing Public Expenditure (Chapter 4) xlvi. Higher and more effective public expenditure will be needed to achieve the Government's growth and equity goals. This will require improv- ing the efficiency of decision-making and implementing procedures and developing a better trained and motivated public workforce. Adapting and strengthening institutions is a long-term process. The report documents recent progress and suggests directions--many of which are under active consideration by the Government--for the coming years. Development Strategy - The Role of the Planning Commission xlvii. The Planning Commission is responsible for formulating the Government's development strategy and for translating this into a public investment program. It also ensures that public programs and policies are in conformity with that strategy, through its project approval process, and through its advisory position on the country's two highest economic decision- making bodies--the National Economic Council (NEC) and its executive commit- tee (ECNEC). With the growth in size and complexity of the public expendi- ture program and the continuous need to ensure that economic policies are consistent with the expenditure program, a strong and well staffed Planning Commission is much needed. In this regard, it is recommended that attention -xxx- be given to two areas. First, over the coming years, the Planning Commission should devote less time and attention to detailed project approvals, ensuring only that the project is in conformity with national priorities. This would enable more time to be given to the formulation and monitoring of development strategy and for broader policy issues. For example, a stronger leadership role could be taken in setting the agenda and providing analyses and recom- mendations for NEC and ECNEC. Second, in view of this upgraded role, the Commission's capacity to undertake economic analysis would need strengthening. In this regard, the disciplinary mix at the senior levels of the Planning Commission currently appears to be inappropriate. Rotations, promotions and enhanced training opportunities could be used to prepare the Commission for its key role in the development process. Project Initiation and Approval xlviii. Streamlining Project Approval. There are two major deficiencies with the current Project Proforma (PP) process which the Government is seek- ing to address. First, the process takes too long, with most of the delays due to bureaucratic impediments rather than substantive issues. Second, too much attention is paid to relatively minor budgetary and administrative details--personnel, vehicles, equipment and technical assistance--with Planning Commission staff frequently concentrating on these details, while important issues such as project design and technology choice, economic viability, and sectoral context are sometimes neglected. The Planning Commission is currently reviewing this process, with the aim of substantial reform. xlix. Strengthening Ministry Planning Units. Many ministries play a rela- tively passive role in reviewing the details of proposed projects, assuming this will be done by the Planning Commission and the Project Evaluation Committee. Recognizing this problem, the Government has begun to strengthen ministerial planning cells/units by transferring Planning Commission staff to them. In the meantime consideration might be given to hiring local consult- ants on a short-term basis to strengthen the planning units and to assist in project identification, preparation and statistical work in the line ministries. 1. Reviewing Technical Assistance Projects. Delays in approving Technical Assistance proposals (TAPPs) are a major cause of slow project implementation; there is an urgent need for procedures to be streamlined and reoriented. Donors on their part should refrain from suggesting studies automatically whenever difficult problems are encountered and be more selec- tive about proposing foreign rather than local consultants. The Government's preference to use grant funds for TA is reasonable, but an inflexible application of this policy is causing delays in the development program, flexibility is especially important when TA is an essential part of an investment project f(e.g., design and supervision for civil works). Proposals for TA should also be scrutinized on their merits, rather than be subject to arbitrary rules. -xxxi- Budgeting Public Expenditure li. Operation and Maintenance (O&M). The urgent need to provide for adequate resources for O&M has increasingly been recognized at all levels of Government. In the FY87 budget, for the first time, O&M line items were shown in the budget, but the Government still limits its definition of O&M to materials and services, thus excluding recurrent personnel expenses which are particularly important for projects and programs in education, health, family planning, agricultural extension, and other staff-intensive develop- ment activities. In order to ensure adequate O&M provisions (including recurrent personnel costs) in future budgets, line ministries and public autonomous bodies will need to assess the extent of backlog in O&M requirements; establish future needs based on sector-specific plans and standards; formulate medium-term financing plans for O&M; and establish procedures for monitoring O&M implementation. Three key sectors--BWDB flood control, drainage and irrigation projects, national highways, and education-- have been selected by the Government as priority sectors. Studies have been commissioned to assess O&M needs in these sectors and new arrangements and procedures will be introduced in FY88. lii. Improving the ADP Process. During the past five years, progress has been made with respect to the delegation of financial authority to line ministries and project agencies, the streamlining of budgetary procedures and more decentralization of administrative activities. The excessive number of projects in the ADP has been cut every year since 1983; the FY87 ADP includes 638 projects in contrast with 1726 in FY82. The Core Program which was introduced in FY83 to improve discipline in the ADP process, is now creating anomalous situations; sometimes different components of the same project are being designated Core and non-Core, and high-priority new projects can be classified as non-Core because the Core category is full. The system needs rethinking. In a first attempt to introduce multi-year budgeting, the Planning Commission prepared "shadow ADPs" for FY86-88 in parallel with the FY86 ADP; however the process appears not to have been taken very seriously and to have played little or no role in the formulation of the FY87 ADP. The exercise needs to be up-dated on a rolling basis and its results incorporated in the normal development and budgetary planning cycles. liii. The Possibilities for Budget Integration. Although funds are dis- tributed between the Revenue Budget and ADP through one decision-making process, the two budgets are formulated separately. The allocation of resources might be improved if the two budget processes were merged. Although the distinction between recurrent and capital expenditures would be maintained, integrated budgets could be prepared jointly on a sectoral basis, facilitating a comprehensive assessment of each sector's requirements. Trade-offs among investment in new facilities, rehabilitation or improvement of existing facilities, and O&M requirements could be addressed more directly than at present. Multi-year budgeting could probably also be incorporated -xxxii- more easily in an integrated budget format, since the relationships between capital and recurrent expenditures would become clearer. Project Implementation liv. Delays are experienced in the implementation of almost every develop- ment project in Bangladesh. Improvements over the last two years include improved customs and budgetary release procedures and, in the case of IDA funds, the introduction of the Special Accounts in Foreign Exchange (SAFE). However, serious problems remain and further progress is needed in: - expediting the process of land acquisition; - improving procedures for the appointment of key staff; - streamlining procedures and training staff in procurement; - simplifying consultant appointment procedures; and - devolving autonomy and accountability to project managers. The report contains recommendations in each of these areas. The Quality and Motivation of Public Employees lv. Reforms of planning and implementation procedures will only be as effective as the people who implement them. The efficiency of public expen- ditures depends above all on the quality, motivation and sense of common purpose of public employees. In Bangladesh, as in many developing countries, the effectiveness of the public sector could be greatly improved in this regard. Currently, inadequate compensation compared to the private sector and an apparent decline in the prestige of public service seems to be leading to a decline in the quality of recruitment of Class I Officers and to an increase in resignations. In addition, the centralized system of decision- making through the secretariats, supported by a vast, intricate web of formal procedures, leads to further frustrations and bottlenecks, and the heavy reliance on the committee system also tends to reduce the level of account- ability and hence motivation of middle level managers. Furthermore, the policy of frequent rotation among Class I Officers tends to encourage a lack of commitment to longer term tasks and strategic thinking. And despite some recent improvement, most promotion decisions continue to be made largely on the basis of seniority, which can discourage able young recruits. Aware of these problems, the Government has recently announced that a high priority will be given to reforming the administrative structure. -xxxiii- Financing Public Expenditure (Chapter 5) lvi. Even with more generous foreign assistance, substantial increases will be required in domestic revenues to undertake the level of required public expenditures. It is estimated that the ratio of Central Government revenue to GDP will have to rise by about 1.5 percentage points by FY90 and by about 3.0 percentage points by FY95e In addition to these funds needed in the Cenitral Government treasury, substantial increases in revenues will be required from sales of public enterprise products and services in order to restore their financial health, and enhanced charges will be essential for a number of publicly provided services in order to cover their recurrent costs. Approximately another 1% of GDP will be required for these purposes. Tax Policy lvii. Achieving the Government's twin objectives of raising public revenues while rationalizing its industrial incentive structure will require careful management. Trade-based taxes account for 55% of tax revenles, and some of the measures needed to promote industrial efficiency and export competitiveness--reducing selective tariffs and expanding the duty drawback system for example--will result in a reduction in revenue. Similarly tax adjustments required to reduce discrimination against some industries (brought about by "cascading" domestic and trade taxes) may also entail a loss of revenue. lviii. Many developing countries face a similar dilemma. While there is no blueprint applicable to all countries, some lessons are emerging from reform efforts. Common elements to tax reform--whether implemented all at once, as in the case of Indonesia, or more gradually--include (i) a shift away from trade-based taxes towards taxes on consumption, easing collection difficul- ties by building upon existing tax instruments and collecting at the import or manufacturing level; (ii) replacement of import quotas by non-prohibitive tariffs, which can raise revenues substantially; (iii) a reduction in exemp- tions on corporate and personal income taxation, which in the case of Bangladesh are very generous; (iv) measures to improve tax administration; and (v) an increased emphasis on other taxes, such as land taxes. Public Pricing Measures lix. Since the prices of most publicly provided goods are below their economic costs, raising prices will generally lead to a more efficient allocation of resources. At the margin therefore raising revenue from improved cost recovery is often more efficient than from taxation. Good progress has been achieved over the past five years in improving public pricing policies, primarily by the reduction of large subsidies on foodgrain and fertilizer sales, and by the taxation of petroleum products. However, in other areas--power, natural gas, education, irrigation--public expenditures have risen more rapidly than revenues. -xxxiv- lx. Defined in their broadest sense economic subsidies account for about 3% of GDP in Bangladesh. About one third of these are in three areas which are obviously beneficial and should be retained--primary education, primary health care and special food programs targeted towards the most vulnerable. The remaining subsidies have remained roughly constant in the aggregate during the 1980s but in composition there has been a shift away from the subsidization of agricultural inputs and outputs (fertilizers and foodgrains) towards the subsidization of industrial and commercial sectors (power, natural gas and railways). An additional implicit subsidy, which again tends to indirectly benefit the industrial sector, occurs when fees for services are not collected; collections for electricity in FY86 for example were barely half of what they should have been. lxi. The report presents an illustrative scenario, under which price subsidies in energy, transport, communications, non-primary education, and non-poverty oriented food programs are phased out by the end of FY90. Public revenues would rise by about 2% of GDP, about half of which would be avail- able to the Central Government as general revenue. The bulk of the price increases would be borne by better-off urban dwellers. The effect on the poor would be small but not negligible. An expansion of the social services and targeted subsidies would therefore be an important complement to the program. III,k PROMOTING HUMAN DEVELOPMENT Trends in Poverty, Nutrition and Real Wages (Chapter 6) lxii. Based upon a recently available Household Expenditure Survey and evidence from nutrition surveys and wage and food availability data, the report assesses recent trends in poverty alleviation. While the data are weak some broad conclusions appear warranted. lxiii. The 1974-82 Period. While the proportion of the population in poverty--those unable to afford a basic recommended calorie intake-- apparently fell from 82% to 73%, the proportion in extreme poverty--unable to afford even enough food to live a reasonably active life--rose from 43% to 50%. The number of these "hardcore" poor rose by 13 million during this period. Real wages fell and while calorie intake was helped by a relative decline in the price of foodgrains, the quality of the diet fell sharply. lxiv. The 1982-87 Period. The poverty situation appears at least not to have deteriorated further over the last five years. More food has been available to lower income groups, partly through the rapid expansion of the Food for Work and Vulnerable Group Feeding programs, and real agricultural wages have risen, recovering in 1986 to their pre-Independence levels for the -xxxv- first time. Assuming no deterioration in the distribution of income over the last five years, the incidence of poverty would appear to have declined slightly, although the absolute number of poor has certainly risen, from about 67 million in 1982 to 73 million in 1986;-equivalent to 60% of the increase in the population during this period. Despite recent progress, food availability and relative price data have led most observers to conclude that the quality of the diet has continued to deteriorate and this needs immediate attention. lxv. The Outlook for the Future. The causes of the recent rise in real wages appear to be associated as much with the institutional changes and special programs in rural areas as with underlying economic factors. The outlook for the 7 million landless and near landless families in rural Bangladesh is highly uncertain. While there is good scope for continued robust agricultural growth, the need for hired labor is tending to be reduced as average farm size declines; between 1977 and 1987, average farm size has fallen from 3.5 acres to 2.3 acres and will probably fall to 1.5 acres in the next 20 years. Smaller farms tend to generate more employment but less hired employment. Over the next two decades, as fragmentation of agricultural land continues, over 23 million additional people w.ll become dependent on rural non-farm activities or will be forced to migrate to the cities. This is potentially a disastrous situation for landless laborers and for very small farmers, whose farms provide only supplementary income to laboring activities and yet prevent their mobility to urban and other rural areas where job opportunities might be more plentiful. In this regard, the Government recog- nizes that the promotion of economic and employmdnt opportunities, and access to resources by these disadvantaged people must have the highest priority. Promoting Income Earning Opportunities Among the Poor (Chapter 7) lxvi. Even under the High Case growth scenario, probably only about two- thirds of the 1.3 million annual increase in the labor force could be produc- tively employed at current real wages under the present production structure. Special targeted efforts to help the assetless and near assetless are there- fore an essential complement to sound macroeconomic and incentive policies. But experience in many developing countries suggests that without special attention, government programs tend to benefit primarily the better-off rural dwellers and usually fail to reach the very poor. The assetless are generally illiterate and lack skills and financial resources to take advantage of productive opportunities as they might arise. Almost inevitably, therefore, the existing rural power structure manages to usurp the benefits of poverty programs for themselves, sometimes with negative effects on the poor. Bangladesh is no exception to this common occurrence. In some instances good progress has been made--e.g., Grameen Bank--but the efficiency of programs could be improved and the scale of the unmet needs is enormous. -xxxvi- lxvii. These concerns are shared by both Government and donors, and the last year has witnessed important initiatives in this area. Experience with ongoing programs leads to the following conclusions: - In order to prevent the expropriation of cooperative schemes by the local elite and to promote a sense of "ownership" on the part of the poor, it is necessary that individuals be organized into groups based on socio-economic homogeneity and common interest. - The best chances of achieving economic viability for landless cooperatives is if training in functional skills and market infor- mation is made available along with access to credit. This is a complex endeavor requiring a skilled, motivated and unconstrained intermediary. - It is difficult--but not impossible--to achieve this sense of motivation within public agencies. In this regard, it is desirable that the Government seek to establish a closer partner- ship with local Non-Governmental Organizations (NGOs), in order to draw upon their unique strengths. - In view of the importance of employment concerns and the expansion of innovative approaches to poverty alleviation, there is a need for (a) monitoring and evaluating ongoing employment programs to ensure that emerging lessons from experience are disseminated and incorporated in new initiatives; fb) reviewing the Government's overall expenditure program, and assessing the extent to which attention is given to providing opportunities to the most needy; and (c) exploring the overall policy environment and technology development with respect to its impact on employment. The Government has recently announced its decision to establish a policy unit in the Planning Ministry for this purpose. - While the Food for Work programs have had a remarkably positive impact on rural employment creation, there has been a tendency to regard the program as a form of relief rather than an integral part of the local investment plan; as a result counterpart funds for important complementary investments (bridges, culverts, etc.) are often not provided, and cash allocations for maintenance are quite inadequate. As the FWP expands and diversifies into new activities such as irrigation works, social forestry, fisheries and the construction of schools and markets, it is more important than ever that these programs be coordinated with other local activities such as those financed by the Upazila Development Grant and other ADP-financed projects at the local level. These were among the most important recommendations stemming from a working level meeting of the Bangladesh Aid Group held in Bonn in November 1986, to consider ways to alleviate the lot of the country's many poor. -xxxvii- Promoting Economic Opportunities for Women (Chapter 8) lxviii. Acute poverty at the margin appears to be hitting hardest at women, physically, socially, and economically, resulting in a high, gender-specific wastage of human resources. Persistent poverty is changing the family structure, often making women's contribution to household earnings essential. Nuclear families are becoming the dominant household form, and many widows can no longer depend on the protection of extended family networks. Rising dowry demands and higher frequencies of divorce, separation and abandonment are additional signs of acute pressure on family bonding. Particularly among the poor, traditional support networks are breaking down, and women's earning capacity is becoming a matter of survival for growing numbers of poor families. Poor health and nutrition, lack of schooling and limited access to improved technology and social and economic services, result in low produc- tivity of female labor and low wages. Rural women work around 14 hours per day on average--as much as four more hours per day than men do--and earn wages which are generally about half those of men. Targeted Women's Programs lxix. Over the long term the best prospects for improving the welfare and quality of life for Bangladesh's women are provided by expanded and improved access to education, health and family planning programs. Social rates of return on investment in these services for women are universally very high throughout the developing world. In this regard, education of girls deserves not only policy commitment but also serious attention to influences now discouraging parents from educating their daughters. It is also essential to expand entry of women teachers and to encourage promising innovative approaches such as non-formal primary schooling; adapting schedules, location and curriculum content to match local circumstances; scholarship programs for secondary and higher education; non-formal and formal skills training to women in organized groups; and expanded use of female community-based volun- teers as basic trainers and resource persons. Similarly improving the quality of family planning services to allow women to plan pregnancy and space childbirth with greater confidence and ease, and expanding access to maternal health care will be crucial to encourage a fuller response of women to development opportunities. lxx. These human development programs must be supplemented by special programs, targeted towards providing women with access to resources and productive services. A number of group approaches have proved particularly successful in reaching women in Bangladesh and offer a basis for larger-scale programs. lxxi. The Most Vulnerable. Over half a million of the most distressed and vulnerable women are being reached by the Vulnerable Group Feeding Program -xxxviii- (VGF) and two modified Food-for-Work Programs--Post Monsoon Rehabilitation and the Road Maintenance Program (RMP)--which are implemented through union- level committees. The RMP and VGF programs now also include development training in basic health and literacy and have sought to link their clients to the services and support of government and non-government agencies. A recent survey of the RMP showed that about 95% of beneficiaries had never been to school, more than 70% owned no land, and about 40% had no house. After one year in the program, which provides Tk 12 a day throughout the year, the proportion of beneficiaries receiving an inadequate diet fell dramatically, expenditure on health care, housing, cereals and protein increased, and children's school attendance doubled to around 23%. lxxii. The Working Poor. A number of programs have opened access to tradi- tional small-scale income-earning activities and have strengthened women's economic capacity through homestead-based skills training, input provision, savings mobilization and credit. At least half a million women from landless households and possibly as many as three million are involved in regular group meetingrs and activities. As a result, their asset holdings and their basic food and non-food conisumption have been increasing, and school atten- dance of their children and family planning has been encouraged; compared to the national contraceptive prevalence rate (CPR) of about 28%, data from BRDB's women's cooperatives for 1986, suggest a CPR of 73% for eligible couples. Group formation is essential for mobilizing rural savings and promoting efficiency and discipline in credit use. With only their savings performance as collateral, women have proven to be an excellent credit risk. Savings and credit activities are characterized by regular meetings, training sessions, rapid turnover of funds, tight peer group accountability, locally recruited field staff, and short managerial spans of control. Education, Health, Population and Nutrition (Chapter 9) lxxiii. Countries which give a high priority to education, health, popula- tion and nutrition programs are generally those that are most successful economically. Recognizing this, the Government of Bangladesh has repeatedly emphasized its commitment to human resource programs and, over the last decade, has devoted about 13.5% of public expenditures to education, health and population programs. Birth and death rates have declined, and access to health and education services has increased. However, health and education indicators remain unacceptably low, and easily avoidable illnesses still account for a substantial proportion of deaths. Performance in Bangladesh continues to compare unfavorably with other countries at a similar stage of development; child and infant mortality rates, for example, are twice the average rates in low-income countries, literacy rates are among the lowest in the world, and the population per nurse/midwife is still over three times the average in low-income countries in Asia and the Pacific. -xxxix- Issues in Health, Nutrition and Family Planning lxxiv. Internal Efficiency. Existing facilities are underutilized, par- ticularly in rural areas partly due to the low quality of services resulting from inadequate facilities, staff absenteeism, poor training, and a lack of essential supplies; drug allocation in the Upazila Health Centers, for example, is equivalent to only Tk 1 per person per year. Another problem is the mismatch between available skills and the needs of priority activities; while there are a surplus of physicians trained in secondary and tertiary care, the number of well-trained primary health and family planning workers is quite inadequate. lxxv. Program Management. Performance in the health and family planning sectors has been significantly constrained by delays in recruitment of personnel, inadequate logistics and weak program supervision. In particular, it is hoped that actions for encadrement of Family Planning Officers and their inclusion as members in the Upazila Parishads will improve their performance. In addition, prompt recruitment of additional Family Welfare Assistants and improvement in the distribution of ORT and Drug and Dietary Supplement kits could significantly enhance the immunization, vitamin A and diarrheal programs, and could lead to a reduction in infant mortality. lxxvi. Strengthening Mother and Child Health Care. Recent efforts to improve MCH care are most encouraging, but considerable more work to strengthen the 'existing system and develop new approaches will be necessary. Basic antenatal care, for example, remains almost totally absent. Mass education regarding the need for attention while pregnant remains an unmet.- priority, and effective screening and teaching of pregnant women will require more and better trained field workers. lxxvii. Planning for Urban Health. Health services in urban areas are inadequate and their coverage may even be deteriorating. The urban areas lack major government health input and the NGOs provide the bulk of urban health services. Programming and priorities of the NGOs are at best loosely coordinated. The health needs and strategies for providing these services are not being formulated and are not reflected in existing budgets. lxxviii. The Need for a Nutrition Program. A strategy for dealing with problems of malnutrition and institutional arrangements for implementing programs are currently lacking. Principal responsibility for policy and strategy formulation should rest with the Food Policy Committee (FPC). And strengthening the Food Ministry's Food Planning and Monitoring Section would permit it to function as a secretariat to the FPC. Earlier efforts to ener- gize the National Nutrition Council (NNC) and build on its efforts to formu- late a draft nutrition policy and program have lost momentum but must be renewed if it is to play an essential advocacy and advisory role. The NNC also needs broadening to include NGOs and other private sector representatives. -xl- lxxix. Role of NGOs. The contribution of local and international NGQs in the expansion of health and family planning programs has been substantial; it is estimated that they provide almost 40% of contraception from modern methods and for the majority of MCH services in urban areas. In order to facilitate their further growth, it will be necessary to improve coordination both among the NGOs and with the Governmient's programs, and to develop mechanisms to evaluate, supervise and monitor their performance. Issues in Education lxxx. Education faces a number of constraints which combine to reduce its effectiveness. These include the burden of a rapidly growing population, low expenditures and an underdeveloped planning, management and administrative capacity. Access to education has only expanded modestly in relation to the growing needs and the quality of education is poor. There is growing discon- tent and frustration with the poor performance of the system. Some progress is beginning to be made. F4or example, a reorganization of the Ministry of Education has been initiated, and in primary education, improvements are occurring in field supervision, personnel management, teacher training, curriculum development, textbook supplies and in construction and maintenance of school facilities. Nonetheless, the situation remains very serious. Unless the reforms initiated in primary education are expanded and developed, the primary system will not only remain very wasteful, but will absolutely fail in its task of providing basic literacy and numeracy; currently less than one in five children who enter the system emerges literate. Secondary and higher education is also in urgent need of attention; examination systems must be modified, and programs and curricula must be made more appropriate to the needs of the country. lxxxi. Reducing High Wastage. High dropout and repeater rates currently greatly increase the cost of producing graduates at all levels of education. Fully 50% of first grade students drop out before the second grade, and repeater rates at the primary level are high. If the system continues to perform as it has in the first half of the eighties, primary enrollments will not even keep up with population growth by 1990. Wastage in the secondary and college systems is most evident in the low pass rates associated with the terminal examinations. Repetition in the secondary system is estimated at between 25% to 30% at each grade level, and degree colleges have an even higher failure rate in their examinations. lxxxii. The Need for Cost Recovery. Cost recovery in the education system is almost non-existent. Monthly tuition fees average Tk 5.5 in lower secondary (US 18 cents), Tk 8.5 in upper secondary (US 29 cents), Tk 10 at the degree colleges (US 33 cents) and Tk 12 (US 39 cents) at the honors and advanced degree courses of study. As a result, fees contribute well below 10% of recurrent costs; this places an additional constraint to the prospects for improving quality and-expanding educational services. While no charges should be made for primary education, the option of increasing tuition and -xli- fees at the higher levels, while establishing programs of student aid on the basis of need and merit, deserves serious consideration. lxxxiii. Non-Formal Education Alternatives. Community-based non-formal education approaches are a promiising alternative to provide basic numeracy, literacy and skills to youths and young adults who have not been able to enter the formal education system. NGOs have achieved considerable success in implementing innovative non-formal basic education programs and in reach- ing the rural poor with training, but their progress has been on a small scale. Some--such as the Bangladesh Rural Advancement Committee--have reached fairly high enrollment and low dropout rates (especially for girls) with fairly low operational and minimal capital expenditures. A serious review of these activities with a view to assessing their potential for replication is desirable. INTRODUCTION Bangladesh is now two years into its Third Five Year Development Plan (TFYP; FY86-FY90). There has been progress and many reasons for encouragement, but also causes for concern. The overall development targets established in the plan were for the most part appropriate and achievable, but for a number of reasons they are not being met and the economy continues to perform below its potential. Bangladesh's overall economic growth-- averaging about 4% per year so far in the 1980s--is respectable by interna- tional standards. But it is not sufficient to permit much progress in tack- ling the problem of poverty, which remains overwhelming. This report there- fore assesses the scope for accelerating development in Bangladesh. What are the policy adjustments that would be required to attain the kind of develop- ment envisaged in the TFYP? How can foreign donors support this effort? And how can human development programs and special measures to assist the most vulnerable, complement the policies designed for higher and more efficient growth? The report has three parts. Part I discusses economic trends and assesses the scope for accelerating growth in the coming years. Chapter 1 briefly reviews recent developments in the economy, giving special attention to FY86 and FY87. Chapter 2 takes a longer-term perspective, and discusses the outlook for the economy for the remainder of the Third Five Year Plan period and for the first half of the 1990s. Unlike previous reports which have described the expected outlook for the economy under present economic policies and aid commitments, in this report the focus is on potential growth and development. A "High Case" is defined based on the assumption that the Government con- tinues to make good progress in adjusting the policy environment and that donors are able to support this progress with more generous and appropriate aid flows. Part II discusses in more detail the development strategy envisaged under the High Case. Chapter 3 explores policies designed to promote more eff;;ciency in the private and public enterprise sectors; how can agricultural, industrial and financial policies and programs be modified to support more rapid market-oriented growth? Chapter 4 discusses the role of public expenditure; how can the process of planning, budgeting and implement- ing public expenditure be improved? Chapter 5 assesses the scope for improved public resource mobilization; what adjustments in taxation and public pricing policies would be needed to finance the projected increases in public expenditure? Part III of the report focuses on human development and the poor. Chapter 6 assesses--to the extent possible given the limited data--recent trends in poverty incidence and the outlook for the future. Chapters 7 and 8 discuss the needs of the two most vulnerable groups in Bangladesh--the asset- less and women; what lessons are being learnt from the various programs directed towards assisting these two groups? Finally, Chapter 9 reviews progress and prospects in health, population, nutrition and education. A Statistical Annex is presented at the end of the report. -2- PART I: RECENT DEVELOPMENTS AND MEDIUM-TERM OPTIONS Chapter 1: RECENT ECONOMIC DEVELOPMENTS 1.01 FY86 and FY87 have witnessed significant improvements in economic policymaking in Bangladesh. Macroeconomic management has been sound, and the authorities have embarked upon an ambitious program to improve efficiency and competitiveness in the economy. The current account of the balance of pay- ments and the budget deficits have been brought down to manageable and sus- tainable levels, and over the last few months serious efforts have been initiated to restore discipline to the troubled domestic financial system. At the same time, there is some evidence to suggest, albeit tentatively, that real wages and incomes may be rising in rural areas. 1.02 But there have also been disappointments. Industrial expansion has been well below expectations and agricultural growth has been due more to special circumstances than to strong policies and programs that can be expected to continue, Although overall growth rates are respectable, they are well below the targets established for the Third Five Year Plan and while there are good reasons for these shortfalls, there is nonetheless a sense that in some areas progress is slipping. Table 1.1: GDP GROWTH - A COMPARATIVE PERSPECTIVE Percent Growth Per Annum 1973-80 1980-84 1984 1985 1986 1984-86 Average Average Average World 3.4 2.1 4.2 2.8 2.9 3.3 Developing Countries 5.0 2.9 5.2 4.1 3.4 4.2 Low Income Countries 4.7 6.8 9.0 8.8 6.0 7.9 Sub-Sahara Africa 3.4 -1.3 -1.8 2.3 0.9 0.5 China and India 4.9 7.7 10.3 9.8 6.1 8.7 Bangladesh 5.8 3.8 4.2 3.7 4.4 4.1 Note: Data for Bangladesh are in fiscal years, July-June. Source: World Bank, estimates as of mid-1987. -3- Sources of Growth 1.03 Overall GDP growth in FY86 and FY87 is estimated at 4.4% and 4.2%, respectively--about average by international standards. These growth rates were slightly above the average for 1980-85 but well below the 5.8% average growth achieved in the 1973-80 period. Table 1.1 places Bangladesh's growth in a comparative perspective. For the time being, Bangladesh continues to grow faster than African countries, but at a much slower rate than the largest low income countries--India and China. Table 1.2: GDP GROWTH BY SECTORS, FY73-FY87 (percent growth per annum, constant FY73 prices)/a Production FY73- FY81- FY83 FY84 FY85 FY86/b FY87/b as Share of FY80 FY85 Total FY86/c Agriculture 3.5 2.8 4.6 1.6 1.0 3.4 1.5 46.3 (Crop Sector) (4.0) (2.5) (4.9) (1.1) (1.2) (4.4) (-) (36.4) (Others) (1.6) (4.1) (3.5) (3.3) (0.1) (0.1) (-) (9.9) Manufacturing (13.9) 2.5 -1.6 3.6 3.2 1.8 7.7 9.8 Construction & Utilities 7.4 11.2 5.8 18.4 11.8 3.0 10.2 5.6 Services 7.6 4.8 3.5 6.2 6.3 6.6 5.6 38.3 GDP at Market Prices 5.8 3.9 3.6 4.2 3.7 4.4 4.2 100.0 /a In accordance with BBS practice, a base year of FY73 is assumed here. It is recommended that the national accounts series be rebased on FY85 prices in the near future. /b Preliminary estimates. 78 At constant prices. Note: Table presents official Bangladesh Bureau of Statistics data. Staff estimates suggest that manufacturing growth for FY84 and FY85 was much higher (about 9% each year) than suggested by official data (see para. 3.21). Sourcen: Bangladesh Bureau of Statistics, Planning Commission. 1.04 The agricultural sector, accounting for 46% of GDP, grew by 3.4% in FY86. While this was an improvement on the growth of the previous year, it was due almost entirely to a 50% increase in jute production in response to high producer prices in the year before. Foodgrain production, at 16.1 million tons, was disappointing, falling slightly for the first time since 1982. The main (rainfed) aman rice crop was excellent, rising by over -4- 600,000 tons to over 8.5 million tons, but was more than offset by a 30% decline in the wheat crop and a 6% fall in the boro rice crop.1/ Table 1.3: TRENDS IN AGRICULTURAL PRODUCTION AND VALUE ADDED, FY81-FY87 Est. Proj. FY81 FY82 FY83 FY84 FY85 FY86 FY87 Production (million tons unless indicated otherwise) Foodgrains 15.02 14.65 15.36 15.75 16.12 16.11 16.64 Rice 13.88 13.63 14.21 14.50 14.62 15.04 15.50 Aus 3.28 3.26 3.06 3.22 2.78 2.83 3.13 Aman 7.96 7.20 7.60 7.93 7.93 8.54 8.27 Boro 2.63 3.15 3.54 3.35 3.90 3.67 4.10 Wheat 1.09 0.96 1.09 1.21 1.46 1.04 1.10 Others 0.05 0.05 0.05 0.03 0.03 0.03 0.04 Jute ('000 bales) 4,943 4,646 4,881 5,216 5,111 8,660 6,753 Cotton ('000 bales) 10 55 58 46 29 29 50 Pulses 0.22 0.21 0.20 0.19 0.19 0.18 0.24 Oilseeds 0.25 0.26 0.26 0.27 0.27 0.27 0.27 Sugarcane 6.60 7.14 7.48 7.29 7.00 6.64 7.00 Potatoes 1.00 1.08 1.17 1.19 1.18 1.10 1.15 Sweet Potatoes 0.70 0.69 0.73 0.72 0.69 0.61 0.56 Tea (thousand tons) 40 39 41 42 38 37 40 Tobacco (thousand tons) 48 51 51 49 50 46 50 Real Growth in Value Added (% p.a.) Crops 5.9 -0.7 4.9 1.3 1.2 4.4 Livestock 2.5 5.8 2.4 1.9 2.3 2.4 Forestry 7.9 10.5 1.9 9.3 -6.5 -5.0 Fisheries 0.2 5.8 6.8 0.7 2.3 0.3 Total Agriculture 5.3 0.9 4.6 1.6 1.0 3.4 1.5 Sources: Bangladesh Bureau of Statistics; Ministry of Agriculture; World Food Programme, Dhaka; and mission estimates. 1/ Harvesting seasons for foodgrains are: aman (main monsoon season: July-November), aus (early monsoon season: March-July), boro (dry season: December-April), and wheat (dry season: December-April). -5- 1.05 Relative price shifts, and a decline in input use and credit availability played important roles in the FY86 production picture. Low paddy prices dampened incentives for boro and wheat production and, in com- bination with buoyant prices for some of the minor crops, stimulated some substitution of acreage. Sales of fertilizer and other inputs fell in FY86 for the first time in many years, discouraged by a lower fertilizer-rice price ratio, Low cash incomes from jute and the squeeze on agricultural credit. Fertilizer sales had been unusually high the year before as a result of additional use of replanting of crops, but this cannot account for the full decline. Mainly as a result of serious institutional problems (as well as reduced credit availability), sales of irrigation equipment slumped badly; only 4,400 shallow tubewells were sold in comparison with 19,700 in FY85, and sales of deep tubewells fell from 2,170 to 670. The growth in irrigated area was thus only 2% in contrast with 8% in FY85. 1.06 After a period of very rapid growth in agricultural credit programs in which many loans of doubtful legitimacy were made and arrears built up totaling some $600 million equivalent, a crisis point was reached which required acceptance of short-term costs for the sake of the survival of the institutional rural credit system.l/ Gross credit extended to agriculture fell from the equivalent of $280 million in FY85 to $215 million in FY86. Recoveries, amounting to $210 million, rose slightly in absolute terms from FY85, but as a proportion of outstanding loans fell from 38% to 27%. As a result, strong measures have had to be taken to recover overdue loans and to ensure that new credits are repaid. 1.07 Preliminary data for FY87 suggest a reasonably good year for foodgrains. The aman crop was slightly lower than the record level of FY86, and the aus crop appears to have risen by a healthy 11% having moved into some of the jute area. Expansion of the input-intensive boro and wheat crops continued to be constrained by the slow growth in irrigated areas and con- tinued low sales of tubewells; however, combined they should rebound to their FY85 levels.2/ 1.08 The jute sector remains a cause for serious concern.3/ There has been a 40% decline in real jute export earnings between FY85-87 as average export prices collapsed by more than one-third, a three-quarter fall in the producer prices received by jute farmers, a decline in jute goods production by 14% and annual losses in jute manufacturing exceeding 0.5% of GDP. These 1/ In this report $ always refers to US$. 2/ See Chapter 3 for a more detailed discussion of issues in the agricul- tural and industrial sectors. 3/ See Chapter 3, Section III for a more detailed discussion of issues in the jute sector. -6- problems have stemmed from cyclical instabilities in jute markets of unusual severity which the Government was unable to control and the political dif- ficulties of closing or trimming employment in inefficient jute mills. As a result of the crisis, longer-term problems of falling world demand and uncom- petitiveness with synthetics, declining profitability in jute cultivation and major financial losses in jute manufacturing have been exacerbated. 1.09 Manufacturing output rose by only about 2% in FY86 although prelimi- nary estimates suggest a reasonably healthy rebound in FY87. The slump in FY86 contrasted markedly with growth of 9% in both FY84 and FY85 when high prices for jute and tea, coupled with an expansionary monetary stance and rapid growth in garments exports, resulted in large increases in domestic and external demand. Industrial policy reforms that had been implemented-- especially since FY82--had enabled the industrial sector to respond to these demand increases by raising output rather than prices. Domestic demand collapsed in FY86 due to depressed incomes, and to a tighter monetary environment coupled with efforts to improve credit recovery rates. Exports of non-traditional products, which are largely manufactured products, rose by only 14% compared with 30% annual growth over previous years. This was due to the imposition of auotas on garment imports in OECD countries and uncer- tainties associated with internal quota allocations. 1.10 Other economic sectors tended to follow the lackluster performance of agriculture and industry in FY86. Growth of construction and utilities fell from an average of 15% in the previous two years to only 3% due to declining private investment and to shortfalls in the public investment program. This appears to have been reversed in FY87 as construction growth and utility expansion have rebounded to more normal levels, aided by the resumption in manufacturing and input-intensive (boro and wheat) agricultural growth. Economic Management 1.11 The Government has continued to make progress towards creating a stable and undistorted economic environment. Table 1.4 presents some "stability" and "incentive" indicators, the first indicate the extent to which economic activity can be undertaken without undue risk of macroeconomic instability, and the second indicate the extent to which the incentive system is biased, leading to resource misallocation. 1.12 Macroeconomic Stability. The authorities have successfully brought monetary expansion under control over the last eighteen months. In contrast with a growth of 42% in FY84, broad money rose by 17% in FY86 and would have grown less had the balance of payments (net foreign assets) not shown unex- pected strength during the year. Broad money is estimated to have risen by a further 17% in FY87, largely due to improvements in net foreign asset position. As credit expansion has decelerated, the Government has ensured that the public sector's need to borrow has not squeezed out the private sector. The rate of growth of credit expansion to the public enterprises has -7- been lower than or in line with that to the private sector, and net credit to the Government actually fell in FY85 and FY86 and has grown only mar- ginally in FY87. This has been due to a decline in the overall budget deficit from 9.2% of GDP in FY84 to 7.3% in FY86, and to about 7% in FY87. 1.13 In response to prudent demand management the rate of inflation fell below 10% in FY86. However, in the first half of FY87, inflation rose, led by higher food prices. A lower-than-expected (but still respectable) aman crop and delays in shipments of foodgrain from Europe resulted in sharply higher rice prices, which in March 1987 were more than 17% above their level of a year earlier. For FY87 as a whole, an inflation rate of about 12% is expected. This increase is due to supply rather than demand problems and shouLd not be countered by a tighter monetary policy, but rather by efforts to restore food stocks (see para. 1.31). 1.14 The deterioration in credit recovery on the part of the four nation- alized commercial banks (NCBs), the two development finance institutions (DFIs) and the agricultural credit bank has been the greatest threat to stability over the last eighteen months. In FY86, only 27% of current dues and overdues wyere collected for agricultural loans, and for industrial term loans, the percentage was only 10%. This situation undermined longer-term growth prospects and permitted serious resource misallocation and (because most of the defaulters are relatively well off) harsh inequities. Aware of the seriousness of the situation, the Government has taken strong steps to improve recovery rates, and preliminary data for FY87 suggest some modest progress. l/ 1.15 Restoring discipline in the financial sector itself poses difficult issues of macroeconomic management for the Government. In view of the mag- nitude of the problem, the denial of new credit to defaulters has inevitably resulted in a net contraction of formal credit available in some areas. How, therefore, can efficient private sector growth, especially in needy rural areas, be stimulated in this tight credit situation? Some compensatory injection of economic demand may be warranted over the coming months. The jute stockpiling program was helpful in this respect. Other possibilities include more aggressive and earlier procurement of rice and wheat crops, stepped up rural works programs, and a higher priority to the expansion of innovative (and high return) credit programs to assetless and near-assetless rural groups.2/ 1/ These issues are discussed in more detail in Chapter 3. 2/ See Chapters 7 and 8 for discussions of new credit programs to landless and women's groups. -8- Table 1.4: KEY POLICY INDICATORS, FY82-FY86 (percent, unless otherwise indicated) FY82 FY83 FY84 FY85 FY86 Stability Indicators Growth of Broad Money 6.5 31.9 42.2 25.6 17.1 Growth of Credit 21.5 14.7 30.9 26.2 16.6 to Government (net) 12.7 2.9 21.5 -2.8 -5.8 to other public bodies 28.5 9.0 3.6 26.5 23.0 to private sector 24.3 30.0 58.7 40.2 21.3 Inflation (CPI) 16.3 9.9 9.7 11.0 9.8 Government Budget Deficit (as % of GDP) -8.7 -11.2 -9.2 -7.6 -7.4 Agricultural Credit Recovery Ratio /a .49 .42 .42 .38 .27 Industrial Credit Recovery Ratio /a n.a. .15 .12 .11 .10 Incentive Indicators Real Effective Exchange Rate /b Index 1980 = 100 83.6 84.4 91.7 89.4 78.8 Annual Change (Z) -10.7 0.9 8.7 -2.5 -11.9 Real Interest Rates /c 1-2 year deposits Tend of period) 3.6 -2.0 3.9 2.7 3.8 Ratios of Domestic Agricultural Prices to International Prices /d Rice .91 .98 1.05 1.35 1.09 Wheat .80 .84 .80 .77 .80 Jute .90 .95 1.05 1.15 .80 /a Collection of interest and principal as proportion of current dues and overdues. Industrial data is for development finance institutions only. /b Trade-weighted exchange rate adjusted for differential rates of inflation; (- indicates depreciation). /c Deflated by consumer price index. 7T Ratio equals 1.0 in absence of trade barriers and in competitive domestic market. Sources: Bangladesh authorities and staff estimates. -9- 1.16 The Incentive Framework. The official exchange rate has been adjusted frequently and in small steps over the past two years in order to improve and maintain competitiveness. Coupled with the weakening of the US dollar, the trade weighted exchange rate depreciated by 20% in FY86. The real effective exchange rate (adjusting for differential inflation rates) depreciated by 12%, although a small appreciation of 4% has occurred in the first half of FY87 due to higher domestic inflation. Related to this, the authorities have expanded the share of transactions being conducted at the (free) secondary market rate. In FY87 73% of total export earnings will be sold in this market, up from 53% in FY86 and 27% in FY85, while 42% of imports will pass through this market, up from 28% in FY86 and 26% in FY85. At the same time, the gap between the official and secondary exchange rate has also been narrowed from 15% in FY85 to 9J5% in FY86 and to an expected 7.0% in FY87. 1.17 Most interest rates continue to be maintained at positive real levels, and while there is a need to increase the flexibility of the interest rate structure, their general levels are sufficient to encourage savings and the appropriate allocation of loanable funds.l/ Agricultural pricing policies are also more efficient than in many other countries. For the most part, domestic farmgate prices reflect international prices, thereby provid- ing appropriate signals to farmers.2/ Finally, trade and industrial policy-- tariffs, quotas, restrictions and licenses--has been improved markedly since 1982, but especially in FY86 and FY87. However, these improvements are only the first step in a phased program, and distortions in the trade system-- especially those brought about by high and variable tariffs--are still excessive.3/ Savings and Investment 1.18 The gap between domestic investment and national savings--equivalent to the current account deficit--fell to 7.1% of GDP in FY86 from 8.2% in the previous year. This gap declined further in FY87 and is consistent with net aid flows (foreign savings). New commercial borrowing from abroad, therefore, is currently not necessary to any significant extent. 1.19 Macroeconomic and sectoral management is currently hindered by a lack of reliable and timely data on the demand side of the national accounts (private and public consumption, savings and investment), and it is hoped 1/ See Chapter 3, para. 3.55 onwards. 2/ Issues relating to the need to stabilize farmgate jute prices are discussed in Chapter 3 (para. 3.50). 3/ See Chapter 3 for a more detailed discussion of trade and industrial policy. that improvements in their quality will soon be made.l/ The levels of savings and investment shown in Table 1.5 probably underestimate true values by up to 3-5% of GDP. However, their trends are probably fairly accurate. They suggest that the recent improvement in the basic macroeconomic balance has been due unfortunately not to an increase in the rate of savings but to a decline in the level of investment. Private investment in agriculture, mainly in the form of minor irrigation and intensification, slipped badly in FY86 and industrial investment was discouraged by low demand and a tougher credit stance on defaulters. FY87 appears to have witnessed a modest recovery in private investment; more vigorous growth is expected in FY88. Table 1.5: MACROECONOMIC BALANCES, FY81-FY86 (Percent of GDP) FY81 FY82 FY83 FY84 FY85 FY86 Foreign Savings 9.6 11.5 8.4 6.8 8.2 7.1 (Current Account Balance) Gross Domestic Investment, Total 13.1 15.0 13.6 12.3 13.3 13.1 Public 7.2 6.1 6.3 5.6 6.1 5.9 Private 5.9 8.9 7.3 6.7 7.1 7.1 Domestic Savings 1.2 1.1 0.8 1.5 2.7 3.2 National Savings 3.5 3.5 5.2 5.5 5.1 6.0 Memorandum Items: Share of Gross Domestic Investment Financed by Foreign Savings (%) 73.3 76.7 61.8 55.3 61.7 54.2 Workers Remittances (as % of GDP) 3.3 3.2 5.2 4.3 2.7 3.6 Sources: Bangladesh Bureau of Statistics and staff estimates. 1/ The Bangladesh Bureau of Statistics has recently been assisted by a UNDP project to improve its national accounts estimates. A report has been completed containing detailed recommendations and the expenditure side of the accounts were singled out as in need of special attention. A National Income Commission is to be established in the coming months with the purpose of assessing ways of improving the quality and coverage of official data. The demand side of the national accounts should be given a high priority. 1.20 Domestic savings at 3.2% of GDP in FY86 remain among the lowest in the world. Remittances from Bangladeshis working abroad (mostly in the Middle East) rose from $441 million in FY85 to $555 million in FY86, permit- ting national savings to rise.l/ Over the longer term, however, the impor- tance of remittances as a share of domestic investment is expected to fall requiring that domestic savings rise if investment is not to fall. Managing this transition will be a major challenge for policymakers in the coming years. The Balance of Payments 1.21 The counterpart to the savings-investment gap is seen in the balance of payments. While the decline in the current account deficit to 7.1% of FCDP in FY86 and to an estimated 5.6% of GDP in FY87 was cause for encouragement, it has unfortunately been due more to import contraction than to export expansion. 1.22 Average export prices fell by 22% in FY86, more than offsetting a 12% increase in volume. Raw jute and tea prices, which fell by 50% and 53%, respectively, were responsible for the bulk of this decline. The terms of trade fell by 24% offsetting the gain of the previous year. Average jute prices are estimated to have been lower again in FY87, but gains in other primary export prices probably resulted in a slight improvement in the terms of trade. 1.23 Table 1.6 shows the performance of export volumes and values and Figure 1.1 portrays graphically the continued vulnerability of export earnings on fluctuations in traditional export prices and volumes. Non-traditional exports--particularly, ready-made garments and frozen shrimp- -continue to perform well. 1.24 Import developments are shown in Table 1.7. The need for foodgrain imports fell from the all time high of 2.6 million tons in FY85 to 1.2 nmil- lion tons in FY86. Foodgrain imports are expected to increase to a more normal level, 1.87 million tons, in FY87. Lower petroleum prices saved abcout $63 million in the import bill in FY86 and are expected to save an additional $80 million in FY87. The value of fertilizer imports fell by 21% in FY86 due to low agricultural demand and are estimated to have fallen sharply again in FY87 due to the commissioning of the new capacity. Intermediate imports for the industrial sector fell due to depressed demand in FY86, although some recovery is expected in FY87. 1/ Domestic savings are those generated within the country. National savings are those generated by Bangladeshi nationals wherever they are living. The current account deficit is identically equal to gross domestic investment minus gross national savings. -12- Table 1.6: EXPORT VOLUMES AND VALUES, FY81-FY87 (Value in US$ million) FY81 FY82 FY83 FY84 FY85 FY86 FY87/a Traditional Raw Jute 119 102 110 117 151 124 96 mn. bales 1.9 1.9 2.3 1.9 1.4 2.3 2.3 Price Index 100.0 87.3 80.0 100.8 175.2 88.0 68.3 Jute Goods 357 291 320 357 390 293 305 thousand tons 501.4 539.0 531.0 538.0 461.0 495.0 505.0 Price Index 100.0 75.9 84.6 93.2 118.8 83.2 84.8 Tea 41 38 46 69 61 33 33 mn. lbs. 65.7 69.0 67.7 67.7 57.4 65.5 52.0 Price Index 100.0 88.7 109.7 164.5 171.0 80.6 103.2 Leather 56 63 58 85 70 61 119 mn. sq. ft. 80.6 87.3 93..9 102.9 81.8 71.5 123.5 Price Index 100.0 102.9 88.6 118.6 121.4 121.4 137.1 Non-traditional Frozen Shrimp 40 53 72 77 87 113 140 mn. lbs. 16.6 20.7 27.5 31.2 38.2 46.5 52.5 Price Index 100.0 106.6 108.7 102.5 94.2 100.8 110.0 Garments 3 7 11 32 116 131 231 Price Index 100.0 99.5 97.5 95.4 94.9 101.0 108.3 Naptha, etc. 49 43 31 26 21 17 10 Price Index 100.0 99.5 97.5 95.4 94.9 101.0 108.3 Others 46 30 38 48 39 47 46 Price Index 100.0 99.5 97.5 95.4 94.9 101.0 108.3 TOTAL 711 626 686 811 934 819 980 Traditional 573 494 534 628 671 511 553 Non-traditional 138 132 153 183 263 308 427 Memo Items: Volume Index (FY81=100) 100.0 103.2 108.7 112.4 110.4 125.2 142.1 Value Index (FY81=100) 100.0 88.0 96.5 114.1 131.4 115.2 137.8 Export Price Index 100.0 85.3 88.9 101.5 119.1 92.1 97.0 Import Price Index 100.0 99.2 92.0 89.7 84.5 85.7 85.6 Terms of Trade Index (FY81=100) 100.0 86.0 96.6 113.2 140.9 107.4 113.3 Terms of Trade Change (%) -21.9 14.0 12.3 17.2 24.5 23.7 5.5 /a Preliminary estimates. Sources: Bangladesh Bank, Export Promotion Bureau and staff estimates. -13- FIG. 1.1 BANGLADESH: EXPORT VOLUME AND VALUE INDEX (FY81=100) TRADITIONAL EXPORTS 80- 0 FY81 FY82 FY83 FY84 FY85 FY86 FY87 Fiscal Year NON-TRADITIONAL EXPORTS 300 g0 00 FY81 FY82 FY83 FY84 FY85 FY86 FY87 Fiscal Year TORTAL EXPORTS 100- x 000 1 00- 0 200 VOL WME so--- EI FY81 FY82 FY83 FY84 FY85 FY86 FY87 Fiscal Year -14- Table 1.7: IMPORT VOLUMES AND VALUES, FY81-FY87 (Value in US$ million) FY81 FY82 FY83 FY84 FY85 FY86 FY87 /a Food /b Rice 40 46 97 56 176 8 48 Thousand Tons 83 144 345 181 690 39 235 Price Index 100.0 65.5 57.6 63.3 52.3 42.0 41.4 Wheat 210 239 288 342 322 212 265 Thousand Tons 972 1110 1500 1877 1899 1164 1637 Price Index 100.0 100.0 89.3 84.6 78.9 84.6 75.1 Edible Oil & Oil Seeds 103 76 88 89 109 136 46 Thousand Tons 171 122 146 104 156 272 115 Price Index 100.0 99.8 98.6 133.3 116.1 76.3 65.1 Intermediate Goods Crude Petroleum 343 334 240 233 226 177 146 Thousand Tons 1305 1178 928 1004 985 1008 1086 Price Index 100.0 107.9 98.4 8841 87.1 67.2 52.1 Petroleum Products 160 213 171 122 133 165 100 Thousand Tons 524 583 525 464 570 805 700 Price Index 100.0 119.8 106.9 86.2 76.4 67.1 46.8 Fertilizer 104 105 68 75 137 108 23 Thousand Tons 350 465 312 356 666 639 141 Price Index 100.0 76.2 73.5 71.1 69.4 54.3 52.5 Cement 33 39 44 37 26 57 36 Thousand Tons 446 544 759 748 588 899 1300 Price Index 100.0 98.0 78.9 66.7 59.9 60.0 57.2 Raw Cotton 108 85 56 125 106 52 75 Thousand Bales 256 239 194 388 305 181 319 Price Index 100.0 84.4 68.4 76.3 82.5 68.0 63.0 Other 749 752 539 675 796 769 968 Price Index 100.0 99.5 97.5 95.4 94.9 101.0 108.3 Capital Goods 683 615 655 599 616 680 753 TOTAL 2533 2504 2246 2353 2647 2364 2460 Memo Item: Volume Index (FY81=100) 100.0 99.7 96.3 103.6 123.6 108.9 113.4 Value Index (FY81=100) 100.0 98.8 88.7 92.9 104.5 93.3 97.1 /a Preliminary estimates. 7b Minor imports of food items are included in "othert category under intermediate goods. Sources: Planning Commission and staff estimates. -15- 1.25 The overall balance of payments picture is shown in Table 1.8. Aid inflows rose by $39 million to $1,306 million in FY86. A substantial increase in project disbursements more than offset declines in both commodity and food aid. The improved project disbursement performance was more apparent than real, however, being due mainly to exchange rate changes and to the establishment of special disbursemnent accounts within Bangladesh.l/ The overall balance of payments moved into surplus in FY86 and is expected to remain in surplus in FY87. Official reserves rose by $81 million in FY86 to $476 million, equivalent to 2.4 months of imports, and by the end of FY87 are expected to have risen to over $800 million, equivalent to 4.3 months of imports. This is a prudent and comfortable level. Public Income and Expenditure 1.26 Domestic fiscal revenues rose by 18% (8% in real terms) in FY86. The FY87 budget proposed another significant gain in revenues this year. New revenue measures in the budget amounted to Tk 3.7 billion, equivalent to an impressive 0.9% of GDP. The bulk of this increase came from increased duties on imports of commodities whose price had fallen--notably petroleum and edible oil--so was relatively painless to implement. However, revenue col- lections have been below expectations, primarily due to low import levels, once again illustrating the vulnerability of the fiscal balance to the exter- nal sector. The revenue to GDP ratio is now estimated at 9.4% in FY87 (see Table 1.9). It is clear that substantial additional revenue measures will be required over the next two years to reach the Government's TFYP target of over 12% by FY90.2/ 1.27 Expenditures were slightly below what had been expected in FY86. Annual Development Program (ADP) outlays were Tk 2 billion lower than budgeted due to implementation delays, and the food budget outlay was slightly lower than had been expected due to lower imports and domestic procurement of foodgrains. These shortfalls were partially offset by current expenditure overruns on account of salary increases and unexpectedly large losses incurred by the Railway and the Post Office. 1/ See para. 4.31. 2/ See Chapter 5 for a discussion of public revenue issues. -16- Table 1.8: BALANCE OF PAYMETS, FY83-FY87 (US$ million) FY83 FY84 FY85 FY86 FY87/a MerchandisekExports, f.o.b. 686 811 934 819 980 Merchandise Imports, c.i.f. -2,246 -2,353 -2,647 -2,364 -2,460 Trade Balance -1,560 -1,542 -1,713 -1,545 -1,480 Services, Net -113 -33 -78 -125 -126 Receipts 230 279 286 260 258 Payments -343 -312 -364 -385 -384 Private Transfers 653 627 477 586 670 (Of which Workers' Remittances) (634) (602) (441) (555) (650) Current Account Balance -1,020 -948 -1,315 -1,084 -936 Aid Disbursements 1,345 1,268 1,267 1,306 1,469 Food Aid 255 277 244 203 269 Commodity/Program Aid 452 439 432 393 400 Project Aid 638 552 591 710 800 M< Amortization -73 -72 -110 -117 -138 Trust Fund, Net -1 -8 -13 -25 -29 Aircraft Loans, Net - 53 13 1 -7 Food Credits, Net /b 47 -9 91 -69 -96 Borrowing (57) (51) (190) (13) (0) Repayment (-10) (-60) (-99) (-82) (-96) Short-term and Othe- Borrowings, Net -36 -10 -35 1 15 Other Including Errors & Omissions -74 -113 -36 71 -40 Overall Balance IMF, Net 48 20 -6 -3 159 Purchases 102 48 55 92 301 Repurchases -53 -28 -61 -95 -142 Changes in Gross Reserves (- = increase) -236 -181 144 -81 -397 Memorandum Items: Gross Reserves (end FY) 358 53 9 3 95 476 873 (as months of imports) 1.9 2.7 1.8 2.4 4.3 Current Account Deficit as % of GDP -8.4 -6.8 -8.2 -7.1 -5.6 /a Preliminary estimates. /b Commercial borrowings on account of food imports incurred by GCB. Sources: Bangladesh Bank, Bangladesh Bureau of Statistics and staff estimates. -17- Table 1.9: INCOME AND EXPENDITURE OF THE CENTRAL GOVERNMENT, FY83-FY87 FY83 FY84 FY85 FY86 FY87 Budget Estimate (In billions of taka) Total revenue 25.40 28.60 35.93 42.28 48.40 48.16 Tax 21.08 23.70 28.87 32.98 40.45 37.98 Non-tax 4.32 4.90 7.06 9.30 7.95 10.18 Total expenditure 57.80 60.65 67.62 76.37 91.12 84.18 Current expenditure 19.20 23.03 27.71 34.56 36.19 40.20 Food account deficit 6.56 3.80 4.26 1.68 2.80 -1.38 of which: foodstock change (-0.03) (0.27) (1.96) (0.27) (1.59) (-2.07) Annual Development Program (ADP) 29.80 30.11 31.23 36.41 47.64 41.67 Other capital expenditure and net lending /a 2.24 3.71 4.42 3.72 4.49 3.69 Overall budget deficit 32.40 32.05 31.69 34.09 42.72 36.02 Excluding foodgrain stocking 32.43 31.78 29.73 33.82 41.13 38.09 Net foreign financing /b 28.25 27.87 28.67 31.51 37.81 34.46 Project aid 13.44 13.31 14.40 20.17 24.85 24.50 Commodity aid 9.00 9.63 9.62 11.64 13.35 11.01 Food aid 6.40 6.97 4.92 4.99 6.52 5.60 Commercial food borrowing 1.23 -0.41 2.56 -2.27 -3.46 -2.94 Debt amortization -1.82 -1.63 -2.83 -3.02 -3.45 -3.71 Net domestic financing 4.15 4.18 3.02 2.59 4.91 1.56 Banking system 0.65 2.35 -0.66 -1.35 0.50 0.21 Other domestic 3.50 1.83 3.68 3.94 4.41 1.35 (Annual percentage change) Total revenue 9.5 12.6 25.6 17.67 14.5 13.9 Total expenditure 25.3 4.9 11.3 12.95 19.3 10.2 Current expenditure 29.7 20.0 20.3 24.73 4.7 16.3 ADP 11.2 1.0 3.7 16.6 30.8 14.4 (In percent of GDP) Total revenue 8.8 8.2 8.6 9.2 9.4 9.4 Tax revenue 7.3 6.8 6.9 7.2 7.9 7.4 Non-tax revenue 1.5 1.4 1.7 2.0 1.5 2.0 Total expenditure 19.9 17.3 16.1 16.6 17.7 16.3 Current expenditure 6.6 6.6 6.6 7.5 7.0 7.8 ADP 13.3 8.6 7.7 7.9 9.3 8.1 Overall budget deficit 11.2 -9.2 -7.6 -7.4 -8.3 -7.0 Excluding food stocking (11.2) -9.1 -7.1 -7.3 -8.0 -7.4 /a Comprises non-ADP project expenditure, the Food-for-Work Program, miscelleous investment (non-development) and net loans and advances. A major part of gross lending by the Government is included within the ADP. /b Including foreign grants. Sources: Bangladesh authorities, and staff estimates; see Table 5.3 (page 110) for revenue details. -18- 1.28 Total government expenditure in FY87 was budgeted at Tk 91 billion ($3 billion). Of this amount Tk 52 billion ($1.7 billion) was allocated to projects, Tk 37 billion ($1.2 billion) to the recurrent budget and Tk 2.8 billion ($90 million) to the food budget. Actual expenditures are likely to be well below these levels, due to implementation problems. Preliminary data for FY87 indicate that total expenditure and ADP expenditures will respec- tively be about 8% and 13.1% below budgeted levels (Table 1.9). 1.29 The shortfalls in revenue and expenditure roughly offset each other in FY87, which led to a lack of urgency in dealing with both. The overall budget deficit (including the development budget) is estimated to have risen slightly to Tk 36 billion in FY87, but to have declined as a proportion of GDP from 7.4% to 7.0%. 1.30 The financial situation of the public sector enterprises is a cause for greater concern. The consolidated net income for non-financial enterprises amounted to about 3% of book-value of assets in FY84, and has declined continuously since then to only about 0.4% in FY86, partly as a result of very large losses in jute and textiles manufacturing. Public pricing and public enterprise reforms are therefore urgently required to reduce the pressure on budgetary resources; Chapter 5 explores these issues in some detail. Food Availability and Real Wage Developments 1.31 The Food Situation. The foodgrain situation is seen in Table 1.10. Mediocre production performance coupled with much lower imports resulted in a sharp apparent reduction in overall foodgrain availability from 167 kg per person in FY85 to 156 kg per person in FY86 . However, these data exclude private storage, which was probably very high at the beginning of FY86, following the large imports, high prices and late production in FY85. While there is no immediate cause for alarm, official foodstocks in FY87 have fallen to unnecessarily low levels. Delayed imports coupled with higher offtake and lower procurement than planned resulted in PFDS stocks falling to about 690,000 tons towards the end of FY87, the lowest level in three years. This low level of stocks undoubtedly played a role in raising domestic prices and could result in PFDS finding itself unable to cope adequately with a severe flood or other emergency. Stocks are expected to rise to more com- fortable levels due to increased imports, but higher stocks of 1.25-1.50 million tons would be appropriate. -19- Table 1.10: SUMMARY OF THE FOODGRAIN SITUATION, FY81-FY87 (thousand metric tons, unless stated otherwise) Estimate Projection FY81 FY82 FY83 FY84 FY85 FY86 FY87 Domestic production Gross 15,026 14,650 15,361 15,748 16,124 16,115 16,640 Net /a 13,523 13,185 13,825 14,182 14,512 14,504 14,976 Domestic supply, net /b 13,431 13,066 13,696 14,216 14,315 14,630 14,849 Government operations: Domestic procurement 1,033 302 192 270 344 349 130 Imports 1,076 1,256 1,843 2,059 2,590 1,202 1,773 - own resources 264 100 700 569 1,236 113 343 - aided 812 1,136 1,143 1,488 1,354 1,089 1,430 Total distribution 1,546 2,067 1,937 2,052 2,580 1,541 2,075 Ration sales: 1,141 1,468 1,324 1,334 1,459 730 1,133 Statutory rationing 348 312 308 293 282 160 216 Priority groups 611 665 648 641 712 467 662 Modified rationing 182 491 368 400 465 103 265 Vulnerable group programs: 406 441 495 587 708 673 701 Relief 94 103 23 55 113 136 85 Vulnerable Group Feeding 23 39 67 92 23 152 176 Food-for-Work 289 299 405 440 572 385 440 Market sales /c - 176 /d 118 286 357 138 239 Losses 104 104 103 88 137 51 113 Closing stocks 1,249 616 630 803 1,004 976 691 Total availability 13,914 14,831 15,441 15,998 16,551 !1.ŽJ2i 16,794 Population, mid-year, million 89.34 91.67 94.05 96.50 99.01 101.53 104.07 Per capita availability kg/year 156.1 161.8 164.2 165.8 167.1 155.8 161.4 g/day 428 443 450 454 458 427 442 ounces/day 15.1 15.6 15.9 16.0 16.2 15.1 15.6 Public distribution as % of total availability 11.1 13.9 12.5 12.8 15.6 9.1 12.4 /a Gross production minus 10% for feed and. waste. Th Adjusted for crop cycle overlap with fiscal year. Overlap: boro 27%, wheat 18%. Th Includes market operations. 7T Includes export sales of 20,000 M.T. Sources: World Food Programme; USAID; Ministry of Food; staff estimates. -20- FIG. 1.2 REPRESENTATIVE DAILY WAGE RATES REAL WAGE RATE (1986 PRICES) CHITTAGONG 40-s U- X , '0' BANGLADESH < 0 - BOGRA I-- 20 FISCAL YEAR WAGES IN TERMS OF KG. OF RICE 6'- :CHITTAGONG a: X S |BOGRA L&.J ce. FISCAL YEAR Source: Bangladesh Bureau of Statistics and staff estimates. -21- 1.32 More important and encouraging is the continued expansion of food programs for the poor. The combined distribution of the Food-for-Work Program (FWP), and the Vulnerable Group Feeding (VGF) and Relief Program amounted to 673,000 tons in FY86. An expansion to about 701,000 tons is estimated for FY87. About 80 million days of work was generated by the FWP in both FY86 and FY87. Recent assessments of the FWP and VGF are positive and suggest that continued but careful growth is warranted.l/ 1.33 Statutory and Priority Ration Programs continue to decline in impor- tance in accordance with the Government's policy of relying less on food subsidies in the compensation package of public employees. However, sub- sidies through the Public Foodgrain Distribution System continues to be large, at about Tk 1.0-2.0 billion per annum, which could be better utilized for targeted food programs for the needy. Stability of market prices could be better undertaken through open market purchases and sales. In view of the current tight credit situation in rural areas, there may be a need for ear- lier and more aggressive domestic procurement and correspondingly higher open market operations than presently planned. 1.34 Real Wage Rate Developments. No up-to-date information is available on recent developments in real incomes. But data on wage rates are encouraging. Average real wage rates have risen over the last couple of years in both rural and urban areas and appear to have finally reached their pre-Liberation levels for the first time. Figure 1.2 portrays real wage developments over the last 16 years for the country as a whole and for repre- sentative high wage (Chittagong) and low wage (Bogra) districts. Abstracting from year-to-year fluctuations, real wages remained fairly flat during the 1970-82 period when measured in terms of rice, and declined when deflated by the rural consumer price index. Since 1982, however, there does appear to have been substantial progress in both indexes, especially in FY85 and FY86. An unskilled agricultural laborer now earns an average of 4 kg of rice per day or about Tk 30, up from an average of about 2.8 kg of rice in the 1970-82 period. This data does not provide conclusive evidence that the standard of living among the poor is improving in Bangladesh and it is not clear whether these trends anyway are due to an underlying strength in rural areas.2/ In 1/ See Chapters 8 and 9 for discussions of the EWP and VGF Programs, respectively. 2/ It should be noted that low agricu'itaral prices and modest production growth suggest that real per capita consumption in rural areas may have fallen in FY86 (possibly by as much as 2%),, While not necessarily incon- sistent with rising real wages for unskilled labor, declining real consumption--if true--helps to put the wage data in perspective. See Chapter 6 for a more detailed discussion of these issues. -22- addition, even at these higher levels, wage rates (at an average of $1 per day) remain quite inadequate to meet even the most basic needs of a family. Nevertheless, if sustained and built upon, these trends represent an encouraging achievement and provide preliminary support for the general direction of government programs and policy in rural areas. -23- Chapter 2: MEDIUM TERM OPTIONS AND CAPITAL REQUIREMENTS 2.01 It is unlikely that the small gains in real incomes which appear to have been achieved over the last few years can be sustained withuut healthy economic growth in the future. In turn this growth must be supplemented by specific directed efforts to aid those who tend to be by-passed by the development process. The Third Five Year Plan's emphasis on the need for higher economic growth--5.4Z per year in comparison with 3.9% per year in the SFYP--is appropriate. This chapter suggests that in the coming years this kind of economic growth is feasible and indeed necessary in Bangladesh, but it will require better progress in policy reform and more generous for- eign aid. 2.02 This conclusion is not inconsistent with earlier analyses which suggested that the rate of economic growth is expected to be somewhat lower (4.2-4.5% per year) than the TFYP target. This report describes a "High Policy Case"; what rate of economic growth is feasible and what are the policy and program adjustments and aid levels that will be required to achieve this higher growth rate? The High Case is intended to be a realistic alternative to current trends. It requires good--but not spectacular-- progress in a number of areas, most of which have already been identified by the Government. It also incorporates fairly conservative assumptions con- cerning the external environment. A "Base Case" is also described; what can be expected under a "business as usual" approach to policy reform and aid flows? 2.03 This chapter begins with an overview of the High Case. Overall macroeconomic aggregates are projected for the coming years and assumptions concerning the Government's policy stance are made explicit. In a country as poor and vulnerable as Bangladesh, food availability must remain central in policymakers' minds. Section I, therefore, also describes the outlook for the food situation under continued sound policies. Sections II and III then explore the budgetary and balance of payments implications of the High Case, while Section IV describes the important role of external assistance in supporting accelerated development. Finally, Section V explores the downside risks; what can be expected in the absence of sustained policy reforms and increased aid flows? I. OVERVIEW OF THE HIGH POLICY CASE 2.04 Development planning inevitably involves a tension between long-term goals and present realities. While it is important that policymakers' long- term vision for rapid poverty alleviation does not detract them from immediate stabilization concerns, it is also important that the urgency of shorter-term macroeconomic management does not divert attention from more fundamental development needs. Over the last two years--FY86 and FY87--policymakers in Bangladesh have necessarily focused a good part of their energies on urgent issues of monetary control, fiscal and external -24- balance, and domestic financial discipline (see Chapter 1). Failing to come to grips with these issues would have undermined any long-term growth prospects. While these issues will continue to be important--especially raising credit recovery rates--the Government can now afford to devote more of its attention to implementing the development strategy that it laid out in its Third Plan. Policymaking Under the High Case 2.05 The Government's strategy to promote higher economic growth can be broadly categorized into three sets of policies corresponding to the three chapters in Part II of this report: (a) Promoting Efficient Private-Oriented Activity (Chapter 3). This involves, `irstj regaining the momentum of growth in the agricul- tural sector bylimproving the quality of services and infrastruc- ture in rural ateas and by removing remaining distortions in the incentive framework facing Bangladesh's farmers and fishermen. Second, it requires continued progress in industrial sector reform through import tariff and export policy adjustments and in accelerating the policy response to changes in the external and internal environment. Finally, it involves financial policy reform so that the banking system can play a more efficient role in mobilizing financial savings, allocating them to productive uses, and promoting discipline in economic activity. (b) Promoting Efficient Public Expenditure (Chapter 4). This requires strengthening the capacity to efficiently plan, appraise and implement an expanded public expenditure program. Procedural changes are required and efforts to improve the quality and motivation of public employees need to be strengthened. (c) Raising Public Revenues (Chapter 5). Even with more generous foreign assistance, the current revenue base remains quite inade- quate to meet the needs for investment and operations and main- tenance expenditures in the coming years. Tax reform and enhanced revenues from public pricing policies are required for both efficiency and revenue reasons. 2.06 Combined, these policies constitute the High Policy Case. Making an assessment of the effects of these policy adjustments is of course fraught with difficulties, but rough orders of magnitude can be suggested. In combination these policies are assumed to have three effects. First, the level of investment and savings would be higher. Second, the efficiency of investment would be higher, due to a less distorted incentive framework and improved public expenditure planning. And third, export growth would be faster and import growth slower, due to trade and industrial policy reforms and to more rapid agricultural growth. -25- 2.07 These policies to promote overall economic efficiency must of course be complemented by special interventions to provide economic opportunities to the poor and by social programs--education, health, family planning, nutrition--which raise the quality of life for all income groups. These human resource policies and programs, which are the theme of Part III of this report should also be regarded as components of the High Policy Case; they too are powerful tools for promoting economic growth, although their effect is longer term.l/ Sources of Growth 2.08 Table 2.1 summarizes macroeconomic developments under the High Case. For the remaining three years of the TFYP period (FY88-90), an a'anual growth of GDP of 5.1% is thought to be feasible, while a higher growth of 5.4% is projected for the first half of the 1990s, when some of the longer-term policy initiatives begin to bear fruit. Agricultural growth is projected to grow by 3.4-3.6% per year and industry by 7.3-7.5% per year. The service sector would grow at just over 6% per year, partly in response to faster agricultural and industrial growth and partly to the huge influx of under- employed workers into the service sector which will increasingly play the role of "employer of last resort". 2.09 These growth rates are not unrealistically high in view of the Government's stated program of policy reform. They will, however, require both higher investment and improved efficiency of investment. Figure 2.1 illustrates the relationship between growth and the level and efficiency of investment. Under the High Case, GDP per person would rise from $146 in 1986 to about $190 (in constant 1986 prices) by 1995. Under the Base Case, which is described in more detail at the end of the chapter, the economy grows at 3.9% per year, the average rate for the 1980-1986 period; by 1995, GDP per person rises to $170. Under both cases, it is assumed that population grows at a rate of 2.4% per year between 1987 and 1990, and falls to an average of 2.2% in 1990-95. It is worth noting that if more rapid progress could be achieved in the family planning program, bringing the population growth rate down to an average of 1.8% per year in the 1990-95 period (the Government's target for the TFYP), GDP per capita could reach $200 (1986 prices) by 1995.2/ 1/ No attempt is made to quantify their effects in this chapter's economic projections. 2/ Issues confronting the population program are discussed in Chapter 9. -26- Table 2.1: MACROECONOMIC INDICATORS - THE HIGH CASE Second FYP Third FYP Fourth FYP (FY81-85) FY86-87 FY88-90 (FY91-95) -----------Annual Real Growth Rates (Z)----------- Gross Domestic Product . 9 4.3 5.1 5.4 Agriculture 2.8 2.5 3.4 3.6 Crops 2.5 2.0 3.2 3.2 Other 4.1 4.1 4.1 4.1 Industry 5.1 5.5 7.3 7.5 Services 4.8 6.1 6.1 6.3 Investment . 3.8 4.4 7.8 5.7 Exports 3.8 13.5 7.2 8.6 Traditional 2 -1.7 10.5 1.8 1.9 Non-traditional 22.2 19.1 15.4 9.3 Imports 3.0 -3.9 4.0 5.0 ------------------Shares of GDP ()--------------- Gross Domestic Product 100.0 100.0 100.0 100.0 Agriculture 48.3 45.7 44.2 42.8s Crops 37.7 36.0 34.5 33.4 Other 10.6 9.7 9.7 9.4 Industry 15.2 15.8 16.6 17.3 Services 36.5 38.5 39.2 39.9 Investment /a 13.5 13.0 14.2 15.6 Exports /a 5.4 5.6 5.7 6.0 Traditional /a 4.4 3.3 3.1 2.9 Non-traditional /a 1.0 2.3 2.6 3.1 Imports /a 17.6 15.0 15.0 15.9 /a Ratio at current prices. Sou. -es: Bangladesh Bureau of Statistics and staff estimates. FIG. 2.1 KEY INDiCATORS UNDER HIGH AND LOW POLICY SCENARIOS AVERAGE PER CAPITA INCOME INVESTMENT (CONSTANT 1986 PRICES) 200 la BASE CASE 16 HIGH CASE | - BASE CASE FISCAL YEAR FISCAL YEAR INCREMENTAL C/APITAL OuTPt!T RATiO NTOA AIG soa. 5 i X8- HIGH CHASE 0 I BASE CASE a.- BASECASESE 3-~.HIIGH CASE a d FISCAL YEAR FISCAL YEAR -28- 2.10 The Efficiency of Economic Activity. The relationship between investment and output growth depends on a complex interaction of technology, capacity utilization and the complementarity of investments. The Incremental Capital Output Ratio (ICOR)--a simplified measure of the efficiency and speed with which investment leads to output growth--is shown in Figure 2.1.1/ The ICOR for Bangladesh has always been fairly low, indicatiuig a quick response of output to investment, implying, as would be expected for such a poor country, a relatively labor-intensive production structure. In the second half of the 1970s, Bangladesh's ICOR averaged less than 2, in contrast with an average of about 4 for developing countries as a whole.2/ Rehabilitation of inifrastructure following the Independence struggle enabled Bangladesh to achieve a healthy rate of growth with little investment. The ICOR rose in the first half of the 1980s to 4.4 due partly to increased capital intensity of the production structure and partly to lower capacity utilization.3/ Under the High Case, it is assumed that the ICOR will fall to about 3, while under the Base Case it woxild stabilize at about 3.5. 2.11 The efficiency of investment matters not only in its effects on overall economic growth, but even more importantly in its effects on employment. During the SFYP period, investment of about $2,500 (in 1986 prices) was required on average to productively absorb each additional member of the labor force. This figure is related to the ICOR. With an ICOR of 4.4 an investment of $2,500 led on average to an ongoing value added of about $570 each year in the future, of which about $250 (10% of $2,500) would be required to pay for the capital, leaving $320 available for labor and profits. When profits and other; factors are paid, this would leave just enough to hire one worker for a full year. With an ICOR of 3.0 instead of 4.4, the same income could be available for labor with an investment of only $1,360 instead of $2,500. Almost twice as much employment could therefore have been generated for the same amount of investment. 2.12 The Rate of Investment. In order to reach GDP growth of over 5% per year, the proportion of GDP allocated for investment would have to rise by about 2 percentage points--from its FY80-87 average of 13.8% to about 16%. By the standards of most developing countries, this is still modest; for low income countries as a whole, investment accounts for about 25% of GDP, and for China and India the percentage was 28%.4/ 1/ The ICOR is calculated as the total investment in constant prices over three years (lagged one year) divided by the change in constant price GDP over a a three-year period. 2/ See for example: U. Tun Wai, A Study of ICOR in Developing Countries; IMF Fiscal Affairs Departmental Working Paper, 1985. 3/ Almost all developing countries experienced rising ICORs in the low growth environment of 1980-85. 4/ As noted in Chapter 1, however, investment data in Bangladesh probably understate the true investment picture possibly by as much as 3-5% of GDP. The level of increase in investment required to achieve the High Case would, however, be the same. -29- Table 2.2: FINANCING THE INVESTMENT PROGRAM - THE HIGH CASE (Percent of GDP) Second FYP Third FYP Fourth FYP (FY81-85) FY86-87 FY88-90 (FY91-95) Gross Investment 14.1 13.0 14.2 15.6 Public 6.1 6.4 7.0 7.6 Private 7.9 6.6 7.2 8.0 Domestic Savings 1.9 3.4 4.8 5.7 Public 0.7 1.7 2.5 Private 2.7 3.1 3.2 National Savings 5.1 6.3 7.3 8.5 Foreign Savings 9.0 6.7 6.9 7.1 Incremental Capitat Output Ratio 4.4 3.3 3.0 3.2 Sources: Bangladesh Bureau of Statistics and staff estimates. 2.13 Table 2.2 illustrates how this higher investment might be split between the private and public sectors and how it might be financed. The following points are worthy of note: - both public and private irvestment would have to rise, but the private sector would take the major share of investment resources; - foreign savings (mainly foreign aid) must rise as a proportion of GDP, but would not reach the level of the SFYP period (9%) and would fall as a proportion of total investment. In addition, the share of foreign savings allocated to finance public investment should fall from almost 90% in FY86-87 to about 65%, to enable the private sector to utilize foreign funds; - domestic savings will have to rise not only to finance increased investment but also to compensate for the declining relative importance of remittances--i.e., the gap between domestic and national savings will narrow; - domestic savings would have to rise from 3.0% of GDP to 5.7%. With the projected growth in income this would still permit average per capita private consumption to rise by 1.8% per year. This should be regarded as about the minimum acceptable rate of consumption growth since, at any lower rate, there would be a serious possibility of declining consumption in some cases. -30- Food Availability and Distribution 2.14 Foodgrain production under the High Case is projected to rise from 16.1 million tons in FY86 to 18.7 million tons in FY90 (see Table 2.3). This is not as high as the TFYP target of 20.7 million tons, but still represents a healthy 3.7% annual growth rate. Import requirements would continue to average about 2 million tons per year through 1990, partly to build up stocks to more comfortable levels. Under continued good policies, production could rise to 22 million tons by 1995, implying imports of about 1 million tons per year. 2.15 Increases in food production and progress towards self-sufficiency are not the only goals of food policy. Ensuring access to increased food supply on the part of the poor is equally important. Careful targeting and management of the Public Food Distribution System (PFDS) is therefore an important complement to broader agricultural policy and investment decisions. Consistent with the Government's policy, projections of PFDS operations are based on the assumption of phased withdrawal of the ration system, continued expansion of the Food-for-Work (FFW) and Vulnerable Group Feeding Programs (VGF) and the expanded use of domestic procurement and open market sales (OMS) as instruments of price stablization. Phasing out the ration system is an appropriate policy but implementing it will require some care to ensure that total food availability to the public does not suffer. One alternative would be to expand the capacity of OMS channels rapidly to, say, 1 million tons per year by FY89; full utilization of this capacity may not be necessary but would depend on crop success/failure and on price developments. Alternatively, private traders could be permitted to import grain. II. PUBLIC EXPENDITURE AND FINANCE 2.16 Expenditure. Total public expenditure under the High Case is projected to rise from Tk 90 billion in FY86 to Tk 169 billion in FY90. This represents an average real increase of 9% per year. As a percentage of GDP, total government expenditure would rise sightly from an average of 16.4% in the FY85-FY87 period to 17.6% in FY90; however, it would remain below the FY80-FY84 period average of 18.8%. 2.17 Recurrent expenditures will need to grow rapidly--by about 10% per year in real terms--in order to take better care of the operation and main- tenance (O&M) requirements of existing and new infrastructure and to finance increased interest obligations on public debt. Following an extended period of relative neglect, O&M expenditures on infrastructure such as roads and irrigation works and on essential supplies for health centers, schools and the like, will generally have a higher rate of return than funds allocated to new investment. -31- Table 2.3: FOODGRAIN AVAILABILITY AND DISTRIBUTION UNDER THE HIGH POLICY CASE, FY81-FY95 FY81 FY86 FY90 FY95 ---------million tons------- Cross Production 15.03 16.11 18.73 22.43 Net Domestic Supply /a 13.43 14.64 16.74 20.05 Net PFDS Operations 0.51 1.19 1.88 0.96 [-J Domestic Procurement 1.02 0.35 0.44 0.91 [+J Offtake 1.55 1.54 2.32 1.87 Imports 1.06 1.20 2.04 1.15 Closing PFDS Stocks 1.23 0.98 1.35 1.51 Total Availability 13.93 15.84 18.62 21.01 kg/capita 156.1 156.0 166.6 168.7 Memorandum: ---------thousand tons------- PFDS Offtake by Channel: Ration Sales 1141 730 300 0 FFW 289 385 569 731 Relief & VGF 117 288 393 507 OMS/MO/FS - 138 1052 637 -----as percent of total----- Ration Sales 73.8 47.4 13.0 0.0 FFW 22.9 25.0 24.6 39.0 Relief & VGF 3.3 18.7 17.0 27.0 OMS/MO/FS 0.0 9.0 45.5 34.0 /a Adjusted for seed, feed, waste and overlap of crop cycles with fiscal years. Source: Staff estimates. -32- Table 2.4: ANNUAL DEVELOPMENT EXPENDITURES IN THE SECOND AND THIRD PLAN PERIODS (Tk billion in constant 1984/85 prices) Second Plan Third Plan Period Period Average Annual FY81-85 FY86-90 Growth Rate X Agriculture, Rural Development & Water Resources 49.4 70.7 7.4 Industry 15.6 26.0 10.8 Energy & Natural Resources 35.8 56.8 9.7 Transport & Communications 26.6 30.3 2.6 Physical Planning and Housing 8.7 5.5 -9.7 Education 6.7 12.2 12.6 Health 4.4 5.5 4.5 Population Planning 4.0 8.7 16.5 Social Welfare 1.0 3.1/a 25.0 Manpower & Employment 0.9 0.9Th 0.0 Upazilas /c 7.7 29.3Th 30.7 Other 3.0 -Th - Total 165.6 250.0 8.6 Memo Item: Total ADP as X of GDP 9.0 10.3 3 /a TFYP figure includes social welfare, women's affairs, youth development, mass media, cultural development, and sports. /b TFYP figure may not be comparable with the SFYP figure because of difference in classification. /c To the extent that this includes items which previously appeared under other categories (especially agriculture), other growth rates are underestimates. Note: Figures noted above are preliminary actuals for SFYP and plan outlay for TFYP. Sources: Ministry of Finance, Planning Commission and staff estimates. 2.18 The TFYP allocation of development expenditures (ADP) among the various sectors is shown in Table 2.4, and contrasted with SFYP actual expenditures. The Plan envisages ADP expenditures in the TFYP period to be 50% higher in real, terms than actual expenditures in the SFYP period; this is equivalent to an average annual real increase of 8.6%. Industry, education, -33- population, social welfare and upazila development are planned to show the largest growth. Under the High Case, ADP expenditure growth is expected to be more modest--8.0% per year for the TFYP as a whole (Table 2.5).1I This lower growth is assumed, partly to accommodate the higher O&M expenditures and partly in acknowledgement of the modest implementation performance during the first two years of the plan period. Even the achievement of this lower rate of growth, however, will require significant improvements in project implementation performance (see Chapter 4). 2.19 Revenue: As a percentage of GDP, tax revenues and total domestic revenues, at 7.2% and 9.2% respectively in FY86, are among the lowest in the world. The Government is committed to raise revenues from both taxation and public pricing measures, and to restructure its tax system away from its current heavy dependence on low elasticity and distortionary foreign trade- based taxes, which currently account for half of all tax revenues. As dis- cussed in Chapter 5, however, this restructuring of the tax system will take some time to plan and implement. The High Case projections assume that this process of reform continues over the next five years or so. At the same time the tax-GDP ratio would have to rise from 7.2% in FY86 to 8.5% in FY90 and to 9.9% in FY95. 2.20 Good progress has been made in reducing expensive subsidies in Bangladesh in recent years; food, fertilizer and petroleum products are notable examples. But given the urgent need for revenues, the Government really has no choice but to continue in this direction. Subsidies on publicly provided goods and services are currently equivalent to about 3% of GDP. About half of these are well targeted and should be maintained and even expanded; these include supplementary feeding programs, basic health care and primary education. But many others are not achieving their goal and are draining scarce funds from other worthwhile programs; some are causing dis- tortions and some are actually detrimental to the poor. Chapter 5 suggests a four-year program for eliminating those subsidies which are not benefiting the poor. These measures, which are assumed under the High Policy Case, would raise revenues by the equivalent of 2 percentage points of GDP by FY90. However, only about half of this added revenue would be available (in a net sense) for central government expenditures; the remainder would be required to restore financial health to the state enterprise sector, much of which has been weakened in recent years by requirements to pay taxes and dividends to the exchequer while not being able to raise the prices on their output. 1/ No attempt is made in this report to assess the sectoral composition of the ADP in TFYP program. A separate exercise is currently underway for this purpose. Chapter 9 of this report does, however, stress the impor- tance of a higher emphasis on human resource programs. -34- Table 2.5: SOURCES AND USES OF GOVERNMENT FUNDS - HIGH CASE, FY81'-FY95 Real Increase FY81 FY86 FY90 FY95 FY81-86 FY86-901 FY90-95 ------Tk billion -----------percent per year----- current prices USES Recurrent Expenditures 13 34 65 121 14.6 9.9 6.3 Investment Expenditures 25 41 69 135 5.2 7.0 7.4 (ADP) /a (24) (36) (65) (127) (4.0) (8.0) (7.4) Food Expenditures 13 12 26 30 -5.5 13.1 -2.5 Amortization 1 3 9 12 10.7 22.8 -0.5 Total Uses 52 90 169 298 6.8 9.4 5.2 SOURCES General Revenues 22 42 77 163 8.9 8.8 9.2 Taxes 18 33 64 133 8.5 10.0 8.7 Non-tax Revenues 4 9 13 30 11.5 2.5 10.9 Aid Disbursements 16 37 68 110 13.4 8.7 3.4 Food Revenues 7 10 24 25 3.0 16.1 -5.6 Commercial Borrowing 7 1 - - - - - Domestic 7 3 - - - - Foreign - -2 - - - - - Total Sources 52 90 169 298 6.8 9.4 5.2 --as percent of total- USES Recurrent Expenditures 25 36 39 41 Investment Expenditures 48 47 41 45 Food Expenditures 25 14 15 10 Amortization 2 3 5 4 SOURCES General Revenues 42 47 46 55 Aid Disbursements 31 42 40 37 Food Revenues 13 11 14 8 Commercial Borrowing 13 - - - --as percent of GDP--- Recurrent Expenditures 5.6 7.4 8.6 9.0 Investment Expenditures 10.2 8.9 9.1 10.0 General Revenues 9.3 9.2 10.5 12.1 Aid Disbursements 8.0 8.0 9.0 8.2 Total Sources/Uses 22.3 19.6 22.3 22.2 /a Not all of ADP expenditures are included as investment. Source: Bank staff estimates. -35- III. THE BALANCE OF PAYMENTS 2.21 The availability of foreign exchange will continue to be a binding constraint on economic growth in Bangladesh for the indefinite future. The very narrow natural resource base implies that investment and industrial production are heavily dependent on imported raw materials, capital goods and components. So far, during the 1980s, Bangladesh has earned from exports and remittances enough to finance about 60% of its imports, or 50% of imports and debt servtce obligations combined. The remainder--about $1.5 billion per year--is financed by foreign aid. Even under fairly optimistic assumptions concerning donor behavior, the proportion of imports financed by foreign aid must fall; this represents a major policy challenge to the Government. 2.22 The International Environment. Bangladesh has been treated harshly in international markets in the last two years. As seen in Figure 2.1 the dramatic decline in the price of jute (50% in FY86 and an expected 23% in FY87) caused the terms of trade to fall by over 20% in FY86. Raw jute prices are now at their lowest level since 1973, and the outlook for the future is not bright. A modest price increase is expected next year, but thereafter jute prices are expected to rise by less than 1% per year, implying a decline in real terms.1/ While other export prices are expected to display greater buoyancy than Jute, this will not fully compensate for jute's gloomy outlook. Thus, following a slight improvement next year, the terms of trade are expected to show a small but continuous decline well into the 1990s. This will make the transition to greater self-reliance in financing imports very difficult; it illustrates the urgent need to rationalize the jute sector (Chapter 3), and may require active exchange rate policy to ensure continual gains in competitiveness to compensate for the declining terms of trade. However the outlook for export prices should not be blamed for too much; while the outlook is certainly not optimistic, it is worth noting that even by 1990, the terms of trade will be slightly above the average for the decade of the 1980s as a whole. 1/ Detailed price projections and the outlook for the supply and demand for each commodity are available in: World Bank, Price Prospects for Major Commodities (in 5 Volumes), October 1986. Issues relating to jute sector are discussed in Chapter 3. -36- FIG. 2.2 TERMS OF TRADE, IMPORT AND EXPORT PRICE INDICES (FY81 = 100) IMPORT AND EXPORT PRICE INDICES 140- EXPORT PRICE INDEX 120- w 10000 80 IMPORT PRICE INDEX 63 FISCAL YEAR TERMS OF TRADE AND JUTE PRICE INDICES 180- 160- TTERMS OF TRADE INDEX C-- JUTE PRICE INDEX FISCAL YEAR -37- Table 2.6: FOREIGN EXCHANGE EARNINGS - HIGH CASE, FY86-FY95 Growth Rate Z p.a. Second Third Fourth FY86 FY88 FY90 FY95 FYP FYP FYP US$ million current prices --at constant prices- Traditional 511 590 632 842 -1.7 4.3 1.9 Jute and Jute Goods 417 460 478 55.2t -2.0 4.6 1.5 Others 94 130 154 250 0.5 3.0 3.6 Non-traditional 308 467 652 1608 22.2 13.8 9.3 Garments 131 187 257 720 - 11.3 12.0 Frozen Seafood 113 200 295 615 26.0 21.0 15.0 Others 64 80 100 273 21.5 5.4 10.0 Total Exports 819 1057 1284 2450 3.8 8.0 8.6 Service Receipts 260 275 309 430 2.5 -3.8 2.0 Transfers 586 601 650 810 17.9 1.1 - Workers' Remittances (555) (572) (619) (770) (n.a.) 1.5 - Total Earnings 1665 1933 2243 3690 4.1 6.8 5.7 Note: To obtain constant price (real) growth rates, commodities are deflated by their own price indices (FY81 prices). Services and transfers deflated by unit value of manufactured goods (MUV). Source: Staff estimates. 2.23 Foreign Exchange Earnings. Table 2.6 presents projections for exports and for remittances and service receipts. Traditional exports--jute, jute goods, tea and leather--are expected to grow slowly in volume terms, with a modest expansion in jute goods partly making up for stagnant raw jute exports. During the next three years, non-traditional exports are expected to overtake traditional exports for the first time. Garments and frozen seafood are expected to continue growing rapidly although not at the extremely high rates witnessed over the last few years. An important con- sideration here is the extent to which Bangladesh can share in an expanding world market for those products or instead has to take markets away from other exporters. The world market for garments is not expected to grow rapidly, but as seen in Table 2.7, Bangladesh's share in world trade remains sufficiently small that, even with stagnant growth in world demand, its share would remain well below 1% by 1995. World trade in frozen shrimp is cer- tainly more buoyant than for garments, but Bangladesh's share would nonethe- less have to rise from 1.1% in FY84 to about 3Z in FY95 to achieve the 15-20% volume expansion each year projected under the High Case. -38- Table 2.7: SHARE OF BANGLADESH'S MAJOR EXPORTS IN WORLD TRADE, FY81-FY84 (as percent of world trade) FY81 FY82 FY83 FY84 Raw Jute 75.3 93.1 84.9 83.1 Jute Goods 51.5 49.9 82.7 77.6 Tea 2.6 5.6 4.5 4.9' Garments 0.02 0.07 0.12 0.42 Frozen Fish 0.39 0.70 0.74 1.10 Source: GATT data base. Table 2.8: PROJECTED IMPORTS - THE HIGH CASE. FY81-FY95 (US$ million at current prices) FY81 FY86 FY90 FY95 Foodgrains 250 220 418 260 Petroleum and Products 503 342 324 658 Capital Goods 683 680 1069 1748 Other Consumption and Intermediate Goods 1097 1122 1617 2841 Total Imports 2533 2364 3428 5507 Sources: BBS and staff estimates. 2.24 Service receipts are expected to decline over the TFYP as a whole, partly due to lower interest earnings (caused in turn by lower interest rates), before rising again in the 1990s. The outlook for remittances, which remain the single largest source of foreign exchange earnings, is highly unpredictable despite their unexpected rebound in FY86. With continued low and uncertain world oil prices, it would be prudent to assume not much growth from this source in the future. Under the projections, the share of imports financed by remittances is expected to fall from 23.5X in FY86 to 18% in FY90 and 14% in FY95. 2.25 Import Requirements. Barsgladesh will continue to remain highly dependent on imports. As shown in Table 2.8, annual imports are expected to rise from $2.4 billion in FY86 to $3.4 billion in FY90 and $5.5 billion in -39- FY95. Foodgrain imports are projected to follow the pattern described in Table 2.3. Petroleum imports are expected to continue to decline for the remainder of the decade due to continued import substitution and low interna- tional prices. Capital goods will remain essential 'o economic growth, and will grow in accordance with investment growth. However, the projections assume a slight decline in the import intensity of investment--from 33% in FY81-87 to 30% in FY90 and 29Z in FY95--in accordance with the High Case trade and industrial policies, which would encourage the development of the domestic capital goods industry. Consumption goods imports are expected to grow slightly faster than consumption growth due to trade liberalization measures, and intermediate imports would grow slightly slower than industrial output growth, in accordance with progress in achieving backward linkages in industry. 2.26 The Balance of Payments. Table 2.9 summarizes the overall balance of payments. The current account deficit as a percentage of GDP remains in the 6.5% to 7.5% range, and the model projections have )een constrained to ensure that foreign exchange reserves remain adequate. On the assumption that foreign aid disbursements are available to fill the foreign exchange gap--i.e., that no commercial borrowing will be required--debt service obligations will not be a serious prublem. Following the repayments of commercial food loans and repurchases with the IMF in FY86 and FY87, the debt service ratio falls to an average of 21% for the remainder of the decade and thereafter drops gradually to FY95.1/ 1/ These debt service figures omit short-term debt (under one year maturity). Bangladesh prudently limits its short-term debt to trade financing. -40- Table 2.9: THE BALANCE OF PAYMENTS - THE HIGH CASE, FY86-FY95 (US$ million, current prices) SFYP Average FY86 FY87 FY88 FY89 FY90 FY95 Exports of Merchandise, f.o.b. 754 819 980 1057 1162 1284 2450 Imports of Merchandise, c.i.f. -2457 -2364 -2460 -2777 -3103 -3428 -5507 Trade Balance -1703 -1545 -1480 -1721 -1941 -2144 -3057 Services, Net -56 -125 -126 -118 -119 -122 -222 (interest payments) (110) (-145) (-128) (-130) (-132) (-134) (-216) Private Transfers, Net 512 5866 670 601 625 650 810 (Workers' remittances) (496) (555) (650) (572) (595) (619) (770) Current Account Balance -1247 -1084 -936 -1238 -1435 -1616 -2469 Aid Disbursements, Gross 1253 1306 1469 1638 1778 1949 2650 Repayments M&L -73 -117 -138 -149 -174 -190 -300 Food Borrowing -42 -82 -96 0 -13 -13 Other -1 -29 -42 -41 -34 -22 Other Capital, Net /a 81 90 -19 -87 -12 50 180 Overall Balance -29 84 238 123 110 158 61 IMF, Net 53 -3 159 -45 -30 -127 0 Changes in Gross Reserves (- = increase) -24 -81 -397 -78 -80 -31 -61 End Year Gross Reserves 333 476 873 951 1031 1062 1.420 (as months of imports) (1.6) (2.4) (4.3) (4.1) (4.0) (3.7) (3.0) Memorandum Items: C.A. Deficit as % of GDP 9.0 7.1 5.6 6.7 6.9 7.1 7.2 Debt Service Payments (excluding IMF) /b 192 335 411 292 330 342 516 Debt Service Ratio /c 12.3 20.1 19.5 15.1 15.8 15.2 14.0 Debt Service Payments (including IMF) /b 277 467 539 418 435 493 516 Debt Service Ratio /c 18.0 28.1 28.2 21.5 20.9 21.9 14.0 /a Includes errors and omissions. Tb Excludes debt of under one-year maturity. 7T Debt service payments as percent of foreign exchange receipts (exports of good3 and services plus private transfers). Sources: Bangladesh authorities and staff estimates. -41- [V. THE ROLE OF EXTERNAL ASSISTANCE 2.27 Bangladesh will continue to rely heavily on foreign assistance at least for the next decade. Table 2.10 suggests that about $5.4 billion in disbursements of foreign aid will be required during the remainder of the TFYP (FY88-90) in order to reach the High Case growth rates. This compares with disbursements of $3.9 billion over the last three years (FY84-86). This represents an increase of 40% in current prices and about 20% in real terms. For the Fourth Plan period, aid disbursements of almost $12 billion would be required. This represents a current price increase of 46% and 89% over disbursements in the TFYP and SFYP, respectively. Table 2.10: FOREIGN EXCHANGE REQUIREMENTS AND SOURCES, FY81-FY95 (US$ billion, at current prices) SFYP TFYP FFYP FYS1-85 FY86-87 FY88-90 FY91-95 -. ------period totals-------------- REQUIREMENTS Current Account Deficit Excluding Interest Payments 6.24 1.75 3.89 9.62 Interest Payments 0.53 0.27 0.40 0.90 Ahmortization /a 0.85 0.76 0.93 1.46 Increase in Reserves 0.12 0.48 0.25 0.39 Total 7.74 3.26 5.47 12.37 AVAILABILITIES Aid Disbursements 6.27 2.78 5.37 11.84 Grants (3.40) (1.30) (2.87) (5.75) Concessional Loans (2.87) (1.48) (3.00) (6.09) Other Capital Flows /b 1.47 0.48 0.10 0.53 Total 7.74 3.26 5.47 12.37 /a Includes repurchases wish the IMF. 7- Includes purchases with the IMF. Source: Bank staff estimates. 2.28 These figures imply that foreign aid disbursements would continue to flnance between 50% and 55% of import needs. This level of dependence, however, should not be interpreted in any way as a sign that progress is not being made in self-financing of imports through improved export performance. -42- Export earnings under the High Case would finance a growing share of imports- -from an average of 31% in the SFYP to 37% in FY90 and 44% in FY95. However, the growth of exports would be required to compensate for the declining role of remittances, and to substitute for non-concessional borrowing from the IMF and from other sources. 2.29 This level of foreign aid disbursement should therefore be regarded as an appropriate complement to the policy reforms adopted by the authorities. Indeed, without enhanced aid flows, the Government's structural adjustment program probably would not be feasible. Increased public resource mobilization through tax and public pricing reforms, for example, may be preclutded in the face of possibly declining private per capita consumption levels. More generous aid is therefore needed--but is it realistic? Table 2.11 illustrates levels of commitments and disbursements of food aid, commodity aid and project aid nat could generate these flows. Of course, there is a certain degree of fungibility among the different forms of aid, so these figures should not be interpreted as being precise. Figure 2.3 shows graphically these levels of cormmitments and disbursements on an annual basis up to FY95, and contrasts them with historical trends. With regard to the aggregate picture, two points are worthy of note: (i) Disbursements have remained roughly constant during the four year period FY82-85, but in FY86 and FY87 have grown as project implementation has shown improvements. Aggregate disbursements will need to continue to grow--by about 6% per year in real terms--in the coming years, if the High Case growth is to be achieved. The bulk of this growth, however, can come from faster utilization of the existing pipeline. (ii) Annual commitments have varied dramatically over recent years. A slight upward trend is observable in current ptvice terms, but much depends upon the starting point and the period considered. Comparing the most recent three year period--FY84-86, during which annual commitments averaged $1.73 billion--with the pre- vious three years--FY81-83, $1.67 billion--suggests that donors are willing to maintain real commitment levels about constant. For the remainder of the 1980s, real growth in overall commit- ments needed to achieve the required disbursement levels under the High Case is 2% per year. While this represents an increase over the recent historical trend, it is certainly not an unrealistic level of support in view of the Government's policy initiatives. -43- Table 2.11: FOREIGN AID - COMMITMENTS AND DISBURSEMENTS, FY81-FY95 (US$ million) Annual Averages Second FYP Third FYP Fourth FYP FY81-85 FY86-87 FY88-90 FY91-95 Disbursements Food Aid 240 236 298 307 Commodity Aid 427 396 562 742 Project Aid 553 755 928 1318 Total 1220 1387 1788 2367 From Pipeline as of July 1987 i220 1387 1108 403 From New Commitments - - 680 1964 Commitments Food Aid 267 255 280 305 Commodity Aid 425 457 557 756 Project Aid 1042 916 1149 1698 Total 1734 1629 1986 2759 Grants 785 763 958 1324 Loans 949 866 1028 1435 Sources: External Resources Division and staff estimates. -44- FIG. 2.3 BANGLADESH: AID COMMITMENTS AND DISBURSEMENTS (IN CURRENT PRICES) AID COMMITMENTS 3000- 2500- z o 2000Q -J00 b 500$ 1000 AID DISBURSEMENTS 3000- 2500 z o 2000 2150 -J00 . 1500| PA 93 PROJECT AID EJ COMMODITY AID -FOOD AID -45- 2.30 Project Aid. The starting point for an assessment of future disbur- sements must be the large pipeline--estimated at $4.7 billion in March 1987--of undisbursed project aid. Accelerating the rate of project implemen- tation is an important goal of the Government and is discussed in some detail in Chapter 4. The High Case projections assume that the ratio of annual disbursements to the beginning year project pipeline will continue to rise from about 17% in FY86 to 20Z by FY91. This results in a real increase in project aid disbursements of about 10% per year during the remainder of the TFYP period, even with no real increase in project aid commitments. As shown in Figure 2.4, the undisbursed balance of aid has grown sharply over recent years and is now equivalent to about 27% of GDP, or 75% of the total dis- bursea outstanding debt. This is too high. Raising the disbursement ratio to 20% by the early 1990s will bring down the undisbursed balance to about 16% of GDP by FY95. 2.31 The next few years, therefore, give Bangladesh a breathing space. Aid disbursements can rise fairly rapidly at least until FY90, even with constant project commitment levels; a current account deficit of about 7% of GDP can be comfortably financed if progress is made in project implementation. Thereafter, however, commitments would have to rise substan- tially (see Figure 2.3) if this level of current account deficit is to continue. In the judgement of the Bank staff preparing this report, this enhanced donor support is fully warranted if progress continues to be made in the policy environment. It is important, therefore, that over the next two or three years a preliminary investment analysis tbe undertaken for increased project aid commitments in the early 1990s. In this regard, a comprehensive public expenditure review is required. A first stage of such a review will be undertaken over the next twelve months with assistance from IDA. -46- FIG. 2.4 BANGLADESH - AID FLOWS (FY73 - FY87) (AS PERCENT OF GDP) COMMITMENTS, DISBURSEMENTS AND CURRENT ACCOUNT DEFICIT 20- COMMITMENTS 100 cz DISBURSEMENTS 0 z C.A. DEFICIT -10 FISCAL YEAR DISBURSED OUTSTANDING DEBT AND UNDISBURSED PIPELINE 40- o- UITA / mu- 3 DISBURSED 0A C DEBT 30 I... 20- z Li 10Y UNDISBURSED BALANCE FISCAL YEAR -47- 2.32 Commodity Aid, Higher levels of commodity aid have been recommended for some time now. Commodity aid is not ullique to Bangladesh, but it is not for most donors a type of aid that can be handled through routine procedures. Several important commodity aid donors are finding it difficult to justify commodity aid programs, some because of disbursement problems that seem to undercut the argument that this form of aid is urgently needed and others because they cannot make a sufficiently strong case that the economic policies implicitly supported by this type of aid adequately address the issue of poverty. It is important that these and any other issues that are negatively affecting commodity aid commitments be addressed and solutions sought that meet the needs of both donors and Bangladesh."/ IDA's approach is to provide exchange for essentially any imports procured under interna- tional competitive bidding procedures in the context of an agreement with the Government on a range of either sectoral issues or wider ranging economic policy and management reforms. For the coming years it is recommended that commodity aid commitments grow by 5% per year in real terms. A shift towards these quick-disbursing funds untied to specific investments is necessary to support the Government's new emphasis on O&M expenditures and to provide foreign exchange urgently needed for private importation of intermediate and capital goods. 2.33 Food Aid. While in many ways equivalent to commodity aid, food aid has a particularly important and distinctive role to play because of its links to nutrition and to employment creation and social welfare programs. It would be unfortunate if progress towards foodgrain self-sufficiency resulted in a reduction of food aid not compensated for by other forms of commodity or program assistance, especially during a period in which the Government was making serious efforts to redirect food distribution to those needy population groups who cannot be reached through the ration system. Such a redirection of the PFDS towards those who lack the purchasing power to secure their nutritional needs from the market is to be welcomed for equity and nutritional reasons; but it will result inevitably in the reduction of "counterpart fund" generation. In the immediate future an increase in food aid would be appropriate. Stocks are at low levels and food availability has declined (para. 1.31). Increased food aid could indeed play an important economic role, helping to stabilize the macroeconomy while the Government undertakes its structural reform program. 2.34 Aid Commitments for FY88. Table 2.12 presents a disaggregated pic- ture of commitments and disbursements that are judged to be appropriate over the coming years. There are many uncertainties involved and these should be judged as indicative suggestions rather than precise recommendations, Overall commitments for FY87 fell below expectations due primarily to problems associated with project preparation. It is important that FY87 1/ A Commodity Aid Utilization Study, financed by UNDP, is to be completed in the first part of FY88. -48- therefore not be regarded as the base on which to judge future aid increases. For FY88, total commitments of $1.8-2.0 billion are required to generate the needed disbursements in later years. This represents a current price increase of 14% and 11% over FY86 and FY87 commitments, respectively, but still only restores the commitment level of FY85. About 30% of this amount, $500-600 million, is needed in the form of quick disbursing commodity aid. Table 2.12: AID PIPELINE, FY81-FY90 (USS million, current prices) 1 SFYP - TFYP I FY81 FY82 FY83 FY84 fY85 Average FY86 FY87 FY88 FY89 FY90 Average | FOOD AID Commitments 203 221 248 285 240/bI 240 | 273 237 240 280 320 I 270 Disbursements 194 231 255 277 244 | 240 | 203 269 273 303 319 | 273 Closing Pipeline /a 59 49 42 51 56 | 51 I 126 94 61 38 39 | 72 COMMODITY AID I Commitments 355 513 474 528 253 | 425 | 409 505 540 560 570 | 517 Disbursements 393 420 452 439 432 | 427 | 393 400 535 550 602 i 496 Closing Pipeline /a 361 454 477 566 412 | 454 | 428 533 538 548 516 I 513 I PROJECT AID I I I I Commitments 1001 1189 800 882 1340 | 1042 | 924 907 1055 1189 1202 | 1055 I - -'0 Disbursements 560 589 638 552 591 | 586 I 710 800 830 925 1028 | 859 I Closing Pipeline /a 2444 3044 3206 3536 4026 | 3251 | 4632 4739 4964 5228 5402 I 4993 TOTAL AID Commitments 1559 1923 1523 1695 1833 | 1707 | 1606 1652 1835 2020 2069 | 1836 Disbursements 1147 1239 1345 1268 1267 | 1220 I 1306 1469 1638 1778 1949 | 1628 Closing Pipeline /a 2864 3547 3725 4153 4494 I 3757 | 5243 5426 5623 5865 5985 ; 5628 Memo Items: | -------- I TOTAL AID IN 1984/85 PRICES I I Commitments 1479 1833 1481 1685 1833 1 1662 | 1508 1447 1576 1718 1743 | 1598 Disbursements 1088 1181 1308 1260 1267 | 1221 | 1226 1287 1407 1512 1642 | 1415 Closing Pipeline 2717 3381 3623 4128 4495 I 3669 | 4922 4753 4829 4988 5042 I 4907 /a Represent total available aid at the beginning of the year less disbursements during the year. /b Some donors--Canada, U.S., WFP--commit food aid on a multi-year basis. Commitments shown for FY85 and later years are the annualized levels of total commitment. Sources: External Resources Division and staff estimates. -50- V. UNCERTAINTIES IN THE ANALYSIS 2.35 This chapter has described a High Case set of economic projections. It has assumed good progress in the Government's adjustment program, moderately generous foreign assistance, and the absence of any further sharp declines in Bangladesh's terms of trade or any serious worsening in protec- tive bai:riers facing Bangladesh's exports. In view of the political and social uncertainties in both Bangladesh and in donor and importing countries, it is not possible to take these projections for granted. The Base Policy Case 2.36 Table 2.13 contrasts the High Case projections with the "business-as- usual" Base Case. The latter assumes no serious progress in domestic resource mobilization or in improving the efficiency of investment. Annual investment under the Base Case is therefore 12% lower than under the High Case by FY90 and 24% lower by FY95. Aid commitments are assumed to be the same in aggregate terms under both cases as is the external environment, so the difference in performance is due to domestic policy factors alone.l/ The composition of aid commitments is assumed to be slightly different, with commodity aid in the 1990s increasingly substituting for food aid, which is less needed. Total disbursements under the High Case, however, would be slightly higher due to improved project implementation. The current account deficit as a percentage of GDP would be higher under the Base Case during the 1990s, and would have to be financed by commercial borrowing, leading to a higher debt service ratio. However, since Bangladesh's access to commercial borrowing is limited, most of the adjustment to the balance of payments disequilibrium would take place by lowering overall growth. 1/ In reality, in the absence of policy progress aid commitments would likely be lower. They are assumed unchanged from the High Case here in order to allow the effects of policy reform and aid flows to be disentangled. -51- Table 2.13: COMPARISON BETWEEN "HIGH" AND "BASE" POLICY CASES FY81-85 FY88-90 FY91-95 High Base High Base ------------annual real growth rates---------- Gross Domestic Product 3.9 5.1 3.9 5.1 4.0 Agriculture 2.8 3.4 3.2 3.6 3.0 Non-Agriculture 4.9 6.4 5.2 6.2 5.3 Investment 3.8 7.8 7.0 5.7 4.1 Consumption 4.2 4.4 4.4 4.8 3.4 Exports 3.8 7.2 6.7 8.6 6.5 ----------------averages---------------------- Debt Service Ratio 18.7 21.7 15.9 14.2 16.0 ICOR 4.4 3.0 3.9 3.2 3.7 FY87 FY90 FY95 High Base Highi Base ---------- US$ per person FY86 prices--------- Gross Domestic Product 151.4 162.2 156.2 188.7 170.0 Investment 19.4 21.8 19.1 26.1 19.9 Government Expenditure 29.8 37.6 34.2 42.7 39.3 Domestic Revenue 13.5 18.3 15.2 23.4 17.1 Aid Commitments 16.4 16.6 16.0 19.9 19.9 Aid Disbursements 12.5 15.6 15.0 16.2 15.5 Foodgrain Consumption (kg per yr) 161 167 166 169 166 -----------------Percent of GDP--------------- Investment 13.5 14.8 13.5 15.8 13.5 Exports 5.4 5.6 5.4 7.1 5.4 Current Account Deficit 9.0 7.1 7.1 7.2 8.4 Foreign Debt /a 43.6 40.2 42.7 42.8 50.7 /a Includes use of Fund credit. Source: Staff estimates -52- 2.37 By FY95 the total size of the economy under the Base Case would be about 11% smaller than under the High Case; per capita incomes would be $19 per year lower (in FY86 prices); investment per capita, $6 lower; and foodgrain availability lest, plentiful despite higher food imports. Foreign debt under the Base Case vwould rise to over 50% of GDP by FY95 (in comparison with 43% under the High Case), due partly to a lower GDP and parl:ly to higher borrowing. Under the Base Case, the economy could only afford to grow at about 4% per year--not bad by international standards, but certainly not high enough to make serious progress in alleviating poverty. Over the longer term--the period after 1995--the gap between performance under the High and Base Cases would be even greater. The effects of an undistorted versus a distorted incentive environment, for example, will be cumulative. The Government's present policy initiatives, while Bangladesh is still not "locked in" to an inefficient production structure, offer an opportunity for determining the course of development for the next fifty years. Foreign Assistance and the External Environment 2.38 The mediocre performance achieved under the Base Case could occur even if the Government were fully successful in implementing its policy reform package. This would happen, for example, if aid commitments remained at their present levels (in current price terms). Even with an improved policy environment, Bangladesh needs to be able to sustain a current account deficit equivalent to 6.5-7.5% of its GDP. Without increased aid, its sus- tainable deficit would continuously fall. If, for example, Bangladesh were required to limit its deficit to say 5% of GDP, it could probably only afford to grow by about 3.5% per year. 2.39 The role of donors would become even more significant in the event that the international marketplace deteriorates for Bangladesh. If for example, the Government is unable to negotiate continually rising quotas for its garment exports, or if the price of jute were to fall further, increased commodity aid disbursements would be urgently required to support the Government's efforts to accelerate the process of development and poverty alleviation. -53- PART II: POLICIES FOR HIGHER GROWTH Chapter 3: PROMOTING EFFICIENT PRIVATE-ORIENTED GROWTH 3.01 Reaching the goals that Bangladesh has set for itself will depend first and foremost on the performance of the private sector. The primary role of the Government will be to establish a supportive but unbiased incen- tive system and to ensure that infrastructure and services are adequate and conducive to efficient private growth. 3.02 Private investment stagnated in FY86 and only modest growth occurred in FY87. But over the coming decade, it is estimated that real private investment will have to rise from 6.6% of GDP in FY86-87 to 8.0% during the first half of the 1990s, if the High Case scenario is to be achieved. The Government is committed to establishing an environment in which private investment will not only grow, but also in which the efficiency of investment will be raised. This chapter describes some of the key components of such a strategy. The chapter is divided into four sections. Section I covers issues in agriculture, while Sectior II describes the Government's policy agenda in the industrial sector. Section III addresses the special and difficult issues facing the jute sector, which straddles agriculture and industry. Finally, Section IV explores the role of the financial system in promoting efficient private-oriented activity. The term "private-oriented" includes those state enterprises which are expected to compete in the market place and which should be held accountable to commercial standards. I. ISSUES IN AGRICULTURE POLICY 3.03 Agricultural production has grown at a rate of about 3.0% per year during the period FY80-85, while value added in agriculture has grown by about 2.8% per year. Foodgrain production has been the highest priority, and has grown at a faster rate, by about 3.2% per annunt. But despite such progress, recent developments in agriculture are cause for concern. Overall production growth in FY86 and FY87 averaged less than 2.5% each year, and even this rate of growth has been achieved mainly as a result of good weather benefiting the traditional aman rice crop. In contrast, the more input dependent crops such as boro rice and wheat--which have been the prime engines of expansion in earlier years and which still have great potential-- have lost some of their momentum. If such trends persist, agricultural growth over the medium term could slow to about 2.0-2.5% per year, instead of a possible 4.0%, the Government target for the TFYP. The growth rate assumed under this reDort's High Case is 3.6% per year. 3.04 If potential growth rates in agriculture are to be met and if other related objectives--agricultural diversification, adequate nutrition and rural employment growth--are to be achieved, difficult issues will have to be addressed in the near future. This section suggests that progress is espe- cially important in four areas--improving water development and management, promoting new initiatives in rainfed crop development, encouraging investment in fisheries, and strengthening agricultural support institutions. A fifth important area--pricing policy in agriculture--is discussed in Chapter 5. No simple solutions are readily available in some of these areas, and additional study will be required. In this regard, the Government, IDA and other donors will be undertaking a review of these and other issues in the second half of FY87. Water Development 3.05 Water resources are abundant in Bangladesh and provide the potential for rapid growth of agricultural output. Water control is required in the wet season and irrigation in the dry season. Between May and October, one- third of cultivated land is deeply flooded (over 3 feet of flooding), and another third is shallow flooded (less than 3 feet). Coastal areas are subject to storm surges, and annual rainfall is erratic. During the dry season (November-April), there is little rainfall, and some 60% of cultivable land area remains fallow. 3.06 All types of water development have potentially high economic rates of return.l/ However, drainage and flood control (DFC) facilities are generally ranked lower than irrigation because of lower returns, longer gestation and little or no prospects of cost recovery.2/ Similarly, minor groundwater irrigation requires smaller initial public outlay and subsequent O&M expenditures. DFC development has generally concentrated on small schemes (combined with irrigation where feasible) on lands which are shallow flooded or medium low lands (up to 6 feet of flooding), enabling farmers to grow transplant HYV aman (main monsoon season) rice instead of low-yield broadcast local variety aus (early monsoon season) rice and jute, or deep- 1/ See: National Water Plan, Draft Final Report, July 1985. There are five principal existing modes of water development: (a) drainage and flood control (DFC); (b) drainage and flood control with irrigation (DFCI); (c) major surface-water irrigation, requiring primary pumping (ppI); (d) minor irrigation from surface water using low-lift pumps (LLPs); and (e) minor irrigation from groundwater (GWI), using various kinds of tubewells, hand-tubewells (HTWs) shallow-tubewells (STWs) and deep-ttubewells (DTWs). 2/ Cost recovery in DFC projects is a complex issue. Protection from flooding is considered a government responsibility, and benefits vary from one plot to another depending on land elevation. The Government's current view is that cost-recovery on DFC projects is not feasible, but given the large resources allocated to DFC, potentially high returns to private individuals, and need for public resource mobilization, land benefit taxes may be justified and necessary in the future (see Chapter 5 for further details). -55- water broadcast rice. Irrigation development has focussed primarily on minor works, using tubewells to tap the shallow aquifer and surface water pumps along rivers to enable farmers to grow boro (dry season) rice and wheat, inotead of traditional low-yield dry season oilseeds and pulses (or leaving land fallow). 3.07 Despite major investment in water development--$1.2 billion over the last decade, accounting for 55% of development expenditures in agriculture 1/ and 13.5% of total development outlays--there remains a huge untapped potential. Drainage and flood control now covers about 15% of inland cultiv- able areas, compared with 5% a decade ago and 35-40% potentially suitable area for low cost DFC. Irrigation covers no more than 22% of cultivated area, compared to 10% a decade ago, and a potential of 50% (using shallow aquifers and small surface water schemes), and up to 80% if barrages and/or unexplored deep aquifers under possible artesian pressure are found techni- cally and economically feasible. Table 3.1 illustrates the dramatic effects on output and employment generation of combining modern techniques with irrigation facilities in both the wet and dry seasons. 3.08 The water sector continues to receive high priority. For the Third Five Year Plan period the Government proposes to allocate the same proportion of total development spending, 13.5%, to the sector. Some 800,000 ha of DFC facilities (9% of cultivated land) and 1.5 million ha of irrigated facilities (17% of cultivated land) would be added. DFC and major irrigation, imple- mented by the Bangladesh Water Development Board (BWDB) would account for about 35% of investment and minor irrigation, implemented mainly by the Bangladesh Agricultural Development Corporation (BADC), for about 65%. These are appropriate goals; the draft National Water Plan, which was completed in July 1985, but which still needs to be operationalized, provides a good framework for their implementation. Achieving these targets and, more importantly, generating the related growth in agricultural output will require progress in two related areas. 1/ Its indirect share has been even larger, since many other expenditures in the sector--research, extension, fertilizer--have been geared towards irrigated crops. -56- Table 3.1: EFFECTS OF IRRIGATION AND MODERN INPUTS ON PRODUCTION AND LABOR ABSORPTION Crops and Labor Fertilizer No. of Times Varieties Yield Rate /a Use /b Use /b Irrigated /b (kgs. cleaned (days per (nutrient rice per ha) hectare) kgs. per ha) Early monsoon rice (aus) Local variety 827 143 22 nil HYV 2,048 198 98 3.0 Monsoon rice (aman) Local variety 1,163 125 29 nil HYV 1,961 163 79 0.9 Dry season rice (boro) Local variety 1,554 207 9 3.6 HYV 2,734 242 140 7.3 /a Averages for 1980-85, compiled from official statistics published by the Bangladesh Bureau of Statistics. /b Averages for 1970-82, compiled from the International Fertilizer Development Center. Source: Mahabub Hossa.Ln, Technological Change and Factor Productivity in Bangladesh Agriculture, International Food Policy Research Institute, September 1986. 3.09 First, implementation of the minor irrigation program must be improved. The expansion of minor irrigation has been the major engine of development over the last decade, accounting (in combination with increased use of HYVs and fertilizers on irrigated land) for over 60% of crop produc- tion growth. It was facilitated by a rapid growth in fieldings of shallow tubewells by private dealers in the early 1980s. The last two years, however, have seen a serious slump in sales due to a combination of factors, including difficulties in farmers' group formation, inadequate groundwater information, lower credit availability, a lack of clarity in the relative roles of the private and public sector, uncertainty concerning pricing and rental policy, and reduced incentives to farmers due to relatively lower output prices. While the solutions to these problems are not clear-cut, it seems clear that the institutional weakness of BADC, which retains a virtual monopoly for all irrigation equipment rentals and sales except shallow -57- tubewells (and which carries very large unsold 3tocks of equipment), will need to be addressed, either by privatization of its functions, or by a major improvement in its operations. In addition, subsidies on sales and rentals of equipment need to be reduced to improve efficiency and resource mobilization. 3.10 Second, the efficiency of investment mustsbe raised. Average invest- ment costs of water development over the last decade--about $300 per acre in 1985 prices--are not high by international standards, but in view of the very low costs of minor irrigation--$100-$200 per acre at efficient utilization rates--are much higher than earlier expected. The average command area for irrigation equipment is only about 35% of potential, indicating great inefficiency; raising this to, say, 45% could increase the irrigated area by as much as 26%, or 0.5 million ha at relatively low cost. But achieving this potential is a formidable task which will require major institutional support to the Irrigation Management Program (IMP)--administered by the Bangladesh Rural Development Board, BRDB--to reach some 300,000 farmers. 3.11 DFC and major irrigation investments have also not reaped the rewards that had been intended; their effective contribution to crop production growth has been low and rates of return may have been only 8-12%, instead of their potential of over 30%.1/ This is partly due to slow project implemen- tation and inadequate attention to maintaining and operating existing assets. For the coming years, it is important that a prioritization of expenditures be clearly established. This will involve assessing trade-offs among new projects, rehabilitation of existing assets and O&M expenditures. Rainfed Crop Development 3.12 The extensive and high profile work being undertaken in the water sector and the lack of corresponding efforts on rainfed crops by the agricul- tural development agencies, tends to bias attention and expenditure towards the irrigated crop sectors. As a result individual crop yields for most rainfed crops have remained virtually stagnant over the past decade and rainfed crops are declining in acreage because of low profitability and competition with irrigated food crops. 3.13 The potential for progress is, however, impressive. The introduction of input responsive high yielding varieties (HYV) for wet season cropping can double average yields. While the proportion of cereals produced using HYVs 1/ It is estimated that DFC and major irrigation have contributed about 20% to total crop production growth, despite accounting for over half of all development expenditure in water development. The estimate is based on incremental production growth of HYV transplant aman and estimated incremental production in BWDB irrigation project areas (mission estimates). -58- has risen from 8% to 16% over the last decade, the potential is estimated at 50% under existing conditions (and 80% with full development of flood control and irrigation). In addition, there is scope for crop intensification through dry season (or upland) cultivation of low water using crops, espe- cially during the winter and early summer months. Realization of these potentials requires an expanded emphasis on research and extension services on rainfed areas, and on developing and disseminating improved varieties and practices for non-cereal crops (pulses, oilseeds, vegetables, fruits as well as sugarcane, and cotton). Their potential for growth without requiring expensive investments in irrigation are high--the rapid past growth of wheat cultivation, 50% of which is non-irrigated, is an example. 3.14 Fertilizer use has nearly tripled during the past decade, from 55 kg/ha to 146 kg/ha. There is high complementarity between fertilizer, HYV and irrigation use, but at least one-third of the expansion in fertilizer use could be attributable to diffusion of fertilizer use on rainfed local variety crops. The potential for further rapid expansion is high, since one-third to one-half of local variety crops (covering some 80% of rainfed crops) are still not treated with fertilizer, and average fertilizer application rates are half the recommended levels. Research and extension activities need to redirect efforts towards efficient fertilizer use on rainfed crops and areas, including addressing local agroeconomic constraints and micro-nutrient deficiencies. Supply of good quality seeds may also be a major constraint, since only 5% of seed ased by farmers are certified, and only one-third of desirable quality. Private investment in the seed industry also requires much greater policy support. Fisheries Development 3.15 The natural resources to support a growing fisheries sector are abundant. More than 1 million ha of perennial inland water bodies, and over 3 million ha of flood plains (30% of total area of Bangladesh), provide an extensive and highly fertile area suited to inland fish productiGn, while some 4 million ha of coastal and offshore waters contain productive areas and fish stocks to support marine fisheries. Despite such resources, fish production has grown at only 3% per year since 1980. 3.16 Inland fisheries account for about 580,000 tons, or 80% of total fish production, most of which comes from capture fisheries in open waters. Open water fisheries are not expected to support a substantial increase in inland fish production because of overfishing and depletion of natural stocks, and continued expansion of DFC facilities. The biggest potential exists for intensive aquaculture in ponds (now 4% of total production), but more impor- tantly in larger inland water bodies including irrigation tanks, "baors" (old river beds), and independent and smaller drainage basins with controllable water regimes which have been formed as a result of DFC and irrigation projects. The combined water areas of these water bodies is at least 200,000 ha (and potentially up to 500,000 ha), capable of producing about 100,000 tons of fish annually. Intensification of pond aquaculture also offers large -59- scope for growth. Current yields are very low (300-700 kg per ha), and can be feasibly quadrupled with application of modern techniques (fertilizers, feed, aeration), providing incremental production of 100-300,000 tons per year. 3.17 However, there are some major constrainqs to realizing this potential. Larger inland water bodies would need stocking with fingerlings and hence investment in hatcheries; private investment would need to be fostered by leasing of public water bodies; and conflicts with other users of water (jute retting, irrigation during the dry season) are potentially serious. Pond fisheries also have similar problems, including absentee ownership, multiple uses, and short-term leases of public ponds. 3.18 Coastal brackish water shrimp farming is already developed and offers excellent scope for rapid growth based on intensive aquaculture practices and favorable export demand. A successful conversion of current low-yielding trapping activities into higher-yielding extensive and semi-intensive opera- tions would raise export quality shrimp production fourfold. The major constraint to this is the conflict with rice farming in coastal areas, and related Government water management (and leasing) policies regarding saline water intrusion in coastal DFC polder areas. Public investments will also be required in polder development, to benefit highly profitable shrimp farming, and cost recovery measures are therefore appropriate. 3.19 In order to support such a basic technological transition from cap- ture fishing to intensive aquaculture techniques, and to manage improvements in policies and public investment, the Directorate of Fisheries (DOF) will need considerable strengthening.l/ The Third Five Year Plan recognizes this need and conceives the establishment of an autonomous Aquaculture Development Board. While this may be a helpful development, it will need to be comple- mented by staffing and manaaement improvements to facilitate more effective policy analysis and investment planning. Slow progress in these areas is currently causing delays in obtaining external assistance to finance required investments in the sector. The Efficiency of Agricultural Institutions 3.20 As the agricultural sector grows and diversifies, the role of the public institutions charged with serving the sector also grows and becomes more complex. These institutions must continuously evolve so that farmers and fishermen are given the highest possible service at the lowest cost. There is currently considerable scope for improving efficiency of the six major agricultural support institutions: BWDB (surface water), BRDB (cooperatives, credits, Irrigation Management Program), BADC (input supply), 1/ See for example World Bank: Institutional Improvement in the Department of Fisheries, draft report, December 1986. -60- research institutes (Bangladesh Agricultural Research Council and its affiliates), the extension service, and the Directorate of Fisheries. Examples of inadequate services are a weak cooperative system which has failed to resolve difficulties in farmer group formation and input supply (see paras. 7.07-7.10), inefficiency in sales and servicing of irrigation equipment, reduced effectiveness of extension and research services, low efficiency of water use, and a credit system which reaches only 15% of farm households and where the majority of better-off farmers don't repay their debts.l/ The Government has recognized the need for institutional strengthening. For example, it has begun studies on the reorganization of BWDB and BADC, initiated reforms of the agricultural credit system, and is committed to strengthening the irrigation management program of BRDB. An analysis of the appropriate role for BRDB is also expected to be undertaken in the near future. In this process emphasis should be given to defining priorities and desirable shifts in current activities, and identifying managerial and staffing constraints (in policy, investment planning and implementation), and in providing an appropriate incentive framework for staff motivation. II. INDUSTRIAL POLICY 3.21 The industrial and manufacturing sectors in Bangladesh are modest in size, accounting for only about 15% and 9% of GDP, respectively, in FY86. Rapid growth, especially in labor-intensive exports and efficient import- substitution industries are essential to provide adequate employment oppor- tunities and foreign exchange earnings. During FY80-85, significant progress was made in shifting to a more efficient and faster pattern of industrial growth, and the actual rate of growth of about 5% per annum would have been considerably higher, but for the stagnant jute sector. Recent growth has been led by relatively new labor-intensive exports such as garments and shrimp and leather processing, as well as efficient import substitution in chemical fertilizers, basic metals (e.g., ship-breaking) and food processing. Moreover, most of the growth was led by private investment, which doubled between FY80-85 (Table 3.2). Major industrial policy reforms since FY81, including more realistic exchange rates, import liberalization, and improved support for the private sector through increased credit flows, reduced con- trols on private investment, and a reduced role for the public sector (includ- ing denationalization) have been responsible for this improved performance. 1/ The issues in agricultural credit are discussed in Section IV-of this chapter. -61- Table 3.2: LARGE AND MEDIUM SCALE MANUFACTURING OUTPUT, INVESTMENT, AND EXPORTS, FY80-FY86 Est. Annual Growth Rates FY80 FY85 FY86 FY81-85 FY86 Tk billion, 1974 rprices ----- % per year- Manufactured Output 5.1 6.6 6.7 5.3% 1.0% (FY74 prices) Private Investment in 0.5 1.1 0.8 17.1% -26% Manufacturing (Tk billion, FY74 prices) Public Investment in 1.0 0.7 0.9 -6.9% -28% Manufacturing /a Nonrtraditional Exports 130.0 310.0 350.0 19.0% 12.9% (US $ million) /b (as % of total exports) (18%) (33%) (43%) .. /a Three-year averages to even out large fluctuation due to lumpy fertilizer plant investments. /b Includes processed shrimp and leather exports. Sources: BBS and Bank staff estimates. 3.22 Manufacturing growth has slowed down considerably in FY86, but this reflects primarily the problems encountered in the traditional sectors--jute, textiles and engineering.l/ In addition to addressing the problems in these sectors, it will be important for the Government to continue its past industrial policy reforms in several major areas, in order to accelerate potential industrial sector growth to at least 7-8% per annum, and non- traditional exports to about 30% per annum over the next decade. These relatively high rates are achievable given the low starting base, and neces- sary if some progress is to be made to alleviate the country's severe employ- ment and foreign exchange constraints. 3.23 Last year's report discussed recent developments and policy initia- tives in the industrial sector in some detail. Policy recommendations--m-ary 1/ These are discussed in paras. 3.34-3.38 below, as well as in the separate Section III on jute. -62- of which had already been identified by the Government--were grouped under five headings: (a) export policies and administration; (b) the structure of protection; (c) the investment sanctioning system; (d) public sector industrial enterprises; and (e) the industrial credit system. This section briefly reports on progress since that time and suggests areas in which complementary action is needed.l/ Export Promotion Policies 3.24 Over the last eighteen months the Government has taken a series of actions to encourage export growth: - the real exchange rate has depreciated (see Chapter 1) and XPB benefits 2/ have been extended to more products to increase export competitiveness; - three task forces have been set up to evaluate export financing, backward integration and export credit guarantees; - a Duty Exemption and Drawback Cell has been established, which over time is to develop and implement more efficient systems for duty free imports for exporters; - the internal quota allocation system for garment exports has been revised to eliminate its shortcomings, and for FY87 allocations were issued promptly; and - the orders determining the role and function of the Chittagong Export Processing Zone Authority were amended to give the Zone Authority greater autonomy and facilitate investments in the Zone. 3.25 Despite these encouraging developments, Bangladesh still lacks an efficient system of export administration that can react swiftly to the changing needs of exporters. Lack of a substantial domestic resource base means that most of the non-traditional exports will require significant amounts of imported inputs so future growth will depend crucially on the efficiency and flexibility of the duty drawback system and import rules for raw materials. For example, in order to maximize the benefits from rapid growth of garment exports to the rest of the industrial sector, backward linkages from this activity need to be developed. But despite progress, development of such linkages are still hampered by the lack of a simple, 1/ Issues of industrial credit are discussed in Section IV of this chapter. 2/ Exporters are permitted to sell foreign exchange earnings in the secon- dary market, thus earning more taka revenues. -63- well-defined system for duty and restriction free importation of raw materials for fabric, yarn and accessories industries. Delays in issuing circulars to facilitate supply of fabric and accessories to local firms to the garment industry are currently holding down value added in this sector. Export diversification will soon require similar administrative capabilities for a larger number of products.. The Structure of Protection 3.26 Tfhe Government is in the process of implementing a medium-term tariff and import regime reform: - to rationalize the tariff structure in order to reduce the wide variation of tariffs and ensure that different products have broadly similar and appropriate protection; - to gradually replace Quantitative Restrictions (QRs) and other administrative controls on imports with tariffs; and - to move towards unification of the dual exchange rate system by transferring foreign trade transactions from the official to the secondary market. 3.27 Tariffs. Anomalies in the tariff structure are especially acute in textiles and steel and engineering which combined account for over half of value added in the manufacturing sector. The Government has therefore developed a phased three-year program (FY88-90) to reduce net protective tariffs in these sectors (taking into account sales taxes, custom duties, development surcharges and import license fees). Protection would be lowered to a range of 10-75% from approximately 25-100% in textiles and 2.5-200% in steel and engineering. A longer-term program of further tariff rationaliza- tion will also be carried out in other subsectors, based on ongoing effective protection studies.l/ 3.28 Quantitative Restrictions. After changing to a negative and restricted list of imports in FY86, the Government's FY87 Import Policy Order liberalized imports further by shortening the negative and restricted lists. Restrictions on 140 items have been lifted, including diesel engines, trucks and buses, and inputs for the electric goods industry. The number of restricted spare parts items for the jute and textile industries has been reduced by 537. In terms of four digit ITC categories, the negative list has been reduced from 389 categories to 321 categories (out of a total. of 1,192), 1/ The Trade and Industrial Policy (TIP) project, financed undsr IDA's Fourth Technical Assistance Credit has recently completed a series of sub-sectoral studies recommending a program of industrial policy adjustments. -64- a reduction of 18%. Finally, part of the restricted list pertaining to commercial importers has been eliminated. However, the restricted list continues to limit the import of certain raw materials to industrial users only, therefore still penalizing thousands of small and cottage industries which under a freer system would be able to import their needed raw materials indirectly through commercial importers. The Government hopes to make fur- ther progress on this issue in FY88. 3.29 Unification of the Dual Exchange Rate System. The Government has continued to transfer foreign trade transactions from the official to the secondary market. The share of exports in the secondary market increased from 27% in FY85 to 53% in FY86 and an estimated 73% in FY87. As a result, raw jute, tea and wet bl>.: leather will be the only exports transacted at the official exchange rate. Similarly, the share of imports coming through the secondary market increased from 26.1% in FY85 to 28% in FY86 and an estimated 42% in FY87. Following changes announced this year, all non-government imports, except those financed by foreign aid or through barter arrangements, will come through the secondary market. The major items imported through the official market will be foodgrains, fertilizer and certain capital equipment for officially sponsored projects. These policies have resulted in a narrow- ing of the gap between the official and secondary exchange rates--from 15% in FY85 to an estimated average of 7.5% in FY87. 3.30 While significant rationalization and liberalization has therefore taken place in the system of protection, the magnitude of restrictions and the variance of tariff protection are still very extensive. Some industries continue to suffer as a result of the tariff system. The engineering sector is an example here, where tariffs are much higher on inputs than on output. Some activities on the other hand enjoy too much protection, thus reducing incentives to domestic producers to improve efficiency. Other distortions include the restriction limiting imports of many raw materials to registered industrial firms, which sometimes leads to the formation of firms and the importation of machinery just to be able to import these products to sell in the domestic market. Formation of these "industrial fronts" wastes scarce resources and will only get worse as the investment licensing system is liberalized (para. 3.32). A final problem stems from the remaining extensive import bans, which are causing large-Scale smuggling and thus depriving the Government of an important source of revenue as well as distorting the desired pattern of protection. 3.31 In view of these problems, it is suggested that the Government act boldly to: - increase the speed at which import bans are eliminated and replaced with tariffs. Given the magnitude of smuggling, this shift would also compensate for revenue losses due to tariff seductions; - eliminate the restriction on the importation of raw materials so as to allow them to be imported by commercial importers as well; and -65- - rationalize the tariff system more rapidly. Investment Sanctioning 3.32 The investment sanctioning system was significantly liberalized in FY87 when the Government issue(i a revised industrial policy which clearly defines the roles of the public and private sectors and lifts almost all restrictions on private investment. Specific changes are: (a) The old Investment Schedule which prescribed to priority sectors the quantity of investments that should be undertaken in each of these sectors,l/ was replaced by a new Schedule which is indica- tive only, containing a set of general guidelines for assisting investment decisions and omitting quantitative specifications on additional capacity. (b) The Revised Industrial Policy reserves only seven industries for the public sector.2/ In addition, the Government has issued a short list of discouraged industries, in which there are either environmental constraints (e.g., deep sea trawling) or very serious over capacity (e.g., jute carpets), where prior permission is required. All other industries (125 out of a total of 144) are now treated a3 free sectors which do not require prior approval if the investments are funded from investors' own resources. (c) The requirement that all investments in industries using more than 20% imported inputs must be approved by the Investment Board has been relaxed by increasing the threshold to 50%. (d) Currently when financial institutions give term loans for industrial projects, the projects are considered "sanctioned." However, there are size limits on the financial institutions' sanctioning authority. These size limits have been increased significantly up to US$1 million £or commercial banks and up to US$2 million for the development finance institutions (DFIs), as a part of the revised industrial policy and will continue to be increased over time. Approximately 90% of investments 1/ Investment targets were generally unrealistic and were not binding on private investors. Their primary drawback, however, was that financial institutions tended to follow the schedule closely and used it as a substitute for careful project appraisal in making lending decisions. 2/ These are arms and ammunition, atomic energy, telecommunications, air transportation, generation and distribution of energy, mechanized forestry and currency printing. -66- should now come under these limits. This gradual approach has been adopted primarily because of financial institutions' weaknesses in appraising industrial term loans. Public Sector Enterprises 3.33 In its efforts to raise the efficiency of the public sector enterprises (PSEs), the Government has sought to enhance enterprise autonomy while establishing clearer accountability and performance criteria.l/ Although significant progress has been made in developing a framework for better performance evaluation by developing a technical unit, an accounting system and in FY87 by promulgating a Public Corporations (Management Coordination) Ordinance, the speed and magnitude of implementation has not been sufficient to arrest the deterioration in PSE financial performance. Profits as a percentaYe of sales of public industrial corporations has con- sistently declined from 4.9% in FY83 to 1.8% in FY84, -4.2% in FY85 and to -9.8% in FY86. This is clearly a serious and wasteful problem requiring greater involvement of all ministries and enterprises in the monitoring exercise and a much faster rate of implementation of the new public sector administration and evaluation system. Unless clearer performance criteria are established and the enterprises are given greater operational autonomy to meet these criteria, the PSEs will continue to be a burden on the economy instead of contributing to its growth. The Need for Coordinated Policy - The Experience of FY86 and FY87 3.34 The industrial sector has not been able to achieve sustained high growth over recent years (see Chapter 1) and the poor performance of last year suggests that robust growth still cannot be taken for granted. The past pattern of high growth for a few years to be followed by years of stagnation appears to be continuing. One reason for such variance in growth rates is the lack of diversification ',n the industrial sector; an exogenous shock to a large subsector can drag down the entire industrial growth rate. Over time it is obviously desirable that the industrial sector becomes more diversified; towards this end the Government is seeking to put in place an incentive structure to encourage new and potential industries. But for the coming years, a few large subsectors--textiles and garments, jute, steel and engineering--will continue to account for the bulk of industrial output and employment. Policies clearly must be also designed to make the best of this heavy dependence. First, these key industries must be made less vulnerable to disturbances; this requires that any impediments to their flexibility and speed of adjustment must be removed. Second, backward and forward linkages must, to the extent that they are economically viable, be encouraged; this requires that policy reforms in one area--for example, licensing policy--must be complemented by reforms in other areas--for example, tariff policy. In 1/ This effort has been supported since 1984 by a UNDP-financed project. -67- this regard, while progress in general has been impressive since 1982, and especially over the last eighteen months, there has at times been a lack of complementarity in reforms, sometimes leading to bottlenecks, and a tendency to implement policy adjustments only after a crisis has occurred rather than in anticipation of the problem. 3.35 The experience of the industrial sector over the last year illustrates the vulnerability of the sector and the need for continued and coordinated reform, where the growth depends not on one policy but the inter- action of policies in many areas. The stagnation of industrial activity in FY86 was caused by problems encountered in jute, textiles and engineering sectors,l/ as well as slower growth in non-traditional exports such as garments. 3.36 The textile sector in Bangladesh is quite inefficient and has problems in supplying high quality fabrics. Historically, high protection provided to this sector through import bans and very high tariffs has not given domestic producers an incentive to improve their efficiency. Opportunities to supply the growing domestic demand have therefore not been taken. Supply from domestic sources has grown much slower than any estimate of demand growth implying that smuggled fabric and yarn have been taking a larger share of the domestic market. Furthermore, the large and growing demand for higher quality fabrics for garment exports has for the most part not been supplied by domestic factories. A faster and more efficient growth of the textile sector will depend on (a) continued reduction of tariffs and the elimination of quantitative restrictions in order to discourage smuggling and give incentives to local producers to improve their efficiency; (b) streamlining export administration so that local textile producers who supply fabrics to garment exporters can take full advantage of export incentives; and (c) increasing the efficiency of public sector textile mills which still constitute a large segment of the textile sector. If these reforms can be implemented systematically and without delays, the textile sector can grow very rapidly over the next five years. Delays in implement- ing these reforms will just continue the stagnation that has taken place in FY86. 3.37 Problems encountered by garment exports in FY86 also illustrate the uneven pattern of policy formulation and implementation. The special bonded warehouse system which has been introduced for garments and specialized textiles enabled dramatic expansion of garment exports in FY84-85. However, as in many developing countries, the inability to monitor exports -he functions of the Planning Commission since it would clearly transfer the location of the detailed budget scrutiny function elsewhere. The Planning Commission should, however, retain responsibility for indicative multi-year ADP budgeting and for ensuring that annual ADPs were compatible with the objectives of the nation's medium arld long-term development plans. IV. PROJECT IMPLEMENTATION 4.26 Approval of a PP or inclusion of a project in the ADP doesn't ensure timely, successful implementation. Indeed, delays are experienced in the implementation of almost every development project in Bangladesh. However, some improvements have been made over the last two years, as is indicated in the project aid disbursement ratios shown in Table 4.2. Improved customs and budgetary release procedures and, in the case of IDA funds, the introduction of the SAFE Accounts 1/ have contributed to improved project implementation. 1/ Special Accounts in Foreign Exchange (see para. 4.29). -97- However, serious problems remain and a good part of the gains in disburse- ments have been due to exchange rate fluctuations rather than real improve- ment in implementation.l/ Table 4.2: PROJECT AID DISBURSEMENT PERFORMANCE FY82 FY83 FY84 FY85 FY86 ------------ US$ Million --------- Disbursements Total Project Aid 590 470 553 591 710 IDA Project Aid 105 104 129 155 223 Disbursement Rates /a ---------- Percentages ------------ Total Project Aid 22.2 19.5 15.2 16.2 17.4 IDA Project Aid 14.7 12.3 14.4 16.4 20.2 IDA Project Aid (adjusted 14.9 12.4 14.7 17.1 18.1 for exchange rate changes) /c (14.1) lb /a Annual disbursements as a percentage of opening pipeline. 7T Excluding flows of IDA funds into SAFE Account. 7T Disbursements and pipeline expressed in SDRs instead of dol'lars. Source: Planning Commission and staff estimates. 4.27 Some of the reasons for slow project implementation have already been discussed; delays in the approval or revision of PPs and TA proposals and the under-budgeting of Taka funds for approved projects are probably the most serious. The remainder of this section discusses some of the other principal causes of imple-mentation delays in BangladeshA 1/ In FY86 the value of the dollar depreciated during the year, artifi- cially inflating the ratio of disbursements (expressed at current exchange rates) to the beginning pipeline (valued at the exchange rate at the beginning of the year). Adjusting for these effects requires a detailed knowledge of the currency composition of disbursements and the pipeline; this was available for the IDA portion of project aid only. Calculations show that the FY86 disbursement ratio falls by about 2 percentage points when correcting for the exchange rate effect. If the currency composition of total project aid disbursements were the same as IDA's, this would imply that the disbursement ratio actually fell in FY86. -98- Fund Release Procedures 4.28 In FY85, the Government undertook to streamline funding release procedures. Under the new system, government departments directly respon- sible for project implementation are authorized to spend up to their full annual budgetary allocations without seeking the Finance Division's prior approval. In the case of autonomous government agencies and implementing agencies, budgetary allocations (both GOB counterpart taka and reimbursable project aid) are released quarterly by ministries for the first three quarters of the fiscal year; fourth quarter releases require prior approval from the Finance Division, which can adjust allocations if there is a short- fall in the overall budget. However, these gains have been partially offset by the current requirement that before an agency can receive more funds under reimbursable project aid (RPA), it must use and seek reimbursement for 75% of the funds released to it during the preceding year. This was to reduce the backlog in claiming reimbursements from donors for expenditures already incurred. But because of delays in the release of the funds for the last quarter, it is often impossible for implementing agencies to spend the funds and claim reimbursement in time to qualify for the release of funds from the following year's ADP. Recognizing this, the Finance Division relaxed this condition in FY86 and allowed unconditional release of first quarter RPA. Releases for subsequent quarters are still contingent on the use of at least 75% of previously released funds and claims for their reimbursement. An alternative would be to link each quarter's fund release to expenditures incurred or reimbursement applications submitted during a quarter earlier than the immediately preceding one (e.g., allocations for the first quarter of a year could be limited to expenditure and reimbursement claims for the third quarter of the preceding year). The strengthening of the Disbursement Monitoring Unit established recently in the Ministry of Finance should also help reduce the gaps between expenditures and reimbursements. 4.29 Fund release constraints for IDA-financed projects have after some start-up problems been facilitated considerably by the establishment of Special Accounts in Foreign Exchange (SAFE) against all IDA projects. Under the SAFE procedures, project implementation agencies, including both autonomous bodies and government departments can operate through commercial banks. As an initial deposit into SAFE, IDA provides an advance so that a project entity can meet its requirements for four months. Funds are being replenished on the basis of reimbursement requested by the executing agencies. Physical Implementation 4.30 Land Acquisition. Lengthy procedures to acquire land and the need to wait until the PP is approved before starting the process continue to delay project start-up. A number of suggestions have been made to expedite the process. First, the Government could consider establishing a revolving fund to finance preconstruction activities. Second, given the complicated -99- laws and confusing procedural guidelines for land acquisition, a manual bringing together all relevant documentation and presenting clearly the current interpretations on land acquisition regulations could be issued, preferably in Bengali, for the benefit of land acquisition officers. Third, short-term in-service training of personnel involved in land acquisition would be beneficial. Fourth, in view of the complexity of land pricing, studies are required in both project and non-project areas to gain a better understanding of factors underlying private and public land transactions. Finally, and very important, the public and their local leaders need to be consulted earlier, at the time of the formulation of the project, on how it is likely to affect them and on what they can do to promote its effective implementation. This could help minimize potential political and social frictions which land acquisition issues often provoke. 4.31 Delays in the Appointment of Key Project Staff. These delays are widespread and have various causes. One suggestion would be for the Government to include authorization of the creation of positions and recruit- ment to fill them as part of the PEC's approval of a PP. The Ministry of Establishment could submit its recommendations on proposed staffing as part of its comments on the PP. At the same time, it would be preferable to emphasize the reduction of over-staffing in agencies such as BADC and some public industrial enterprises rather than to exercise such close control over new hiring. 4.32 Procurement. The principle of competitive bidding is well estab- lished in Bangladesh. However, delays are still common, especially for larger contracts, due to imprecise drafting of documents, layering of decision-making, lobbying by bidders and occasional misunderstanding of donor procurement requirements. The approval limits set for sectors and implemen- tation agencies were recently raised but could be increased even further. In the case of externally financed projects, the Government's regulations could be revised to allow major procurement to be initiated (but not finalized) before credit signing. 4.33 Consultant Recruitment. Implementing agencies are only authorized to approve contracts up to Tk 10 million (about US$330,000), and ministries up to Tk 50 million (about US$1.6 million). Larger contracts must be approved by the Council Committee of the Cabinet. Since each layer adds delay to the already lengthy TAPP approval process as well as provides for lobbying oppor- tunities for short-listed consultants, Government could consider increasing the limits for approvals by implementing agencies and ministries and take measures to educate agencies about the general procedures for recruiting consultants as well as specific donors' requirements. 4.34 Project Management Constraints. Many of the factors which constrain implementation are at least theoretically under project managers' control; these include work assignments, staff motivation and evaluation, the estab- lishment of useful monitoring and reporting systems, effective use of con- sultants and sup(ervision of contractors, and maintenance of appropriate -100- relations with project beneficiaries and other agencies. However, many project managers are not effective in all of these areas, and ad hoc solu- tions are often adopted to deal with the resulting problems; these include establishing separate project units, reorganizing departments, hiring con- sultants to design MIS systems and establishing coordinating committees. Such solutions are usually project specific: and may have negative effects on the implementing agency as a whole. It is therefore preferable to deal with such issues on an agency-wide basis and to design project management arrange- ments and, if necessary, technical assistance components which contribute to the agency's overall effectiveness. This approach would reinforce the recom- mendation made earlier that projects should be reviewed in the context of the agencies' overall development programs rather than in isolation. V. THE QUALITY AND MOTIVATION OF PUBLIC EMPLOYEES 4.35 Reforms of planning and implementation procedures of the type dis- cussed above will only be as effective as the people who implement them. Above all, the efficiency of the public expenditure program depends on the quality, motivation and sense of common purpose of public employees. This part first briefly describes the scale and organization of public employment in Bangladesh and then discusses some of the issues which the Government will have to address in its efforts to enhance the quality and motivation of public employees, especially the Class I officers at the apex of the system. The Size and Composition of Public Employment 4.36 More than a million people now work for the Government of Bangladesh up from about 650,000 at the time of Independence. Class I officers, accounting for 6% of total employees, are the managerial officials, Class II officers, accounting for another 3%, are primarily technical staff who have not completed a university degree. Class III employees, about 55% of the total, are secretarial and clerical personnel; and the remaining 36%, Class IV personnel are essentially non-skilled workers.l/ 1/ The term "Civil Service" is used to refer solely to the formal struc- ture of the Bangladesh Civil Service (BCS) which includes only encadred Class I officers; since these account for less than half of all Class I officers, the BCS accounts for only 3% of government employees. The BCS was formed in 1980 and consists of 32 administrative cadres and sub- cadres which are organized along functional lines. Table 4.3: GOVERNMENT SERVICE AS OF MAY 31, 1985 Category Ministries/Divisions Department/Subordinate Autonomous/Semi- of Class (Secretariat) Office Autonomous 3odies Total Posted Strength % of Posted Strength % of Posted Strength % of Posted Strength % of Number % Sanctioned Number X Sanctioned Number % Sanctioned Number % Sanctioned Class I 1,562 21 88 26,097 4 74 38,668 8 84 75,825 6 79 Class II 35 1 73 9,758 2 79 25,778 6 86 38,199 3 84 Class III 3,575 49 94 481,622 75 91 125,174 27 87 660,363 55 90 Class IV 2,120 29 96 125,099 19 90 278,921 59 93 419,743 35 92 Total 7,292 100 93 642,576 100 90 468,541 100 90 1,194,130 100 90 Source: Ministry of Establishment. CD -102- 4.37 The Bangladesh Government's terms and conditions of employment vary considerably. For the vast majority of the one million civic employees, the Government is the best and perhaps the only employer available to them because of the limited opportunities in the private sector and the benefits which public sector employment provides in terms of pay and job security. The key group of government officers who serve in management positions are the Class I officers. Among them, there are cadred as well as non-cadred officers. For Class I officers with university degrees, however, there are competing job opportunities outside government service in the private sector and abroad, and even within government service, in the military. Among Class I officers, those who are employed in autonomous bodies--about 50% of the total--are generally rewarded better than those employed in the Civil Service. Although the Central Government has the authority to set national standards, recruitment, training and promotion of non-cadred officers are basically the responsibility of the autonomous bodies which are therefore sometimes able to attract better qualified staff. 4.38 In 1985, the Government raised salary scales dramatically; senior officers' salaries were doubled and lower level salaries were more than doubled. However, these increases only corrected the earlier erosion of real salaries. While it is hoped that real wages will at least be maintained by providing annual cost of living adjustments, it is unlikely that substantial across-the-board real increases will be possible in the near future. It is, therefore, especially important that non-financial instruments of personnel management--recruitment and promotion policy, opportunities for professional growth and training--be utilized effectively for raising staff quality and motivation. Raising the Efficiency and Motivation of Class I Officers 4.39 Inadequate compensation compared to the private sector, and an apparent decline in the prestige of the BCS seems to be leading to a decline in the quality of recruitment and an increase in resignations. The Government is concerned about it and has indicated its intention of reforming its administrative structure.l/ Emphasis would be given to: (a) developing an administrative system with clear responsibility and accountability; (b) removing the colonial structure from administration and make it com- patible with the requirements of development; (c) making quality of perfor- mance the key criterion for promotion; and (d) relieving the secretariats of executive responsibilities which belong in other central or local government departments, or in public enterprises. 1/ See for example President Ershad's October 1986 public speech on public administration (THE NEW NATION, October 31, 1986). The main points of that speech were reaffirmed by the President in another public statement on November 8, 1986. -103- 4.40 Technical vs. Administrative Cadres. Under the present organization the secretariats in each line ministry are dominant over the attached departments. There has been a tendency, therefore, for the BCS administra- tive cadres to have superior positions in the civil service hierarchy com- pared to technical officers. The unification of the services into the BCS was the result of pressures to abolish the elite administrative system, equalize opportunities for advancement and give recognization to the techni- cal services. But the problems remain. The technical services still com- plain of the lack of participation in decision-making and relations between the administrative and technical cadres have been further aggravated by the establishment of the upazila system, which has created new opportunities for promotion in the administrative cadres and given the administration cadre new authority over the technical cadres in the Upazilas. Tensions among the cadres have contributed to an environment which hinders cooperation and coordination within and among ministries, and clearly affects the efficiency of decision-making. 4.41 The problem of technical vs. administrative cadres is not unique to Bangladesh. It has been addressed in the UK civil service as well as in other developing countries which inherited a similar colonial structure as Bangladesh. Various solutions have been adopted. In Pakistan, for example, the cadre system itself was abolished. Other approaches have included appointing technical personnel to head technical ministries or opening up the management levels to both technical and administrative personnel. There is no ideal solution to the problem in Bangladesh, but it is essential that the Government moves expeditiously to resolve the issue. 4.42 Decision-Making. The centralized system of decision-making through the secretariats supported by a vast, intricate web of formal procedures has created serious bottlenecks. The procedure required for a department to obtain a decision from its Ministry's Secretary or Minister provides a tell- ing example. A decision in the form of a file is referred by the Director of a department through the entire line of authority within a secretariat. The file is reviewed first by the lowest ranking administrative officer and then ascends each rung of the ladder until it reaches the top. Once a decision is made, the file descends again until the lowest ranking officers signs off on it. Estimates of the time it takes for a file to go from a Department Director to a Secretary/Minister and return through the secretariat ranges from a minimum of three months to over a year. 4.43 An associated problem is the excessive reliance on the committee system which reflects the more general lack of accountability and respon- sibility in the organizational structure. Almost all important decisions in Government, whether at the highest levels of administration or within the workings of a department, are made by a committee. Not only is a committee decision-making process inherently lengthy, but even more time may be required to record and agree upon the decisions which are made, since without a written record of a committee's decision, the decision may not be carried out. -104- 4.44 Rotation. Relations between the technical and administrative cadres are also affected by the practice of frequent rotation among the Class I administrative cadres, especially within the Senior Service Pool (SSP).1/ At the top levels of management, rotation can occur with relatively high frequency. Transfers are not only frequent, but also often occur to posi- tions requiring quite different knowledge or skills. Administrative officers serving in technical ministries may be rotated among totally unrelated functions, and administrative officers often do not have time to develop strong working relationships with the technical departments or autonomous bodies or to acquire the specialized knowledge which may be required to improve the quality and efficiency of decision-making. Frequent rotation of administrative officers have also created serious dislocations within the local administrative units under the upazila system. The need for a rational government rotation policy for the administrative cadres should also be addressed. If administrative officers are to continue to hold key management positions in technical ministries, autonomous bodies and in Upazila Administrations, Government should consider a rotation policy which would allow for functional specialization, so that administrative officers could rotate among agencies in the same or related sectors. 4.45 Promotion Policy. Promotion criteria include length of service, training, examination scores, and at the higher levels, merit. The promotion system for Class I officers can be simplified as follows: Rank Authorizing Body Criteria for Promotion Joint Secretary Council Committee on Merit cum seniority and above Promotion. Superior Selection Board Deputy Secretary Superior Selection Board Merit cum seniority Senior Scale Special Promotion Committee Seniority cum merit Section Officer Entry to Class I Public Service Commission Seniority cum merit (Section Officer) In addition, each service of the Government, as well as specialized institutions, have additional promotion requirements written into their recruitment rules. These rules specify what percentage of the posts can be filled by promotion or recruitment. 1/ The SSP begins with the rank of Deputy Secretary (although not all Deputy Secretaries are in the SSP) and comprises the top levels of the administrative hierarchy in the secretariat and the autonomous bodies. -105- 4.46 Seniority still plays the major role in promotion decisions, although efforts have been made in recent years to give more emphasis to merit. The Government has recently reiterated this emphasis, with the intention of attracting more qualified people into the Civil Service and tco retain qualified officers. Offers of promotion to reward good performance, however, would be an additional realistic alternative. 4.47 Training Policy. A network of about 80 training institutes for Class I officers provide general administration management and sector- specific technical training. The principal administrative and management training institute--the Public Administration Training Center (PATC)--is under the Ministry of Establishment, while the sectoral training institutions are operated by the respective line ministries. 4.48 While the Government has emphasized the need for better planning and coordination, the training of Class I officers remains highly fragmented and decentralized. It is often donor driven and may not reflect the institu- tional or individual needs of a particular ministry or agency. In addition, some of the institutions are probably unnecessary and many training institu- tions operate in isolation from the functioning of Government and public policy-making as well as from the universities, colleges, and technical institutes. The increase in personnel under the upazila system has substan- tially raised the demand for administrative training, and PATC's present institutional capacity is being stretched to the limit to meet this demand. A more serious effort to develop a comprehensive training policy is needed, along with additional resources. Above all, this would also require a fun- damental change of attitude. In Bangladesh training is still sometimes viewed almost as a form of punishment rather than as an integral component of professional growth and job enrichment. A recent government publication described training institutions as a "dumping ground" for both trainers and trainees. -106- Chapter 5: FINANCING PUBLIC EXPENDITURE 5.01 Higher economic growth and accelerated human development will require an expanded public expenditure program, both to invest in new infrastructure and services, and to operate and maintain those already in existence. Chapter 2 suggested that even with more generous foreign assistance, substan- tial increases will be required in domestic revenues. It is estimated that the ratio of central government revenue to GDP will have to rise by about 1.6 percentage points by FY90 and by about 3.0 percentage points by FY95. Table 5.1 illustrates how tax and non-tax revenues could rise to fill this need. Table 5.1: CENTRAL GOVERNMENT REVENUES, FY81-FY95 (as % of GDP) FY81 FY86 FY90 FY95 General Revenues 9.3 9.2 10.5 12.1 Taxes 7.6 7.2 8.6 9.9 Non-Tax 1.7 2.0 1.9 2.2 Source: Staff estimates; see Table 2.5. 5.02 This actually understates the total effort required. In addition to funds needed in the central government treasury, substantial increases in revenues will be required from sales of public enterprise products and serv- ices in order to restore their financial health, and enhanced charges will be essential for a number of publicly provided services in order to cover their recurrent costs. Approximately another 1% of GDP will be required for these purposes. 5.03 The need for this major effort to mobilize public resources is clearly recognized in the TFYP, and already in FY86 and FY87 important steps have been taken. This chapter documents this progress and suggests direc- tions for the future. The chapter begins (Section I), with a brief discus- sion of the key principles involved in public revenue decisions and then discusses taxation and public pricing in turn (Sections II and III). I. PRINCIPLES OF PUBLIC RESOURCE MOBILIZATION 5.04 Raising revenue to finance public expenditure is only one of the Government's goals. Others include ensuring that the incentive system favors efficient, undistorted private sector growth, and ensuring that the poor are not taxed and charged beyond their ability to pay. In any tax or public -107- pricing decision, the possibility of a trade-off between revenue raising and economic efficiency on the one hand, and between revenue and equity on the other, must always be at the forefront of policymakers' minds. Public Revenue Versus Efficiency - Is There a Trade-off? 5.05 In addition to transferring resources from the private sector to the public sector, taxation and public pricing decisions also alter the structure of incentives. For example, duties on imports are the most important and administratively cheapest source of tax revenue in Bangladesh, but they can also encourage the development of inefficient, import substituting industries and can inhibit the development of exports. This kind of tax-induced effect on output and growth--of which there are examples in all types of tax regimes--are referred to as the "economic costs" of taxation and are distin- guished from the administrative costs of collections. 5.06 In some circumstances, because of the way in which governments choose to raise revenues, efforts to mobilize public resources, which are designed to permit higher investment and growth, paradoxically lead to slower and more distorted growth. In Sub-Saharan Africa, for example, where the tax-GDP ratio rose from less than 12% in 1966 to more than 16% in 1982, it is estimated that on average, every one percentage point increase in this ratio reduced the GDP growth rate by one quarter of a percentage point.l/ This was because governments usually chose easy and politically popular but dis- tortionary trade-based taxes for raising revenue. 5.07 The Government of Bangladesh is aware of this potentially destructive trade-off. Avoiding the negative impact of public resource mobilization can be assisted by reference to two propositions: - Most taxes tend to distort incentives and reduce efficiency, but consumption-based taxes are much less distortionary than trade- based taxes. By gradually restructuring the tax system in this direction, it may be possible to substantially increase revenues and reduce the overall distortionary effects of the system. A number of developing countries have embarked on this process, and preliminary results are encouraging. - Unlike taxation, public pricing adjustments usually allow revenue to be increased while improving the incentive framework. Since the prices of most publicly provided goods and services are below their economic costs (and few are taxed), raising prices will 1/ See Z. Shalizi and L. Squire; Tax Policy for Sub-Saharan Africa, World Bank, Country Policy Department, draft December 1986. -108- generally lead to a more efficient allocation of resources.l/ At the margin therefore raising revenue from improved cost recovery is more efficient than from taxation. Public Revenue Versus Equity - Is There a Trade-off? 5.08 In some instances raising public revenues will hurt the poor; it may reduce their real purchasing power for essential commodities or it may squeeze them out of the market for important goods and services. Some sub- sidies are potentially very beneficial to the poor and should not be eliminated. The challenge for the authorities is to assess which subsidies are particularly well targeted and beneficial to the poor and to protect and if appropriate expand these, while reducing or eliminating less directed subsidies, which generally don't benefit the poor as much as middle and upper income consumers. In the judgement of the team preparing this report, almost two thirds of subsidies could be abolished with little effeet on the poor. The remaining one third--on primary education, on special food programs (VGF and FWP) directed at the most vulnerable and on primary health care (espe- cially MCH services)--should be expanded. II. TAX POLICY 5.09 The Third Five Year Plan stipulates a series of targets for govern- ment revenue. These include: (i) raising the tax-to-GDP ratio by 2.3 per- centage points during the five-year period to over 10%; (ii) shifting away from heavy reliance on trade-based taxes towards domestic sources of indirect taxation; the share of the latter in total indirect taxation is targeted to rise from 29% in FY85 to 34% in FY90; (iii) raising the share of direct taxes in total tax revenue; and (iv) raising the share of non-tax revenue to CDP from 1.7% to 2.3%. 5.10 There has been no noticeable trend in the behavior of the tax-to-GDP ratio since the late 1980s, although (as noted in Chapter 1) some increase is expected this year. Moreover, while the share of direct tax revenue to total tax revenue increased from 18% to 21% between FY81 and FY86, FY81, the behavior of the share of domestic indirect taxes to total indirect tax revenue exhibits no secular rise over the period. Achieving the TFYP targets will therefore require a very substantial effort.2/ A comparative perspec- 1/ In some cases economic costs are unnecessarily high due to inefficien- cies in production. In these cases, of course, price increases must be accompanied by efforts to reduce costs. 2/ In support of this effort, in FY87 IDA and the IMF are undertaking a review of the longer term options for public resource mobilization. An IDA tax mission visited Dhaka in December 1986 and preliminary recommen- dations will be discussed with the Government in the spring of 1987. -109- tive on these figures is provided by Table 5.2, which presents these ratios for a number of other countries. Table 5.2: TAX STRUCTURE IN SELECTED COUNTRIES (Percentage) Domestically Direct Tax Based Tax $ GNP Per Revenue to Revenue to Capita Tax/GDP Total Tax Indirect Tax (1984) Ratio Revenue Revenue Individual Countries (1980-85 data) Bangladesh 130 3.1 20.1 29.3 Malawi 180 14.8 38.0 n.a. India 260 16.2 30.1 44.6 Ghana 350 4.9 33.1 n.a. Pakistan 380 10.7 23.0 40.0 Indonesia 540 20.1 80.2/a 66.9 Thailand 860 13.1 22.1 66.8 Philippines 660 10.8 24.8 60.7 Malaysia 1980 22.8 44.9 38.3 Korea 2110 16.1 26.2 75.5 Group Averages (1979-81 data) Developing Countries (82 countries) i7.5 29.3 - Sub-Saharan Africa 17.6 30.3 - Asia 14.9 30.3 - South Asia 12.4 13.0 - East Asia 16.8 43.3 - Europe & Middle East 19.7 30.2 - Latin America 17.9 26.1 Industrialized Countries 29.7 34.2 /a Including oil revenues; if these are excluded, the share of direct taxes in total tax revenue falls to 37.3%. Sources: Bangladesh Fiscal Statistics, and IMF and World Bank data. V. Tanzi: "Quantitative Characteristics of the Tax Systems of Developing Countries," IMF DM/83/79, and World Development Report, 1986. Ahmad and Stern: "Tax Reform for Pakistan." -110- Table 5.3: CENTRAL GOVERNMENT REVENUE, FY83-FY87 FY83-86 Averages as Percent of: FY83 FY84 FY85 FY86 FY87 Total Revenue Prov. Est. Revenue Category --------------billion taka------------- Total Revenue 25.40 28.60 35.93 42.28 48.16 100.0 Tax Revenue 21.08 23.70 28.87 32.98 37.98 80.7 100.0 Customs Duties 8.70 9.34 11.83 13.39 15.50 32.7 40.6 Sales Taxes 2.98 3.50 4.46 4.60 5.35 11.7 14.6 Income and Profit Taxes 3.26 3.39 3.86 4.62 5.50 11.4 14.2 Excise Taxes 4.98 5.98 6.92 7.72 8.80 19.4 24.0 Land Taxes 0.22 0.30 0.42 0.55 0.56 1.1 1.4 Stamp Taxes 0.19 1 .01 1.10 1.39 1.40 3.2 4.0 Other /a 0.16 0.18 0.28 0.69 0.87 1.0 1.2 Non-Tax Revenue 4.32 4.91 7.06 9.30 10.18 19.4 100.0 NPEs Profit Transfers /b 0.26 0.28 0.67 0.78 0.92 1.5 7.8 PFIs Profit Transfers 7S 0.94 0.94 2.13 2.70 2.57 5.1 26.2 Interest Receipts 1.00 1.17 1.24 2.31 2.00 4.3 22.4 Registration Fees 0.29 0.32 0.40 0.43 0.65 1.1 5.6 Forest Fees 0.28 0.34 0.46 0.61 0.60 1.3 6.6 Other 1.56 1.85 2.15 2.47 3.44 6.1 31.4 -------annual percentage change--------- Total Revenue 9.5 12.6 25.6 17.7 13.9 Tax Revenue 8.6 12.4 21.9 14.2 15.2 Non-Tax Revenue 14.6 13.5 43.8 31.8 9.4 ------------percent of GDP------------ Total Revenue 8.8 8.2 8.6 9.2 9.4 Tax Revenue 7.3 5.8 6.9 7.2 7.4 Non-Tax Revenue 1.5 1.4 1.7 2.0 2.0 /a Other tax revenue in FY86 and FY87 excludes the Jamuna Bridge. 7i NPE and PFI denote non-financial and financial public enterprises respectively. Sources: Data provided by the Bangladesh authorities; and staff estimates. Indirect Taxation - Status and Issues 5.11 Trade Taxation. Taxes on imports account for 56% of tax revenue in Bangladesh. These comprise: customs duties, ranging from 2.5% to 400% of c&f value; sales taxes which are assessed on duty-paid value, development surcharge at a rate of 2%, and regulatory duty, which ranges from 2.5% to 50%. Table 5.4 shows that as in most countries, effective customs duties and sales taxes (CDST) are highest on consumer goods (40%) and lowest on capital goods (27%). Neither the spread nor the average level (35%) are particularly high or out of line with other countries. However, the varia- tion within these groupings is large and there are a number of commodities where high statutory rates have encouraged smuggling and other irregular practices so that the collections-to-import value ratio understates the distortionary effect of the CDST rates. Irn some of these cases the Government is cutting CDST rates in order to reduce smuggling and to raise revenues; for example CDST rates were reduced from 180% to 100% on some textile products in the FY87 budget. Table 5.4: COLLECTIONS OF TRADE-BASED TAXES BY CATEGORY, FY85 (Tk billion) Import Customs Sales Effective Rate Value Duty Tax CDST of CDST (%) Consumer Goods 8.5 2.8 0.6 3.5 40.4 Raw Materials 24.3 6.3 2.6 8.9 36.8 Capital Goods 11.7 2.7 0.6 3.2 27.4 Total 44.5 11.8 3.8 15.6 35.0 Source: Ministry of Finance. 5.12 Domestic Indirect Taxation. The bulk of domestic indirect taxation comes from excise taxes which are levied ex-factory on domestic production. Excise taxes account for 24% of tax revenue. Most domestic production is excisable, with the exception of cottage industries defined as those units that have invested less than 0.1 million taka in machinery and do not employ more than 15 people. However, the base of domestic indirect taxation is constrained by the narrowness of the formal sector industrial base. Almost 70% of excise tax revenue is therefore accounted for by three categories of goods--tobacco, gas and petroleum products--and an additional 10% comes from five more categories of products--sugar, cement, jute manufactures, narcotics and liquor, and paper. Excise taxes are assessed on different items on either a specific or ad valorem basis; the latter range from 5% to 200%, with a maximum of 25% on many items. However, the average rate of excise -112- taxation, defined as the ratio of collections to the gross value of excisable production is only 5%. Comparing this with the effective rate of CDST sug- gests a high degree of protection to domestic industry, and indicates that,since the rate of excise taxation is modest, there is scope for raising revenue by increasing excises on certain commodities. 5.13 Raising Revenues Whiile Lowering Protection. The Government's twin goals of raising revenue and rationalizing its trade policy may appear to conflict in the short run, but will complement each other over the medium term. In the near term, efforts to reform trade tariffs to promote efficiency in trey sectors are constrained by their impact on public revenue; for example, suggested reductions in tariffs on textiles, steel and engineer- ing goods (see Chapter 3) would cause tax revenues to fall by 1.5-2%. Similarly, efforts to encourage exports through improving the duty drawback scheme will result in revenue loss of about 1.5%. Raising revenues will in turn be hampered by concerns for efficiency; a trade-based tax system tends to be inelastic so that raising the tax-GDP ratio will require discretionary increases in tax rates, but this in turn could worsen protection. This dilemma can be fully resolved only gradually as domestic taxation substitutes for trade-based taxation. However, opportunities exist even in the immediate future for raising tax revenues while reducing distortions. These include raising selected excise rates, eliminating exemptions on income tax and, above all, replacing quantitative restrictions on imports by non-prohibitive tariffs.l/ 5.14 Improving Export Competitiveness. In recent years, the Government has undertaken policies designed to offset the potentially deleterious conse- quences of the existing tax structure. Prominent among these are a variety of '"duty drawback" and related schemes which have the effect of allowing exporters CDST-free access to imported inputs. While their success has been mixed, their importance for ensuring competitiveness will increase, as exports are diversified and the role of imported inputs at different stages in the production process grows. But preserving competitiveness of exports will also require that domestically produced inputs used in export production enjoy relief from excise duty. Furthermore, failure to do so for tradable inputs in the face of duty drawback schemes discriminates against domestic producers of such items. Although current legislation allows for some relief from excise duties on certain categories of inputs going into export production, these provisions have not been widely taken up. As the Government relies increasingly on domestic sources of revenue, it is impor- tant that the administration of such schemes be strengthened accordingly. 5.15 The Need for Non-cascading Taxes. Imposing indirect taxes on inputs for production can lead to multiple or "cascading" taxation which dis- 1/ Quantitative restrictions exist on 321 of 1,192 four digit SITC categories. -113- criminates against those products going through several stages in the produc- tion process and against companies that are not vertically integrated. As already noted, CDST rates apply differentially on raw materials and capital goods, which in many instances are inputs for the production of items which are in turn subject to excise taxation. Existing legislation already provides partial or full relief from CDSTs for a limited number of specified raw materials or components used in particular industries for domestic production. It is important that this facility be extended to all inputs used in domestic production. The experience of other low income countries-- such as Indonesia, India and Malawi--which have introduced tax reforms to overcome the distortions caulsed by cascading, may be helpful. It must be noted, however, that reducing the "cascade" effect, like expanding the duty drawback schemes, may result in a reduction in revenue, so must be accom- panied by other revenue-raising measures. Direct Taxation - Status and Issues 5.16 Less than one-fifth of tax revenue comes from direct taxation. The taxation of personal and company income, accounting for 15% of total tax revenue, or about 1.2% of CDP is by far the most important component. Company taxation, mainly of public sector firms, is the major single direct tax source. The very low contribution to revenues from the agricultural sector means that the entire burden falls on the non-agricultural half of the economy. Furthermore, exemption limits and concessions ensure that less than 0.5% of the population is liable for personal income tax. Comparative data (see Table 5.5) suggests that the share of income tax in total revenue is lower than in other Asian countries, although part of this can be explained by the level of per capita income and limited degree of urbanization. 5.17 Personal Income Tax. The principal features of the personal income tax rules are as follows. First, the basic exemption limit is Tk 30,000, which is roughly 20% above average family income; this excludes the vast majority of the population, whose tax returns would possibly be lower than the cost of collection. Second, the marginal rate of personal income tax rises with income, but with overall tax liability being restricted to one- third of total income. Third, the system provides generous incentives to savings and investment by allowing deductions of up to one-third of income for approved investments, and an exemption limit of Tk 25,000 on capital income (interest and dividends). Finally, the income tax rules provide for tax exemptions of many forms of capital gains arising from tax deductible investments. -114- Table 5.5: COMPARATIVE CHARACTERISTICS OF INCOME TAXATION IN SELECTED ASIAN COUNTRIES /a Share of Income Tax Income Tax- Degree of in Tax Revenue GDP Ratio Per Capita Urbanization (Percent) (Percent) GNP (1981) (1981)/b Bangladesh 14.6 1.2 140 12 India 18.4 2.6 260 24 Pakistan 15.6 2.3 350 29 Thailand 19.8 2.6 770 13 Philippines 24.0 2.9 790 30 /a The figures for Bangladesh refer to the FY82-86 period, while for other countries data refers to 10-year averages for 1971 to 1981. lb The percentage of urban to total population. Source: Government Finance Statistics, IFS and World Development Report. 5.18 Company Income Taxation. The basic rate of company tax is 60%, excluding inter-company dividends which are subject to a 15% tax. Industrial companies in general pay a lower tax of 50%, which is reduced to 45% if their shares are publicly traded. The system of company taxation offers generous incentives for investment. Tax concessions take the form of: 1) eligibility either for extended tax holidays which are granted to all firms filing an application within six months of starting commercial operations, with a longer duration of up to 12 years for companies locating in least developed areas; or for highly accelerated depreciation allowances on new projects and acquisi- tion of capital assets from abroad; and 2) indirect promotion of public limited companies through deductions of stock purchases and dividend income exemptions under the per- sonal income tax. 5.19 Income Tax Reform. In its effort to promote higher investment and savings, the Government have provided an array of fiscal incentives for individuals and companies that is among the most generous in the world. The basic issue in reforming the system to help contribute to resource mobi- lization is the cost-effectiveness of the very significant incentives given to saving and investment. First, increasing reliance on direct taxation requires (a) the identification and removal of the incentive measures with the lowest net social benefit, and (b) the concomitant exploration of non-tax approaches to the promotion of saving and investment; these might include -115- improving services to investors and upgrading infrastructure. Second, atten- tion needs to be directed towards the inequitable incidence of investment subsidies, as captured by the system of "double allowances" with respect to the taxation of capital income. Property Taxation 5.20 The principal property taxes in Bangladesh are the land development tax (LD tax), which is assessed on both agricultural and non-agricultural land, and the holdings tax, assessed on both land and property. While col- lection of the LD tax is essentially a central government responsibility, the holdings tax is basically a local level tax. 5.21 The LD tax amounted to the equivalent of only 0.2% of agricultural value added in FY85, but even this figure overestimates the total tax burden on the agricultural sector, since much of the LD tax is raised in urban areas (where it has been very successful). It is estimated that the LD tax burden on agricultural land ranges on average from 0.1% of income from land for a farmer owning two acres up to 1.9% of land income from a farmer with 20 acres. The importance of the agricultural LD tax has declined significantly in the ten years since its implementation, especially for small plots. The agricultural sector therefore remains undertaxed. In addition, unlike many other countries, sound pricing and regulatory policies have meant that farmers do not suffer from implicit taxation in the form of government induced distortions of input and output prices vis-a-vis their international levels. 5.22 A progressive land development tax with augmented rates could, over the medium term, enhance revenue and improve equity in tax treatment between agricultural and non-agricultural households. However, this could only be effectively implemented if accompanied by a substantial commitment of resour- ces towards strengthening ongoing efforts to update the existing Record of Rights. Tax Administration 5.23 In addition to the need to change tax rates and structure, substan- tial net gains in revenue could be realized by improving tax administration. Arrears, for example, have remained at roughly one quarter of average annual collections over the last few years. The National Board of Revenue (NBR) is responsible for the administration of (a) customs duty on imports and exports, sales tax, regulatory duty, and development surcharge on imports; (b) excise duties on goods manufactured in Bangladesh and on narcotics and liquor, regulatory duty of excise and the turnover tax on specified goods and services and (c) direct taxes including income and corporation taxes. The overwhelming importance of tlose taxes in public revenue, together with widespread concerns, explicitly acknowledged in the FY87 budget speech, about smuggling and other irregular practices, emphasizes the critical role of strengthening administrative procedures in the NBR. -116- 5.24 Consideration therefore needs to be given to expanding the upper echelons of the NBR, improving its capability for data base management, computerizing Collectors' offices, evolving reliable valuation procedures, improving investigation and prevention of fraud, and addressing the training needs of its staff. While part of the manpower required for these purposes can be realized by effecting suitable economies and by redeploying personnel in various cadres, the rest can only come about from expenditure of extra resources. However, it is essential that financing constraints should not be allowed to delay the proposed strengthening of tax administration. Comparative experience suggests that the additional revenue collected by an upgraded NBR would be far in excess of the extra costs of reorganization. III. PUBLIC PRICING POLICIES 5.25 Good progress has been achieved over the past five years in improving public pricing policies, primarily by the reduction of large subsidies on foodgrain and fertilizer sales, and by the taxation of petroleum products. However, in other areas--power, natural gas, education, irrigation, for example--public expenditures have risen much faster than revenues. The TFYP calls for further progress in cost recovery, but a detailed strategy is still being defined. This section seeks to assist the Government in this effort, by identifying the main issues in public pricing reforms, the priority areas where reforms are necessary, and their potential for resource mobilization by FY90. The Potential for Revenue Enhancement 5.26 Despite recent disinvestment and privatization, the public sector continues to account for a large part of the organized sector in Bangladesh. Sales of goods and services provided by the public sector, including those by public sector enterprises, amount to about Tk 75 billion ($2.5 billion) in FY86, equivalent to 16% of GDP.1/ These sales figures actually understate the true value since many public goods and services are provided at nominal or zero cost (e.g., education and health) while others are significantly subsidized. 5.27 Adjusting Prices While Removing Distortions. In view of the large size of the public sector and the relatively inelastic demand for its goods and services, raising public prices provides great potential for raising revenues. For example, a 15% across-the-board real increase in all public prices would generate roughly 2% of GDP in additional resources. However, it would clearly be preferable to adjust prices only in those cases where exist- ing prices are subsidized thus encouraging resource misallocation and where 1/ This is the ratio of gross sales to GDP. Value added of the public sector of course accounts for a much smaller proportion of GDP. -117- there is no clear equity reason for the subsidy. Public prices should reflect, at a minimum, the economic opportunity costs (efficiency prices) to the economy of providing these goods and services, unless there are strong equity or social concerns. A comparison of such estimated efficiency prices with current prices across sectors provides a convenient starting point for an analysis of priorities in public pricing reforms. 5.28 Defining appropriate efficiency prices for internationally traded goods and services--foodgrainsg fertilizers, minor irrigation equipment, petroleum products--is a relatively straightforward exercise. World market prices,l/ converted to local currency and suitably adjusted for quality differentials and international price fluctuations plus domestic distribution costs, provides a good measure. For non-traded goods and services there are greater technical difficulties. In sectors such as power and natural gas, with lumpy investment requirements or significant depletion costs, long-run marginal cost pricing is appropriate and estimates have to be made. In others, such as transport infrastructure, irrigation services, education and health, where externalities may occur (social gains exceed private costs), short-run marginal cost pricing may be more appropriate; in these cases operation and maintenance costs can be used as a proxy. In some sub-sectors, such as railways, postal, and communications services, a proper evaluation of marginal cost tariff structures may be time-consuming and costly, and may not be immediately justified; here the simplest solution may be to measure average costs as a proxy for economic cost. Using these principles and available data and information, Table 5.6 provides indicative estimates of efficiency prices in key sectors. These are compared to current (October 1986) prices in order to estimate the percentage and absolute levels of subsidy or tax across sectors. 1/ cif in the case of import substitutes, fob in the case of actual or potentially exportable products. -118- Table 5.6: PUBLIC PRICING - UNIT SUBSIDIES AND TAXES, FY87 Unit Current Efficiency Subsidy Amount of Price Price Tax Rate Subsidy/Tax (Tk/unit) (Tk/unit) (%) (Tk million) Foodgrain Distribution (tons) 4,332 - Rice (ration) 7,772 8,473 /a 8.3 210 - Wheat (ration) 5,145 6,300 18.3 1,155 - Rice, priority groups 4,000 8,473 50.0 447 - FFW, VGF, Wheat -- 6,300 100.0 2,520 Fertilizer to Farmers (tons) -21 - Urea 4,800 4,412 /b -8.8 -349 - TSP 5,000 5,776 13.4 310 - MP 4,000 4,261 6.1 18 Fertilizer to Factories (tons) 593 - Urea (tons) 3,600 3,787 Ic -4.9 -168 - Gas to factories (mcf) 19.09 34.94 54.6 761 Irrigation, BWDB 1,100 - Water charges (acre) 200 1,200 Ld 83.3 500 - Land betterment taxes -- 400 /dl 100.0 600 Minor Irrigation, BADC (units) 492 - DTW, sales 174,000 220,000 /e 20.9 92 - DTW, rentals 10,000 35,000 71.11 250 - STW, sales 30,000 35,000 14.3 100 - LLP, sales 10,000 20,000 50.0 50 Natural Gas (mcf) 1,770 - Fertilizer 19.09 34.94 /f 45.4 761 - Power 19.09 37.05 48.5 -719 - Large Industry 52.14 53.90 3.2 149 - Small Industry 52.15 68.50 23.9 - Commercial 65.39 54.48 -20.2 -33 - Resident 44.88 67.32 33.4 174 Power (kwh) - 132 Kv Bulk 1.75 2.1 JR 16.7 96 PBS 0.95 2.8 66.1 435 - 11 Kv 2.0 2.2 9.1 330 - LV 1.9 3.6 47.2 3,006 Average 1.71 2.66 35.7 3.867 La Efficiency price of rice and wheat derived as three-year moving average (1985, 1986, 1987) as fob price in world market, discounted by 10% quality difference, plus international freight and domestic distribution costs (26%). Food for Work and VGF expenditures shown here as entirely subsidies, whereas a large part of FFW expenditures is investment expenditures. /b Using 3 year moving average world prices (fob for Urea, $125 per ton, cif for TSP and MP, $170 and $120 per ton, respectively), plus domestic distribution cost (Tk 625) for BADC. /c Using the farmgate economic price and deducting internal distribution costs of Tk 625. Ld Estimated per acre operation and maintenance costs of BWDB irrigation projects. /dl Estimated at 1/3 of O&M costs on BWDB irrigation, in half of all drainage and flood control (DFC). le Using shallow tubewell equivalence pricing for DTWs and full replacement costs of STWs and LLPs. /f Energy Pricing and Resource Mobilization in Bangladesh, draft IDA study, August 1986. La Bangladesh Power Sector Tariff Studies, 1986 - Coopers and Lybrand Associates. -119- Table 5.6: PUBLIC PRICING - UNIT SUBSIDIES AND TAXES, FY87 (CONTINUED) Unit Current Efficiency Subsidy Amount of Price Price Tax Rate Subsidy/Tax (Tk/Unit) (Tk/Unit) (%) (Tk million) Petroleum -(2782-1958) - LPG (12.5 kg) 113.5 102.47 /h -10.8 -6 - Gasoline (litre) 12.88 4.8 + 2.6 -74.1 -414 + 197 - Kerosene (litre) 6.71 4.6 -45.7 -985 - Diesel (litre) 6.71 3.9 + 3.1 4.1 -539 + 1791 - Fuel oil (litre) 4.70 2.68 -75.4 -838 Transport - Railway 643 Passenger (pass km) 8.96 20.0 /i 55.2 513 Freight (ton) 95.8 112.0 14.3 130 - Roads (Implied user charge on oil) 329 Passenger cars (litre) 8.08 2.6 L -53.3 -121 Diesel buses & trucks (litre) 2.8 3.1 28.2 450 Education (per year) 5.022 - Primary Schools 30 268 /k 88.8 2,106 - Secondary Schools 60 1,128 94.7 160 - Colleges 120 1,528 92.1 493 - University 120 12,558 99.0 497 - Private Schools 360 1,128 68.1 1,766 Heal#1*h 600 - Immunization ... ... ... n.a. Li - Medicines ... ... ... 300 - Hospitals ... ... ... 300 Post Offices 300 - Inland letters 1.0 2.0 /m 50.0 225 - Foreign letters 5.75 12.0 44.0 75 TOTAL GROSS SUBSIDY 18,113 TOTAL NET SUBSIDY (net of gas inputs to pov-. --id fertilizer) 16,723 (-) Denotes tax. Lh See /f above. Efficiency price includes border price, plus road user charges to cover costs (see j below). Li Roughly equivalent to private road transport charges. /i Road user charges necessary to cover highway O&M costs plus some investment cost. /k Cost per student. A Revenue budget deficit in health sector. / Price needed to break even. Source: Staff estimates, see footnotes. -120- 5.29 It is evident from Table 5.6 that most major public goods and serv- ices are heavily subsidized in Bangladesh. Total net subsidies, excluding double-counting of input subsidies in natural gas sales, are estimated at Tk 17 billion, or 3% of GDP in FY87. However by no means should all sub- sidies be removed. Some subsidies are especially beneficial to the poor and some have benefits to the community as a whole (externalities) as well as to the individual consumer. Three areas of subsidization shown in Table 5.6 are especially beneficial--poverty oriented food programs (VGF and FWP), primary education and primary health care--which combined account for 30% of total net subsidies. Table 5.7 omits these three subsidies. 5.30 The other subsidies are not necessarily targeted towards the poor, nor obviously socially desirable. For example, benefits from foodgrain sales (except VGF and FWP) mainly accrue to urban and better-off consumers, irriga- tion subsidies to better-off farmers, power subsidies to industrial and commercial users, non-primary education and hospital subsidies to relatively better-off groups in urban areas. And within these categories, large sub- sidies apparently go to the more privileged groups, such as rice sales to priority groups, water to larger farmers, power sales to low-voltage (mainly urban) consumers, and college and university education to middle and upper income urban dwellers. For the most part, therefore, these subsidies are not achieving their stated goals. 5.31 The relative subsidization of different sectors has also undergone a significant change over the past five years, as shown below in Table 5.7. The major economic subsidies are now in the power, natural gas, education, railways and other sectors (irrigation, health), which have grown rapidly as tariff increases have failed to keep pace with growing costs. In contrast, the Government has successfully eliminated previously large sub- sidies on fertilizer sales (although cross-subsidies between products exist), restricted very large subsidies on foodgrain sales (other than for FWP and VGF), and imposed significant taxes on the consumption of petroleum products. In all three cases--fertilizer, food and petroleum products--the recent decline in international prices has helped to reduce subsidies and raise resources. The change in the composition of subsidization across sectors reveals to some extent a relative shift from the subsidization of agricul- tural inputs and outputs (fertilizers and foodgrains) to the subsidization of industrial and commercial sectors (power, natural gas, transportation). -12 1- Table 5.7: DISTRIBUTION OF ECONOMIC SUBSIDIES BY MAIN SECTORS, FY82-FY87 (percentages) FY82 FY87 Foodgrain Sales (excluding FFW & VGF) 41.3 23.8 Fertilizer Sales to Farmers 14.1 0.0 Natural Gas 7.6 22.5 Power 20.7 48.8 Petroleum -5.4 -35.0 Railways 1.1 7.5 Non-primary Education 20.7 32.5 Total of Above 106.0 100.0 Note: (-) denotes taxation. Source: Mission estimates. 5.32 Improving Collection Rates. Apart from the subsidization provided through lower than economic prices, many public sector agencies and organiza- tions currently face serious problems in collecting dues from users of public services, implying further subsidization. The problem is most serious in the power sector, where in FY86, out of expected revenues of about Tk 7.8 billion (excluding technical losses), actual billings were about Tk 6 billion, and collections about Tk 4 billion. Serious problems are also faced in the irrigation sector, where very little is collected out of expected revenues of Tk 200 million (water charges, deep tubewell rentals), as well as railways, and natural gas. Overall losses in public revenues due to weakness in col- lections performance may have amounted to as much as 1% of GDP in FY86. 5.33 Pricing Policies for Public Sector Enterprises. Public enterprises account for about 70% of overall sales of goods and services by the public sector. In addition to providing energy (power, natural gas, petroleum) and fertilizer, which have been discussed earlier, public enterprises are also involved in a large number of other industrial and commercial activities-- jute textiles, cotton textiles, steel and engineering, chemicals and paper, refined sugar, airlines, ports, and road and water transport. Aggregate sales of such items amounted to about Tk 20 billion ($0.7 billion) in FY86. Jute textiles are sold largely for export at prices determined by the market, but for most of the other products, prices are determined by government policies and domestic market conditions. 5.34 Although in theory the public enterprises have flexibility to alter prices and operate commercially, the Government employs extensive price -122- controls and many pricing decisions are subject to the approval of both the concerned technical ministry and the Finance Ministry, and in some cases the cabinet. The simpl,d average increase in prices of such products in the past two years (FY85-87) was about 5% per annum, compared to domestic inflation rate of double that figure--implying extensive price controls and subsidization. In some cases--refined sugar, newsprint and paper sales-- large subsidies are explicit, but in most instances the detrimental effects of price controls are visible only in the poor financial performance of state enterprises. 5.35 Table 5.8 summarizes the recent financial performance of public sector enterprises. The overall rate of return on the book value of assets was only 0.4% in FY86 and negative for enterprises other than in energy and fertilizer. The energy-related enterprises appear to perform better than average but this is due almost entirely to income generated by higher than border prices of petroleum and to subsidized gas input prices. The trend in financial performance is also alarming since the rate of return on assets has deteriorated sharply since FY84, when it was about 3.3%. In addition, many enterprises have been financially weakened as the Government has taken more in taxes and dividend contributions from these enterprises than their surpluses warranted. The result has been increasing dependence on Government and the banking system to finance both current and capital expenditures. This helps explain why at least half of increased revenues from price adjust- ments must be retained by the enterprises to restore their financial viability. -123- Table 5.8: FINANCIAL PERFORMANCE OF PUBLIC ENTERPRISES, FY86 (Tk billion) BCIC All PSEs Energy PSEs Jute PSEs (fertilizer) Other PSEs Sales 49.73 21.8 6.3 7.5 14.1 Income (before 0.5 2.6 -1.6 0.2 -0.7 Taxes) Total Assets 119.3 61.4 6.7 26.1 25.1 Return on 0.44% 4.2% -23.8% 0.8% -2.8% Asset (%) Retained -1.1 1.3 -1.6 0.06 -0.9 Income Source: Bangladesh Authorities and Autonomous Bodies Budgets 1986-87, using SABRE formats, Monitoring Cell, Autonomous Bodies Wing, Finance Division. Implementing Reforms in Public Pricing, FY88-90 5.36 The overall trend of public resource mobilization through reforms in public pricing is not encouraging. Table 5.9 shows the nominal and real adjustments in prices of public sector goods and services during the FY81-87 period. Almost all public sector prices have declined in real terms; the exceptions have been rice (ration) prices, natural gas prices, and postal service fees. Declining prices or user charges have been especially notable for railways, university fees, sugar (ration), newsprint, and cement. Public pricing has clearly not been viewed as a means of mobilizing revenue. In particular, there has been a noticeable tendency for nominal prices to be left unchanged for several years, requiring subsequent large adjustments just to keep pace with past increases in costs; railways, university fees, postal rates, sugar, paper, newsprint, cement are notable examples here. -124- Table 5.9: PUBLIC PRICING ADJUSTMENTS (NOMINAL AND REAL), FY81-FY87 Percentage Annual Change Goods and Services FY81-87 Nominal Prices Real Prices /a Rice (ration) + 11.5 + 0.4 Wheat (ration) + 9.4 - 1.7 Fertilizer (urea) to Farmers + 8.9 - 2.0 Natural Gas + 18.5 + 7.4 Power + 9.8 - 1e3 Petroleum + 8.6 - 2.5 Railway Passenger + 7.0 - 3.8 Railway Freight + 7.6 - 3.2 University Fees + 0.0 - 9.8 Postal Rates + 12.2 + 0.8 Sugar (ration) + 4.8 - 6.5 Paper + 8.4 - 2.5 Newsprint + 1.7 - 8.5 Cement + 4.8 - 5.7 Cotton yarn + 7.9 - 2.9 Average + 8.0 - 2.8 Consumer Price Index + 11.1 /a Nominal price changes deflated by C.P.I. Source: Planning Commission9 Ministries, staff estimates. 5.37 There are several possible reasons for the reluctance tc set prices closer to their economic levels. These include: (a) technical gaps in information regarding the extent of divergence of existing prices from efficiency prices; (b) political difficulties in adjusting prices for rela- tively privileged mainly urban consumers; (c) a concern to offset inflation- at trends; (d) uncertainty regarding effects on incomes of consumers and their ability to pay; (e) a belief that some of the subsidies, such as foodgrain subsidies, are appropriate forms of compensation in kind to public employees; (f) a reluctance to charge consumers for the inefficiency of public sector agencies; (g) resistance within and outside public sector agencies to undercut unofficial rents that accrue from the difference between market and officially controlled prices; and (h) a lack of perceived need to raise domestic public revenues in the face of resource flows from foreign donors. -125- 5.38 These are common factors in most developing countries. In addition, like Bangladesh, the great majqrity of developing countries are now having to reduce non-essential subsidies in the face of increased financial stringency. Bangladesh is now in a good position to undertake such reforms both because real incomes of consumers appear to have risen in the last two years, espe- cially for public sector employees, and because the expansion of well- directed supplementary food programs has enabled the Government to compensate for any minor declines in real incomes of the very poor. 5.39 The available information (presented in Tables 5.5 and 5.6 earlier) suggests that the priorities of the Government should be to undertake rela- tively large pricing adjustments (and collection efforts) in sectors where subsidies are large and growing--power, natural gas, irrigation, railways, postal services-in an effort to approach economic pricing of such basic public goods and services by FY90. It should also be possible to eliminate remaining subsidies in foodgrain sales through the rationing system and other channels (other than FWP and VGF). The education sector presents special problems. Subsidization at the secondary and higher levels has been growing at a rapid pace as a result of escalating costs and unchanged nominal fees; current fees are extremely low in relation to the (presumed) benefits to individuals, their ability to pay, and costs. However, education services in Bangladesh have deteriorated, and social and political considerations may preclude large increases in fees; a gradual approach to enhancing fees and services miay represent the most appropriAte solution. A similar approach to health charges would also be appropriate, at least to cover medicine and hospital costs.l/ 2/ 5.40 Efforts to improve collections in the power, irrigation and railways sectors must be of high priority, and can lessen the need for large price adjustments. However, the problems are deep-rooted and solutions may involve consideration of fairly radical institutional steps in the longer-term, such as setting up independent distribution and collection agencies (possibly with private sector support) in the power sector, and devolving responsibility for collecting irrigation water charges to Local Government. In the interim, enhanced incentive systems for staff responsible for collections, and perfor- mance targets (with sanctions against failure to collect) are probably neces- sary along with the suspension of services to consumers who do not pay. 5.41 Price controls on state ent&-rprises should be liberalized. It should not be necessary for public corporations operating commercially to have to 1/ IDA sector studies are planned or underway in Bangladesh on .,.alth sector finances, and the education sector. 2/ See: Financing Heelth Services in Developing Countries--An Agenda for Reform, World Bank, December 1986, for a discussion of principles and practical experience of health care pricing. -126- approach line ministries or other agencies for approval of pricing decisions. The economic justification for price contr,ols (or subsidies) on sugar, paper, newsprint, cement, road transport, ferry charges, airlines, and shipping is not strong. Moreover, it leads to serious difficulties for private sector competitors--as in road and water transport--because it lowers their prices, profitability, and therefore investment. As improved systems for target setting and performance monitoring are introduced to all enterprises (see Chapter 3), principles for price adjustments can be determined during the annual review. In the interim, it is important that steps be taken to allow greater flexibility in public enterprise pricing and to demand better profit performance. Liberalization of prices across the spectrum of such relatively minor (non-basic) public goods and services would enable improved profitability performance of public sector agencies, and enable the private sector to operate more profitably, possibly resulting in higher private investment and quality of seavice. If such decontrols on pricing could improve the rate of return on the book value of assets of public enterprises from the current level of less than 1% to 5%, additional resources equivalent to about Tk 5.5 billion, or 1.0% of CDP could be generated. 5.42 Table 5.10 provides an illustration of price adjustments that could be made in agriculture, energy, transport, communications and the social services in order to approach economic pricing in these sectors. In some of these sectors, more detailed analysis would need to be undertaken before specific price adjustments are implemented; the table is merely intended to suggest the orders of magnitude involved. It is estimated that these measures would generate revenues equivalent to an additional 2% of GDP by FY90, after taking into account the possibility of lower demand by consumers on account of higher prices. -127- Table 5.10: ILLUSTRATIVE PUBLIC SECTOR PRICE ADJUSTMENTS AND RESOURCE NOBILIZATION, FY88-FY90 Possible Estimated Volume Additional Resource, (Tk Million) FY90 P'rices of Sales Mobilization. FY90 Current (In real Assumed Price (million units) Additional Lover Costs Efficiency Price Terms,, FY87 Z Annual Elasticity Before Price After Price Revenues fro. Reduced Product Unit Price FY87 Prices) Increase of Demand /a Increase Increase from Sales Sales /c TOTAL ---tak--------------- 1. Rice (ration) ton 8473 7772 8473 +3.0 -0.5 0.3 0.28 40 169 209 2. Wheat (ration) ton 6300 5145 6300 +8.0 -0.5 1.1 1.0 640 630 1270 3. Rice Priority ton 8473 4000 8473 +28.4 -0.5 0.1 0.06 108 339 447 Groups 4. Fertilizers TSP ton 5776 5000 5776 +5.8 -0.5 0.45 0.42 175 173 348 MP ton 4261 4000 4261 +2.8 -0.5 0.08 0.08 21 - 21 5. Fertilizer (urea) to Factories ton 3787 3600 3787 +1.7 0.0 1.0 1.0 187 - 187 6. Water Charges acre 1200 200 600 +44.0 -0.2 0.7 0.5 160 240 400 7. Land Betterment Taxes acre 400 - 200 -0.2 1.8 1.3 260 200 460 8. DTW Rentals no. 35000 10000 30000 +44.0 -0.2 16000 /b 11500/b 185 135 320 9. Natural Gas mcf 54 36 54 +14.0 -0.2 128 116 1656 648 2304 10. Power kwh 2.66 1.71 2.66 +15.83 -0.2 5000 4500 3420 1330 4750 11. Railway Passenger km 20.0 8.96 20.0 +30.7 -0.3 9.0 6.6 51 48 99 Freight km 112.0 95.8 112.0 +5.3 -0.3 10.0 9.5 106 56 162 12. University Fees year -secondary 1128 60 200 +49.3 -0.1 0.16 0.13 16 34 50 -colleges 1528 120 400 +49.3 -0.1 0.40 0.33 84 107 191 -university 12558 120 1000 +102.7 -0.1 0.04 0.03 25 126 151 13. Post Services (envelope) 2.0 1.0 2.0 +26.0 -0.1 - - 180 .120 300 14. Sugar (ration) ton - 16508 17152 +1.3 -0.5 0.1 0.1 64 - 64 15. Paper ton - 26317 32000 +6.7 -0.3 0.04 0.04 240 - 240 16. Newsprint ton - 11000 16500 +14.5 -0.3 0.05 0.05 275 - 275 17. Cement ton - 1736 2800 +17.3 -0.3 0.4 0.33 230 196 42B/d 18. Medical Fees .. - - - - - - - - - 300 (hospitals, medicines) TOTAL (net of ratural 6795 4033 10828 gas sales to fertilizer and power) /a Although most items are rationed, and in scarce supply, implying low price-elasticities, some shifts to private sector supplies are anticipated implying higher price-elasticities. /b Number of units. /c Assumed equal to reduction in volume of sales this efficiency price for most items. /d A reduction on half of current medical cost subsidies. /e Revenues from sales to power and fertilizer estimated at 80% of total revenues. Source: Staff estimates. -128- 5.43 Impact on Household Incomes. Assessing the impact of these measures on real incomes is a complex business. A simple comparison of how much consumption could be afforded with and without subsidies gives a very partial picture. If public prices were not raised, the Government would either have to raise revenues in some other manner (which would also lower real consumption) or would have to lower its expenditure plans (the effect of which would depend upon how cuts were made). A partial "static" analysis can nonetheless provide clues as to the direct income distributional impact of the measures. Using the FY82 Household Expenditure Survey,l/ it was found that the bulk of the price increases would be experienced by urban dwellers, who are on average much better off thani their rural counterparts; they account for about 15% of households in Bangladesh but about one third of total household expenditures. Table 5.11 which is based upon an analysis of urban expenditure patterns suggests that the measures proposed would reduce real household incomes by about 5% on average over the four-year phased program (1.25% per year) in comparison with what they would otherwise have been. This would still allow real consumption to rise each year. Better-off consumers and beneficiaries of the ration system and electricity and natural gas supplies would be affected the most. Rural dwellers would be affected primarily through fertilizer and irrigation charges. Raising these prices is estimated to lower real incomes of families on small unirrigated farms by no more than 0.2% and on larger irrigated farms by 1.5% over the four-year period. 5.44 These public pricing and taxation measures represent an important component of the High Policy Case. They therefore cannot be considered in isolation. Without them, the Government will be unable to fulfill its goal of improving the quality and coverage of human development and targeted poverty alleviation programs, which in turn can protect the poor from some of the adverse effects of subsidy removal. In the judgement of the team prepar- ing this report, the overall impact of these measures on real household incomes would be positive, especially for the poor. As noted in Chapter 2, the High Policy Case--which includes these measures--is estimated to permit real per capita private consumption to grow on average by 1.8-2% per year for the remainder of the TFYP period and beyond. 1/ See Chapter 6 for a detailed discussion. Table 5.11: ESTIMATED IMPACT OF PUBLIC PRICING ADJUSTMENTS ON DIFFERENT INCOME GROWPS IN URBAN AREAS, FY90 I I I % DECLINEI INCOME GROUP IPROPORTIONI ABSOLUTE DECLINE IN MONTHLY INCOMES ASSOCIATED WITH: I IN I (Tk/month I OF I I I I I I MED. IALL OTHERI TOTALI MONTHLY I household income)!HOUSEHOLDSI RICE I WHEAT IELECT.I GAS IEDUCATIONI CAREI ITEMS I I INCOME I I Low I ------------------- Tr..k- per household----------------------I HN, (0-1799) I 10.31 I 4.8 1 12.4 I 4.3 I 1.8 1 0.8 1 2.5 1 31.2 I 57.8 I 4.5 \ 0 Lower Middle (1800-2599) I 0.22 1 7.6 1 17.2 114.8 1 5.7 1 3.9 1 4.8 1 58.7 1112.7 1 4.9 Upper Middle (2600-4199) I 0.24 ! 9.7 1 21.1 131.2 114.2 1 12.7 1 8.7 1 98.8 1196.4 1 5.4 High I I I I I I I I I (Above 4200) 1 0.23 j12.7 1 24.8 181.2 134.3 1 45.7 121.0 1242.8 1462.5 1 5.4 Total I 1.00 I 8.4 I 18.4 130.8 113.1 | 14.6 1 8.7 1102.2 1196.3 I 5.3 Note: Detailed assumptions and calculations are available. Source: Staff estimates based upon 1981/82 Household Expenditure Survey and pricing adjustments suggested in Table 5.10. -130- PART III: PROMOTING HUMAN DEVELOPMENT Higher economic growth is, as noted in previous chapters, essential if further progress is to be made in alleviating poverty in Bangladesh. But it is not sufficient. It must be supplemented by specific directed efforts to aid those who tend to be by-passed by the development process. This section of the report discusses the human dimensions of economic developmXent in Bangladesh. It begins with an assessment of recent trends and prospects for poverty alleviation and then discusses some of the specific interventions designed to improve the quality of life in rural and urban areas. Chapter 6 describes recent trends in poverty, nutrition and real wages. The picture is rather confused, but a number of conclusions clearly emerge. Some of these are encouraging; many are cause for serious concern. Chapters 7 and 8 explore the needs of two especially vulnerable groups--the landless and low income women. The chapters describe some of the lessons that have been learnt in recent years in attempting to assist these groups and some of the innovative approaches that are now being initiated. An important theme is that these groups must not only be regarded as vul- nerable and needy; they are also a potentially powerful force for development and progress. These groups are often superior to better-off groups in demon- strating initiative, enterprise and thrift whenever they are given access to basic resources. Finally Chapter 9 focuses on public and private interventions in the human services--health, family planning, nutrition and education. The analysis is not intended to be comprehensive; rather an attempt is made to briefly document recent progress and to highlight key issues for the coming years. In Part II of this report a High Policy Case was recommended as necessary if higher economic growth was to be achieved for the remainder of the 1980s and the first half of the 1990s. The employment and human develop- ment programs described in this part of the report should be seen as an integral component of that High Case. Their influence tends however to be longer-term in nature. If Bangladesh is to sustain its accelerated "momentum of development" not only through its Third and Fourth Plan periods but also thereafter, it really has no choice but to give the development of its human resources the highest possible priority. -131- Chapter 6: TRENDS IN POVERTY, NUTRITION AND REAL WAGES 6.01 Bangladesh has received so much attention from researchers and donors basically because it is one of the poorest countries in the world. However, the data available on recent trends in poverty alleviation, income distribution, landlessness, source of rural non-farm incomes, and nutritional status are surprisingly scarce. Over the last year the results of the 1981/82 Household Expenditure Survey (HES) became available.l/ This is the only systematic and country-wide source of information on detailed expendi- ture patterns by income group. It provides an important supplement to the earlier 1973/74 survey, although it is of course already rather out-of-date.2/ The most recent reliable broadly based nutrition survey is also for 1981/82.3/ These are supplemented by a good number of micro-level surveys associated with individual projects or research efforts; but it is generally very difficult to assess the comparability of these more narrowly focussed smaller studies. In addition, precisely because some of these micro surveys are associated with special project areas, it is risky to generalize to the country as a whole. In this regard, consideration might be given by donors, Government and researchers to provide technical assistance to improve the quality and timeliness of existing ongoing surveys rather than initiating new ones.4/ 6.02 The methodology that has been employed in deriving the results in this chapter is as follows. First, the developments between FY74 and FY82 were examined using the two expenditure surveys. The trends suggested by these sources were compared with those suggested by the nutrition surveys and, more importantly, with other economic indicators--wage rates, food availability and relative prices. There is a good deal of agreement among the various sources for the 1974-82 period; this permits us to accept both the 1981/82 HES as a reasonably reliable benchmark against which to judge 1/ Household Expenditure Survey for Bangladesh, BBS, July 1986. Preliminary results from the Nutrition Module of the Household Expenditure Survey, 1985-86, conducted by BBS became available in February 1987 and they will be published in April 1987. 2/ The next HES (1983/84) is currently being processed; preliminary results are expected to be available in mid-1987. 3/ Nutrition Survey of Rural Bangladesh, 1981/82, Institute of Nutrition and Food Sciences, University of Dhaka. Previous nutrition surveys had been for 1962-66 (East Pakistan) and for 1975-76. 4/ DANIDA and BIDS will be assisting the Government in surveying recent studies on poverty related issues and assessing the extent to which broad conclusions emerge. This is a very worthwhile exercise. -132- more recent developments, and also the ability of other economic indicators (food availability, relative price trends and sectoral wage rates) to act as proxies for progress in poverty alleviation. Second, these indicators have been used to give a rough picture of what has happened between 1982 and 1986. 6.03 Overview of Results. The following broad conclusions would appear to be warranted from the analysis. - Between 1974 and 1982, although the overall incidence of poverty declined from 82% to 73%, that of extreme poverty increased from 43% to 50%. Despite an increase of 16% in real per capita GDP during this period, real wages of agricultural workers in 1982 were only 88% of those in 1974, and there were 4 million more poor, and 13 million more "hard core poor" in 1982 than in 1974. With the unequal sharing of the benefits of growth, the nutritional stand- ards of the poor declined. Because of rapid increases in foodgrain supplies, calorie intensive foods became relatively cheaper, the poor households maintained their calorie intake at the expense of higher quality protein and micro-nutrient intensive foods. - Since 1982, the poverty situation does not seem to have deteriorated further. Though real per capita income increased only at the rate of 1.3% per annum during 1982-86 compared with 1.9% during 1974-82, the impact on poverty was more positive. First, with the substantial increase in Food-for-Work and the Vulnerable Group Feeding Programs, more food became available to the poor. Second, there was a considerable increase in rural credit and inflow of other resources to the rural areas during this period, and real agricultural wages increased substantially; these were 20% higher in 1986 than in 1974, and for the first time regained their 1970 level. However, the current wage rate remains quite inade- quate to support a family. And food availability and relative price data suggest that the nutrition problem continues to be as serious in 1986 as it was in 1982. - Assuming no change in income distribution during 1982-86, the incidence of poverty would seem to have declined slightly--although the absolute number of poor has certainly risen (from about 67 million in 1982 to about 73 million in 1986, equivalent to about 60% of the increase in population during the period). - Whether or not the recent improvements in real wages can be expected to continue is an open question. It is clear, however, that the increase in wages experienced during 1982-86 was not entirely due to increase in demand for labor. Tc a large extent, the upward movement in real wages would depend upon the magnitude of additional resources and the efficiency with which they can be channeled for productive purposes directly to the poor. -133- The 1974-82 Periud 6.04 The vast majority of Bangladeshis are poor. However, some are desperately poor, unable even to provide for the most rudimentary of human needs. In assessing development progress, it is therefore important to analyze changes in welfare of both the population as a whole and of these especially vulnerable groups. For this purpose a poverty line is constructed. 6.05 The Poverty Line. Selecting a poverty line is inevitably arbitrary, but if used carefully can nonetheless provide a useful benchmark. In a very poor country such as Bangladesh, food consumption, as the inost basic of human needs, is generally accepted as the most appropriate proxy for poverty; it continues to account for over 72% of all expenditures of the poorer half of the population. Two poverty lines have been constructed using the household expenditure surveys. They are expressed as the per capita expenditure levels at which certain threshold food intakes can be purchased.l/ N 6.06 The first (Poverty Line I) is defined by the minimum energy require- ments as recommended by a joint WHO/FAO expert group for South Asia for each age group. Adjusting for the age and occupational profile of Bangladesh, the weighted average per capita daily intake is estimated at 2122 calories and 48 grams of protein.2/ The second (Poverty Line II) is defined as 85% of this intake.3/ It is therefore a useful approximation of the "hard-core" poor. The poverty lines are calculated on the basis of the bundle of food that was actually consumed by the poor. This is usually a low quality diet, so the estimated expenditure levels underestimate (by about a third) what would be required to obtain a truly balanced and nutritious diet.4/ Figure 6.1 shows 1/ The poverty line is defined in per capita terms rather than on a household basis as calorie requirements of households would vary, depend- ing upon the size and the age structure of its members. 2/ The minimum calorie requirement of 2,122 is based on the population structure extrapolated from the 1981 census. It is 5% higher than the standard used by the Planning Commissicn (2,020 calories). 3/ Consumption below 90% of the WHO/FAO recommended energy levels results in an inability to lead an active working life. Consumption below 80% results in stunted growth and serious health risks. See e.g., Poverty and Hunger - Issues and Options for Food Security in Developing Countries; a World Bank Policy Study, 1986. 4/ For example, according to the 1981/82 HES, the average cost of 2,122 calories actually consumed by the poor cost about Tk 5.5, while the same amount of calories from a balanced diet recommended by nutrition experts would cost about Tk 8.3. -134- how nutritional intake rises with income, and Figure 6.2 shows the size of poverty groups in rural and urban areas. 6.07 Nutritional Intake. Based on this analysis, Table 6.1 shows the number and the proportion of the population below Poverty Lines I and II. In FY74 over four-fifths of the population in both urban and rural areas con- sumed less than the recommended minimum calorie intake. The very poor accounted for 44% of the population in rural areas and about 29% in urban areas. The picture for FY82 is less clear, due to the changing composition of food basket over the period. If consumers had obtained the same quality of calories in FY82 as they did in FY74, poverty would have appeared to dramatically increase (see footnotes to the table); during the period the price of higher quality protein-rich foods rose at a rate 50% higher than foodgrains and potatoes. Consumers, both middle income and poor therefore, switched to a poorer diet; they were able to adjust their food basket to cheaper foodgrains and potatoes to maintain their calorie intake. Based on actual calorie intake in FY82, the proportion of the population consuming less than the recommended intake of 2,122 calories per day fell, although in absolute numbers there was an increase. Among the very poor, however, the situation became unambiguously worse. Even if the deterioration of the diet is ignored, the proportion of "hard core" poor rose from 44% to 52% in rural areas and from 29% to 31% in urban areas. Between 1974 and 1982 the number of "hard core" poor rose by over 12 million to 46 million. Over 90% of these lived in rural areas. -135- FIGURE 6.1 DAILY PER CAPITA CALORIC INTAKE BY EXPENDITURE GROUP IN FY82 A: RURAL AREAS 3500 3000- 02500- (2122 Cal) Recommended Min. Intake .. . . . I . . . . . . ... ........................ ...................... ,- - 2000- (1805 "Hard Core" Poverty 1500- 0. 500 Tk 145 Tk 189 o i0o 200 360 460 500 oo0 MONTHLY PER CAPITA EXPENDITURE (TK) B: URBAN AREAS 3000 2500J ........................................... f.i ........................ ..... e.*...... J 2000 (2122 Cal) Recommended Min. Intake .................... . . ... . . .. ................. .. ... .. ... ; ...... .. . < (1805 Cal) H"ard Core" Poverty I 1500 0. ) 1000 Tk 175 .Tk 292 soo- - -, 0 100 200 o0o 400 50o *60 MONTHLY PER CAPITA EXPENDITURE (TK) Source: 1981-82 Household Expenditure Survey, BBS, August 1986. 926L snlonfv'Se8 'A3AdnS 38nihN3dXU alOH3SnlOH Z8-196L :3o8nos (I.) 3snIlhiQN3dX3 VlIdVO 83d AlHINOV Ogg OOS 05t oof OS 002 OZ ooz Ol 001 0 0 .. . . -0 S/. , , . 1 o N-S -U --0 I-n .,,,, I 0' '-4z -09 NoIiV1ndOd so 3aOYn333d 3ALL1fflln00 Z8/86L- AId3AOd SO 3ON3GIDNI Z9 3dfl91A -137- Table 6.1: DIMENSIONS OF POVERTY, FY74-FY82 Number and Proportion of Population Below Recommended Calorie Intake and "Hard Core" Poverty Lines Poverty Line I Poverty Line II Recommended Intake "Hard Core" Poverty (2122 cale/day/person) (1805 cals/day/person) - Rural Urban Rural Urban - - - Absolute Number of Poor (millions) - - - - FY74 57.4 5.6 30.7 2.0 FY82/a 70.9 8.8 52.0 3.9 FY82T7 60.9 6.4 43.1 3.0 - - Poor as Percentage of Total Population - - - FY74 82.9 81.4 44.3 28.6 FY82/a 90.0 69.0 66.0 30.7 FY827T 73.8 66.0 52.2 30.7 /a Based on the pattern of consumption of the FY74 HES. 7T Based on the pattern of consumption of the FY82 HES. Source: 1973/74 and 1981/82 Household Expenditure Surveys, BBS. 6.08 The deterioration in diet is illustrated by Table 6.2, showing chan- ges in the per capita consumption of selected-foods. The population on average was able to increase its consumption of carbohydrates--rice, wheat and potatoes--to compensate for declinin6 consumption of protein pulses, milk, meat, fruit, etc. The poor were less able to make this adjustment. This was partly because they were already consuming a poor and cheap diet, and partly because their real incomes fell more rapidly than for the popula- tion as a whole. This is illustrated by the deteriorating income distribu- tion shown in Table 6.3. -138- Table 6.2: CHANGES IN THE FOOD BASKET, SELECTED ITEMS, FOR THE TOTAL POPULATION AND THE POOR Per Capita Consumption FY82 (grams) Percentage Change 1974-82 Total Population The Poor/a Total Population The Poor/a Rural Urban Rural Urban Rural Urban Rural Urban Rice and Wheat 458.2 447.7 417.1 431.0 + 5 + 2 - 1 - 3 Potatoes 22.1 33.8 16.9 24.4 +138 + 90 +162 + 62 Pulses 12.0 18.6 9.2 14.1 - 40 - 2 - 47 - 19 Vegetables 129.8 149.1 + 32 + 31 Milk 16.2 25.5 6.8 10.1 - 41 - 14 - 62 - 55 Fats 5.1 18.6 + 3 +135 Meat 1.9 9.1 0.8 3.e6 - 41 + 36 - 45 - 15 Chicken 2.0 3.9 0.5 5U9 + 14 + 91 - 79 - 56 Fish 26.9 35.0 19.9 23X6 - 5 + 32 - 8 + 4 Sugar/Gur 8.9 14.6 5.7 4.9 - 19 - 9 - 14 + 46 Fruits 9.9 13.7 - 35 - 30 Misce./b 46.1 53.0 +109 + 51 /a Defined as those households consuming on average less than 2,122 calories per person per day (i.e., below Poverty Line I, accounting for 67 million people, or 74% of the rural population and 66% of the urban population in FY82). /b Includes a large variety of cheap foods such as root crops, sweet potatoes, spices and prepared foods. Source: 1973/74 and 1981/82 Household Expenditure Surveys. -139- Table 6.3: INCOME DISTRIBUTION, FY64, FY74 and FY82 (Proportion of Income Accruing to Each Income Group) Rural Urban FY64 FY74 FY82 FY64 FY74 FY82 Bottom 40% 19.6 1901 18.8 16.7 17.8 16.1 Lower Middle 40W 38.4 38.4 38.8 33.8 38.0 36.6 Upper Middle 15%' 24.8 26.5 25.6 28.4 26.6 27.0 Top 5% 17.2 16.0 16.8 21.1 18.6 20.9 100.0 100.0 100.0 100.0 100.0 100.0 Source: Household Expenditure Survey, 1981/82. 6.09 This deteriorating picture is supported by evidence from the nutri- tion surveys. During FY76 and FY82, average daily per capita calorie intake declined by over 7%, and the nutrition status of the poor deteriorated.l/ The FY82 survey indicated that the average consumption of the poorest one third of the population was only 1,500 calories per day; this is less than the critical minimum needed just to maintain body weight, implying that a substantial proportion of the population was unable to function normally. This occurred despite the fact that per capita food availability was rising (from 14.4 ounces per person/per day in FY77 to 15.9 ounces in FY82). 6.10 Nutrition surveys also showed a deteriorating food balance. Between FY77 and FY82 average per capita consumption of protein fell fronm 58.6 grams to 48 grams. By FY82, 77% of all households were deficient in protein cornsumption. Furthermore, most of the protein was derived from cereals and was not complemented with adequate quantities of higher quality protein from legumes and animal sources in order to ensure efficient metabolic consumption; less than 50% of 'he wheat and rice protein is metabolized when consumed alone. The poor con.3umed less than 25% of the estimated needs for higher quality protein. Aveiage per capita consumption of fat declined by 38% since 1966, and its consumption among the poor is just 10% of the requirements (fats are essential for the absorption of vitamins). The calorie deficiency is further exacerbated by lack of micro-nutrients; nutri- tional anemia still affects an estimated 73% of children below 5 years of age, 74% of those aged 5-14 years, 60% of men and 74% of non-pregnant and 1/ Nutrition Surveys of 1975/76 and 1981/82; see also UNICEF Study of 1981. -140- non-nursing women.l/ Within families, children and women receive a less adequate diet than men, with serious effects on the health of children at birth and during the most criticUL period of their development. By the age of 4 years, almost half of the surviving children are physically stunted. Approximately 250,000 children die each year from malnutrition and dehydra- tion linked to diarrheal infections, and about 20,000 !". -ome blind. Only 20% of the children born in a particular year become healtzs, physically fit and fully productive citizens.2/ The 1982-86 Period 6.11 Since 1982, there has been a slight improvement in at least some of the poverty indicators. In particular, wage laborers in rural areas, who constitute the large majority of the very poor, appear to be benefiting from some of the more positive trene 1/ For a more detailed discussion of the 1982 Nutrition Survey, see Bangladesh: Food and Nutrition Sector Review, World Bank, January 1985, Report No. BD-4974. 2/ Chapter 9 discus:ies health and nutrition in more detail. -141- Table 6.4: TRENDS IN REAL WAGES BY SECTOR, 1969/70-1985/86 (Indices of Real Wage Rates; 1973/74=100) 1969/70 1973/74 1981/82 1984/85 1985/86 1985/86 (Tk/day A. Rural Agriculture (unskilled without food) 113 100 88 104 120 29.5 Fishery (unskilled) 166 100 157 12.2 132 25.4 B. Urban /a Cotton Textile 186 100 107 106 116 28.7 Jute Textile 113 100 77 67 83 28.3 Engineering 194 100 97 102 130 36.4 Vegetable Oil 179 100 92 81 84 20.9 Small-Scale Industry 131 100 103 141 139 31.5 Construction 123 100 101 91 104 33.3 /a Avervtge wage rates for Dhaka, Chittagong, Rajshahi and Khulna. Note: Nominal wages deflated by rural and urban cost of living indices. Source: Bangladesh Bureau of Statistics. 6.12 Real Wage Developments. The decline in real wages for unskilled laborers, which occurred steadily between 1970 and 1982 has halted, and appears to have been reversed. Table 6.4 shows that improvements have occurred in both rural and urban areas and broadly across sectors, although in some urban sectors (e.g., vegetable oil, jute, and textiles) real wages appear to have fallen. Gains in agricultural activities are especially impressive; for the first time real agricultural wages have regained their pre-Independence levels. if sustainable this is an important achievement, especially in view of the continued rapid (about 2.4% per year) growth of the rural labor force. Real agricultural wage levels and their rates of growth vary considerably by region in bangladesh (see map at the end of the report), Differences in levels are generally related to the structure of agricultural production and the density of the working population. There is also some evidence that changes are related to the introduction of high yielding seed varieties (HY-Is), increased fertilizer use and irrigation. 6.13 Food Availability and Prices. Progress in real wages has apparently not been matched by gains in nutrition. While, the availability of foodgrains has continued to rise and the calorie intake among the poor has probably not declined in the 1982-86 period, the deterioration in the quality of diet appears to have continued. While the average (weighted by -142- consumption) price of rice, wheat and potatoes rose by 8% per year during the period, protein-rich foods and vegetables each rose by 14% per year. Per capita availability of pulses, fish, chicken and eggs also appears to have declined. Issues for the Future e6.14 Rising real incomes since 1982 have probably slightly reduced the incidence of poverty; but the absolute number of those consuming less than the recommended minimum calorie intake has almost certainly risen, probably by about 6 million, to 74 million.l/ In addition, even at its higher level, the unskilled daily wage rate of about Tk 30 ($1) in 1986 could barely sup- port a family of three for a day at the poverty-threchold consumption expenditure.2/ The average rural family size is over 5.7, and on an average a rural landless laborer can only obtain wage employment for about 185 days per year--115 days in crop production and 70 days in other allied activities; ,for the rest of the time he either remains unemployed or is engaged in other hiarginal and less remunerative activities. 6.15 It is access to income earning opportunities and purchasing power-- even more than food availability or access to health and nutrition facilities--that will determine whether or not the "hard core" poor are to improve their lot in the coming years.3/ In this regard, the recent upward trends in real wages are, despite all the caveats noted above, most encouraging. But whether they are due to underlying developments in the economy that can be expected to continue, or whether to special considera- tions peculiar to the last few years, remains an open question. 6.16 The Causes of Higher Real Wages. Labor demand in agriculture has grown moderately over recent years but cannot explain rising real wages. The 1/ Based on the assumption of unchanged income distribution, and 2.4% per year population growth. 2/ Based on the expenditure pattern of the 1981/82 HES, the minimum recom- mended daily calorie intake requires daily total expenditure of Tk 9 per capita in rural areas and Tk 14 in urban areas in mid-1986. It should also be noted that the documented wages are generally higher than average wages in agriculture. Host labor is still undertaken within the "patron- client" relationship, whereby a landless or near-landless laborer enjoys priority access to paid labor by his patron with whom he has other relationships--credit, sharecropping, or contiguous land. The price of this preferential access is a lower wage. 3/ See Poverty and Hunger - Issues and Options for Food Security in Developing Countries; a World Bank Policy Study, 1986, for an elaboration of this theme. -143- introduction of HYVs, fertilizer and irrigation has, as was seen in Chapter 3 (Table 3.1), significantly added to labor demand. Switching from traditional to modern (HYV) farming of rice raises the average per hectare labor require- ment (mandays) from 125 to 163 for the aman crop, from 143 to 298 for the aus crop and from 207 to 242 for the boro crop.l/ Studies indicate that on average the demand for labor in crop production rises at a rate about half that of the growth in production. Over the 1982-86 period, therefore, the labor demand in agriculture rose by about 1.5% pet year. This is about the same as in the 1974-82 period when the rural labor force was also growing at about the same rate (2.4% per year), but when real wages fell. An additional explanation is therefore required for the later period. 6.17 Special programs which have benefited the poor directly have probably played an important role. For example, allocations of wheat in the Food-for-Work Program increased from 372,000 tons in FY82 to 500,000 tons in FY86, implying an increase of 38 million days of work. And allocations for the Vulnerable Group Feeding Program increased from only 39,000 tons in FY82 to 172,000 tons in FY86, implying an increase in payment to women for nearly 55 million days at Tk 12 per day. Other infrastructure programs have also been important. For example, allocations for construction of upazila head- quarters and new development grants to Upazilas amounted to Tk 3.4 billion in FY84, Tk 4.2 billion in FY85, and Tk 4.3 billion in FY86; rough estimates show that these additional expenditures beginning in FY84 had the potential of creating 75 to 85 million days of new employment. In addition, construc- tion of rural infrastructure was intensified in several areas during FY82-85, and rural credit increased substantially and became more widely available. 6.18 Socio-economic developments may also have influenced the rising trend in rural wages. First, migration to urban areas may have increased over the last five years resulting in a reduction in some areas of the supply of able-bodied men. And second, there is evidence that the traditional rural power structure is beginning to change. A large proportion of the UJnion Parishad leadership has been elected for the first time, and the new leaders are generally young. The younger rural elite are more commercially oriented, and they often tend to disregard the social safety-net concept of traditional patron-client relationships. In addition, a number of programs have been initiated (such as those of the Grameen Bank and many other NGOs) in parts of the country which organize the poor into groups, and offer credit at reasonable rates; these are creating solidarity among the poor, improving their bargaining position, and making possible alternative income earning opportunities. Furthermore, many poor who are able to benefit from increas- ing activities of the Food-for-Work and Vulnerable Group Feeding Programs, apparently no longer approach the local leadership and the rural elite for 1/ See for example Mahabub Hossain: Technological Change and Factor Productivity in Bangladesh Agriculture, International Food Policy Research Institute, September 1986. -144- relief. Thus, while millions of poor families still remain dependent upon the rural elite, there appear to be forces on both sides of the equation which are gradually weakening the traditional patron-client relationship system. This will allow wages to be increasingly determined by supply and demand factors, which may result in a higher wage for the laborer. On the other hand, it will also weaken an integral source of security in rural areas.1/ 6.19 The Outlook for the Future. As discussed in Chapter 3, there is good scope for robust growth in the agricultural sector; regaining its momentum is an urgent challenge. However, agricultural growth will not directly benefit a large majority of the poor--the increasing number of landless and near landless laborers. As is seen in Table 6.5, the fragmentation of agricul- tural land has accelerated in recent years. According to the Agricultural Censuses, the number of farms of less than 1.0 acre rose from less than 1 million in 1977 to over 4 million in 1984. There are now over 10 million farms in Bangladesh, of which one quarter are less than half an acre in size. The average size of farm has fallen from 3.5 acres in 1977 to below 2.3 acres today. 1/ For a detailed analysis of the new phenomenon, see Atiur Rahman, Impact of Grameen Bank.Interventions on the Rural Power Structure, BIDS, July 1986. -145- Table 6.5: DISTRIBUTION OF AGRICULTURAL HOLDINGS, 1960-1984 Percent of all % Change in Size of Farms Percent of all Holdings Land Operated Total Area (acres) 1960 1977 1984 1960 1977 1984 1977-1984 less than 1.0 24.3 15.9 40.5 3.2 2.6 7.8 +205 1.0 - 2.5 27.3 33.9 29.9 13.0 16.1 21.2 + 36 2.5 - 5.0 26.3 29.2 17.9 26.4 29.2 27.4 - 3 5.0 - 7.5 11.4 11.6 6.7 19.3 19.7 17.6 - 8 7.5 and above 10.7 9.5 4.9 38.1 32.4 25.9 - 17 All Holdings 100.0 100.0 100.0 100.0 100.0 100.0 Memorandum Items Number of Farms (million) 6.139 6.257 10.045 Cultivated Area (m acres) 21.726 21.95 22.678 Population (m) 50.0 81.4 97.1 Source: Bangladesh Census of Agriculture and Livestock, 1983-84, BBS, May 1986, and earlier censuses. 6.20 A reduction in farm size generally results in an increase in labor input per acre, so this might sound like good news to the underemployed. But the smaller the farm the less likely that hired labor will be required. This is illustrated in Table 6.6. While total labor use in farms under 2 acres is 17% higher than in larger farms, the use of hired labor is 33% lower. While farms over 5 acres rely on hired labor for 58% of their entire labor needs, farms below 2 acres use hired labor for only 33% of their needs. Smaller farms below 1 acre generally need almost no hired labor at all. 4 * i 4' -146- Table 6.6: THE PATTERN OF LABOR USE BY SIZE OF FARMS, 1982 Labor Days Per Acre Size Labor Days Per Household of Cropped Land Use of Hired Group Family Hired Total Family Hired Total Labor (acres) Labor Labor Labor Labor Labor Labor (percent) Small owner (up to 2.0) 68.7 33.7 102.4 37.6 18.5 56.1 32.9 Medium owner (2.01-5.0) 114.0 82.3 196.3 29.5 21.3 50.8 41.9 Large owner (5.01 and above) 159.4 218.3 377.7 20.3 27.8 48.1 57.8 All Farm Households 96.6 76.2 172.8 28.7 22.6 51.3 44.1 Source: IFPRI/BIDS. Study on the Development Impact of Food for Works Program, Bangladesh (Washington, D.C.: 1985), cited in Raisuddin Ahmed, A Structural Perspective of Farm and Non-Farm Households in Bangladesh, draft, August 1986. 6.21 A recent study has projected these developments in the future.l/ Based upon demographic and economic trends, the number of farms is projected to grow from 10 million in 1983 to over 15 million in 2006. Eighty-three percent of these would be under 2.5 acres (in comparison with about 70% today) and the average farm size would fall from 2.3 acres to 1.5 acres. Over 23 million additional people would become dependent on rural non-farm activities or would be forced to migrate to the cities. This is potentially a disastrous situation for landless laborers and for very small farmers, whose farms provide only supplementary income to laboring activities and yet prevent their mobility to urban and other rural areas where job opportunities might be more plentiful. The promotion of economic and employment opportunities, and access to resources by these disadvantaged people must therefore have the highest priority. This is the theme of the next chapter. 1/ Raisuddin Ahmed; A Structural Perspective of Farm and Non-Farm Households in Bangladesh; International Food Policy Research Institute, draft, August 1986. -147- Chapter 7: PROMOTING INCOME EARNING OPPORTUNITIES AMONG THE POOR 7.01 Even a high GDP growth rate of over 5% per year will be insufficient to productively employ all new entrants to the labor force in the coming years.l/ Probably only about two-thirds of the 1.3 million annual increase in the labor force could be employed at current real wages under the High Case growth under the present production structure; agriculture would prob- ably absorb about 25% of new entrants to the labor force, industry, 7-8%, and infrastructure and services, about 33%. The remainder would involve themsel- ves in marginal activities, swelling the ranks of the very poor, with no access to resources and no hope of improvement. Special targeted efforts to help the assetless and near assetless are therefore an essential complement to sound macroeconomic and incentive policies. 7.02 Experience in many developing countries suggests that without special attention, government programs fail to reach the very poor and can even be dett-imental. In attempting to promote rural development, government agencies usually benefit primarily the better-off rural dwellers. The very poor own no land and therefore can benefit only indirectly from the primary rural development effort--crop production. The assetless are generally illiterate and lack skills and financial resources to take advantage of productive opportunities as they might arise. Almost inevitably, therefore, the exist- ing rural power structure manages to usurp the benefits of poverty programs for themselves, sometimes with negative effects on the poor. Bangladesh is no exception to this common occurrence.2/ 7.03 The Government has for some time recognized the need for special targeted programs. Poverty-oriented programs have been implemented by a number of agencies including the Bangladesh Rural Development Board (BRDB), the Bangladesh Cottage and Small Industries Corporation (BCSIC), and rural works and Food-for-Work Programs. In some instances good progress has been made. But the efficiency of programs could be improved and the scale of the unmet needs is enormous. Programs have generally not been constrained by 1/ Over the coming decade, about 55% of the increased labor force will be in rural areas and 45% in urban areas. 2/ For example, the Administrative Reorganization Committee Report of 1982 notes that "Social reorganization of economic development has always been impeded owing to the existence of powerful vested interest groups who, in collusion with or under patronage of some government functionaries and political forces, have usurped for themselves the benefits of whatever resources that might be available." These observations were based on a 1981 study conducted by the National Institute of Public Administration, and extensive interviews with officials and others in the field. See also the Second Five Year Plan, Chapter XII. -148- a lack of funds, but instead by policy and institutional factors, including weak implementation capacity due primarily to poorly trained and motivated manpower. As a result, their coverage has been narrow in relation to both the need and to the resources already available for such programs. 7.04 These concerns are shared by both Government and donors, and the last year has witnessed important initiatives in this area. For example, follow- ing a joint Government-Aid Group Seminar on the North-South Institute Report on Rural Poverty in Bangladesh,l/ six sub-groups of the Local Consultative Group (LCG) have been established to identify issues and make recommendations in the fields of: (a) rural credit, (b) non-governmental organizations (NGOs) in rural development, (c) the cooperative system, (d) rural employment, (e) rural infrastructure, and (f) the Food-for-Work Program (FWP). In addition "Poverty Alleviation and Employment" was the theme of a special working level Bangladesh Aid Group meeting held in Bonn in November 1986. While the findings of some of the studies and discussions have not yet been translated into a coherent set of policies and programs, some conclu- sions are already clear. This chapter draws upon these preliminary conclusions. 7.05 There are essentially three ways in which targeted programs can provide employment opportunities for the assetless and near assetless. First, opportunities for self-employment can be created through group forma- tion and the provision of skills training, credit and technology. Second employment can be directly generated by labor intensive physical infrastruc- ture programs, and especially the Food-for-Work Programs. And third, assis- tance can be provided to existing informal micro-enterprises, whose expansion is constrained by lack of access to formal support services. Sections I, II and III of this chapter review progress and issues in each of these three areas. Finally, Section IV, discusses some systemic institutional issues common to many programs, and suggests ways in which policy coordination and program implementation might be improved. 1/ North-South Institute: Rural Poverty in Bangladesh - A Report to the Like-Minded Group, April 1985. Additional references on the characteris- tics of poverty in Bangladesh and on poverty programs inc1lude the Government's Third Five Year Plan, December 1985; World Bank, Bangladesh: Selected Issues in Rural Employment, March 1983 (Report No. 4292-BD), and Employment Opportunities for the Rural Poor - A Feasibility Report, February 1985 (Report No. 6035-BD); and over a dozen studies pubDlished by the Bangladesh Institute of Development Studies (BIDS). -149- I. PROMOTING SELF-EMPLOYMENT AMONG THE ASSETLESS 1/ 7.06 The landless and near landless are traditionally unable to share in opportunities for advan*. enment precisely because they are poor. By definition they are unable to provide collateral for bank loans and they lack the skills, information and market access to take advantage of productive opportunities. Experience suggests that for assisting the poor it is neces- sary that first, individuals be organized into groups based on socio-economic homogenity and common interest, and second, credit, skill training and market information be made available. This is a complex endeavor requiring a skilled, motivated and unconstrained intermediary. 7.07 Group Formation and the Cooperative System. The Government has promoted group formation through the cooperative movement. The Comilla model, a two-tier cooperative system, continues to be the dominant institu- tional mechanism to reach the rural poor, both for agricultural development and non-farm employment generation.2/ This approach has undoubtedly made a substantial contribution to rural development. Cooperatives have been par- ticularly successful in distributing large numbers of minor irrigation equipment.3/ However, with the expansion of the program, the Comilla model has become an ad2unct of the bureaucracy, and cooperatives are frequently imposed involuntarily from above for ease of providing inputs, in many cases at the instance of interested rural elite who then manage to appropriate benefits for themselves. Such cooperatives are thus no longer free private associations or enterprises, reflecting commonality of interest and par- ticipation by all members. These two factors--the expropriation of coopera- tives by the local elite, and the lack of a sense of "ownership" on the part of members--have in many instances, led to a deterioration of teamwork and discipline. Credit recovery in the cooperative system currently stands at 1/ Though self-employment generally pertains to single owner operations, for the purposes of this chapter it is taken to include small group ownership and group operations where all involved persons are simul- taneously part-owners and workers performing management, production and trading functions themselves as in production cooperatives or in small informal groups. 2/ The Cooperative Department which performs regulatory functions of registration, audit, inspection, and enquiry, also promotes traditional and professional cooperatives such as weavers, fishermen, rickshaw pullers and sugarcane growers; these have made a positive contribution to employment. However, the Comilla model which requires the federation of village level primary cooperatives into a Central Cooperative Association at the upazila level has become the dominant approach. 3/ About 45% of shallow tubewells and 70% of new deep tubewells installed in the country have been purchased and are operated by cooperatives. -150- about 50%, and while this rate is higher than on loans to individual larger borrowers, the situation has deteriorated to the extent that 25% of the cooperatives are no longer eligible for credit. 7.08 The Bangladesh Rural Development Board (BRDB) is the main government agency to implement the two-tier cooperative structure. In addition to its original objective of facilitating new technology for increasing crop production, BRDB has also been given the responsibility of organizing special cooperatives of assetless men and women, and the complementary services for assisting production in non-crop sectors. It is currently assisting about 2.4 million members of farmers cooperatives (KSS), 350,000 members of cooperatives for resourceless people (BSS) and 280,000 members of women's cooperatives (MSS). This is an enormous responsibility requiring a highly efficient organization. However, its expansion has been so rapid that it has not managed to ensure that the calibre and motivation of staff are commen- surate with the complexity of the task. Efforts are uAderway to redress this situation through management development, staff training, information systems and skills training; but progress has been mixed. 7.09 Furthermore, frequent changes in the leadership of the BRDB have hindered institutional growth and the development of implementation capacity, and field staff often lack orientation and skills appropriate to the needs of the rural poor. As a large public organization, BRDB's orientation inevitably tends to be that of a control and administrative bureaucracy rather than a promotional catalyst. For the same reason, it is very dif- ficult to maintain the flexibility that is required to respond to the complex and changing conditions in rural areas. Furthermore, it lacks an effective monitoring and evaluation mechanism which would permit lessons of experience to be incorporated into policy changes and implementation procedures. Some of these problems seem to stem from its new responsibilities towards rural non-farm programs; these may have over-burdened BRDB to the extent that its original objectives of promoting farming cooperatives and agricultural growth are beginning to suffer. 7.10 In view of these concerns, the working-level meeting of donors and Government in Bonn recommended that a review of the cooperative system be undertaken with the purpose of i) evaluating the cooperative models in place (and more specifically the Comilla model) as a means to effectively reach the assetless; ii) assessing the institutions responsible for implementing and monitoring the cooperative system, particularly the BRDB; and iii) developing alternative solutions to effectively reach the assetless and to better respond to their specific needs and interests.l/ 1/ A recent survey of the cooperative system found it to be-in "disarray", and recommended a program of work for a more detailed review leading to recommendations for reform. See "The Cooperative System in Bangladesh - A Brief Description and a Proposal for a Review", DANIDA, December 1986. -151- 7.11 Providing Credit to the Poor. The question of whether the poor can be made 'banikable" without creating more problems for the already troubled banking system is important and difficult. Though evidence is accumulating that in fact the poor can be an excellent credit risk, even in the absence of collateral, the operational costs of providing credit in very small amounts that the poor need are high. The commercial banks cannot afford to meet the needs of the poor at prevailing interest rates of around 18%. Evaluations of both the Grameen Bank (GB) and the Bangladesh Rural Advancement Committee (BRAC) schemes suggest that landless groups are able to undertake profitable activities and repay loans within a short time even at interest rates of 21% (GB) and up to 30% (BRAC).1/ Both of these models are based on group guar3n- tees and flexible repayment plans; in both cases, repayment rates are over 95%. Studies show that under both schemes, participants increased their household incomes by over 70% in a two-year period, and net earnings of participants from activities financed were between 75-100% of the borrowed funds. Similar positive results were found under the USAID Rural Finance Experiment Project (RFEP) which charged interest rates of up to 36% p.a. without adverse effects on the demand for credit or to repayment rates.2/ The RFEP concluded that interest rates of between 24-30% p.a. were the most appropriate to the rural economy in view of the costs of delivering credit and borrowers' ability and willingness to pay. 7.12 If lending to assetless groups is to be expanded significantly, such lending would need to be made profitable and safe for rural branches of commercial Danks. While a number of projects have been able to demonstrate that the poor were a better credit risk than more conventional borro-ers, this has not been sufficient to prompt commercial banks to become actively involved themselves. They are reluctant to undertake seemingly costly opera- tions of administering a small loans portfolio involving numerous borrowers. Adequate margins must be provided, and experience suggests that in order to limit the lending costs and risks of the banks, specialized intermediaries will be required to disburse, supervise and collect credit; this was the role of the Grameen Bank in its initial project. The development of efficient intermediaries between the poor and the formal banking system seems necessary for providing credit needs of the poor. The success of such intermediaries would depend upon a cadre of well-trained and committed workers (whether employed by NGOs or public agencies like BRDB) who perform multiple functions 1/ See for example Mahabub Hussain, Credit for Alleviation of Rural Poverty: The Experience of Grameen Bank in Bangladesh; Bangladesh Institute for Development Studies, Dhaka, and International Food Policy Research Institute; Washington, D.C., September 1986. 2/ Even interest rates of this level are attractive to the poor since often their only alternative is to borrow from traditional money lenders at 10% per month or more. -152- of assisting the poor in their productive activities, and in monitoring and supervising credit repayments. Experience shows that the poor have the capacity and willingness to pay for such services. 7.13 Market Demand and Appropriate Technology. Opportunities for profitable enterprise through provision of credit and improved productivity on the part of groups of poor and only semi-literate rural dwellers are plentifuL. Limited effective demand, however, is as much a constraint on employment creation as are supply conditions, and care niust be taken in assessing the viability of any project, however small.l/ In many instances, the poor themnelves will be the most competent to make an assessment of demand potential in their own locality, especially for traditional products. But extension workers should be able to give advice on what has proiven suc- cessful elsewhere and on quality improvements that would be required in order to make products attractive outside the immediate vicinity and even for export.2/ 7.14 Simple and appropriate technology development must also be coor- dinated and disseminated. Bangladesh has built up a network of research centers and agencies (both Government and non-Government), but so far the emphasis has been either on crop production or on larger-scale urban industrial production. A number of NGOs have achieved some success in improving technologies for existing artisan enterprises as well as adapting technologies in the production of new products such as jute reinforced roof- ing sheets, treadle pumps, neem soap, sunflower oil and handmade paper, based on locally available resources. However, 1NGOs do not have enough technologi- cal expertise or resources to carry out such work intensively. The Grameen Bank and BRAC are now developing their own technology units. While these units will play an important role in identifying and disseminating appropriate technologies for their clients, there is currently no agency that coordinates the research and dissemination effort. It would be useful to identify or establish a national institute which has the technical interests of poverty oriented self-employment programs specifically included in its work program. 7.15 The Inst-tute of Appropriace Technology (IAT) would be a good candidate. It has a stated interest in working on applied technology in rural areas, and it is relatively new, with no vested interest in any par- 1/ There is, however, a danger of overemphasizing the demand constraint even in extremely low income areas such as rural Bangladesh. Rapid price increases over recent years of such products as fish, meat, pulses, hide, skins and milk, even when production has not fallen markedly, suggest that demand may be more buoyant than often believed. 2/ Potential export goods could include leather., handloom products, silk, rabbits, frog legs, duck feathers, etc. -153- ticular area of technology nor staff who may prove to be inappropriate to the task. It has already proved its ability to come to grips with technology problems of the rural landless by working, for example, on the problem of improving gur technology for BCSIC. In addition, it is well placed in the Bangladesh University of Engineering and Technology (BUET) to influence students and technologists towards the needs of the rural landless. However, IAT would need to start in a modest way, working initially with a few selected projects, and making appropriate links with similar institutes in other countries, so as to build both experience and creditability. ..Over-time it could begin to coordinate the work being done in other Bangladeshi research institutes.l/ 7.16 Skills Training. Two forms of training have been found essential to the successful development of rural income-earning opportunities. First, guidance is required on simple technologies and especially on the scope for activities complementary to traditional agriculture-based goods-for example, those based on fish, milk and meat preservation, leather manufacture, animal feed preparation, and the production of simple capital goods such as fish smoking ovens, bamboo fish cages and fish nets. Second, siimple functional skills such as rudimentary literacy and numeracy are essential both to enable sound decision-making and to prevent exploitation by more powerful groups. 7.17 Very little of this type of functional training is currently being provided to the non-schooled and assetless poor. However, some important initiatives have recently been taken, especially by NGOs. BRAC, for example, has developed a promising system combining group formation, and training in practical skills and in functional literecy and numeracy and other NGOs such as PROSHIKA and Nijra Kori have adopted a similar methodology. Success is mixed, but encouraging. Those providing services to the landless groups also require training. Facilitators, extension workers and even elected local officials need to be given an in-depth knowledge of the problems of the poor, and trainers need to acquire communication skills and to develop flexibility to base the level of instruction according to the learner's knowledge and capacity. While there are a large number of training institutes in Bangladesh, they are not yet oriented towards this type of need. Much can be learned from the ongoing NGO programs. The BRAC approach in particular could be reviewed to assess the extent to which it can be replicated. At the same time capacity for appropriate training in the rural development institutes needs to be reassessed and links between the various government training institutes and the rural poor programs established. 1/ Suggestions on how IAT might be helped to start operating were outlined in Annex III of Employment Opportunities for the Rural Poor - A Feasibility Report, World Bank (Report No. 6035-BD), February 11, 1985. -154- II. INFRASTRUCTURE PROGRAMS FOR EMPLOYMENT CREATION 7.18 Investment in simple rural infrastructure has a high rate of return in Bangladesh.l/ A number of innovative and important programs are now seeking to provide employment opportunities for the poor in the construction stage, while creating economically justified infrastructure in rural areas. Included here are the Rural Employment Sector Project (SIDA), the Road Maintenance Program (USAID, CIDA, CARE, WFP and DANIDA), and the Food for Work Program (FWP). 7.19 By far the largest of these is the Food for Work Program. The allocation of food to FWP has increased almost 12 fold over the last decade, reaching 500,000 tons 2/ in FY86, equivalent to about $114 million.3/ As the single most important resource for rural infrastructure development, the FWP now geiierates annually nearly 100 million workdays of employment for workers who would otherwise be unemployed. Recent evaluation studies suggest that if FWP projects are well selected, designed, implemented and maintained, the program can have a far reaching impact both through its direct employment effects, but also indirectly through the provision of infrastructure and in demand creation in rural areas.4/ Continued but cautious expansion is war- ranted in the coming years. 7.20 Notwithstanding its success there are causes for concern and new directions that must be taken especially if the programs are to continue to grow. A recent review by the World Food Program noted a number of related factors currently preventing the program from achieving its full benefits. First, food aid tends to be considered less valuable than cash aid; less concern is therefore shown in the efficiency of its allocation, and appropriate technical and managerial capacity for project implementation has often not been established. Second, perhaps for the same reason, the programs have not been integrated within local development efforts. FWP projects are not considered as an integral part of the local investment program. As a result, counterpart cash inputs required to make assets fully usable--such as for bridges and culverts--are inadequately provided, and cash 1/ For an analysis of direct and indirect benefits of rural infrastructure see Raisuddin Ahmed, The Role of Infrastructure in Rural Development: The Case of Bangladesh; International Food Policy Research Institute, Washington, September 1986. 2/ This includes about 100,000 tons allocated for "Relief." 3/ Valued at average retail price for wheat. 4/ See for example, Development Impact of Food for Work Program in Bangladesh, Bangladesh Institute of Development Studies (BIDS) and the International Food Policy Research Institute (IFPRI), December 1985. -155- allocations for maintenance are grossly inadecuate. And third, the lack of effective monitoring mechanisms has led to frequent over-estimation of work done and under-payment of food to workers. The employment potential has therefore not been fully realized and assets created have not been as productive as they might have been. 7.21 Government and food aid donors are agreed that some diversification away from the traditional rural road programs will be required if the programs are to be productively expanded. In some parts of the country, the rural road network is already sufficient (at least in density if not in quality), and efforts are being made to explore new directions.l/ Two new initiatives are worthy of note. First, the focus of the Vulnerable Group Feeding (VGF) Program is moving away from that of providing only food towards providing skills training with the hope that beneficiaries over time will become less dependent. This program is still new--a WFP survey in 1985 indicated that only 7% of the VGF beneficiaries received any training--but is being intensified. Second, FWP projects are being coordinated with other aid programs. For example some IDA and CIDA assisted projects provide funds for construction of appurtenant structures on FWP schemes sponsored by th- Bangladesh Water Development Board (BWDB). And West German and USAID/Care programs allocate a part of their food aid to finance structures on FWP schemes assisted by them. 7.22 As the FWP continues to diversify into new activities such as irriga- tion works, social forestry, fisheries and the construction of schools and markets, it is more important than ever that these programs be coordinated with other local activities such as those financed by the Upazila Development Grant and other ADP-financed projects at the local level. This will require a higher priority to developing planning, technical and implementation capacity at the upazila level and a monitoring mechanism at the district and the national levels. 7.23 Finally, as the weak bargaining position of the beneficiaries of these programs contributes to a large extent to over-estimation of work done and under-payment of benefits, it is desirable that new forms of organization of the beneficiaries, such as cooperative and/or NGO assisted informal groups be encouraged; such groups can become instrumental in local level monitoring, thus reducing misappropriation of resources. 1/ This is not to imply that investinent in rural roads is not economically attractive. Returns, especially in road rehabilitation have been very high. A recent analysis found the internal rate of return (IRR) in rural feeder roads to average 46%--a rate 3 to 4 times as high as IRRs generally recorded for projects in Bangladesh. See: Omar Chowdhury and Mahabub Hossain, Roads and Development - A Case Study of Return on Investment in Rural Roads in Bangladesh; Bangladesh Unnayan Parishad, Dhaka, 1985. -156- III. ASSISTING THE URBAN INFORMAL SECTOR 7.24 Providing support to existing micro-enterprises is the third strand in the strategy to promote employment opportunities among the poor. Although strictly speaking the owners of these tiny enterprises are not "assetless," since they usually possess a small amount of rudimentary capital equipment, they eahibit similar characteristics, operating in a subsistence manner and unable to generate surpluses sufficient for capital expansion or grqwth. 7.25 They are part of the "informal" sector in the sense that they generally operate without any dealing with or support from formal institu- tions or programs. The vast majority have no access to formal credit or government assistance programs and operate without any form of license. Their prospects for improving productivity and income for self-sustaining growth are limited by unassured supply of quality raw materials, inadequate infrastructural facilities, and by their continued use of simple, but obsolete technologies; these constraints restrict the quality and markets of their products. 7.26 However, even without support, the urban informal sector remains the fastest growing part of the economy. Regardless of policies followed, micro- enterprises continue to multiply, spurred by continued migration to urban areas coupled with the necessary resourcefulness of the new arrivals. In 1985 there were about 28,000 small scale enterprises, employing about 380,000 persons, and about 370,000 cottage industries, employing about one million. In addition, there were 320,000 handlooms, producing nearly 60% of the cloth requirements of the country and giving direct employment to over 1.2 million people. Nearly one-half of total industrial production in Bangladesh comes from these units and they account for two-thirds of total urban employment. 7.27 However, while these enterprises proliferate, they are generally unable to grow and prosper. Potentially, they are among the most powerful forces for development in the economy but lack of access to resources and knowledge has so far prevented the realization of this potential. The mod- ernization of informal sector micro-enterprises require both financial and non-financial assistance; they need credit both for working capital and for financing replacement of old and obsolete equipment, and they need training in planning, accountancy, procurement and marketing. They also need access to quality raw materials and to improved technology. 7.28 Assisting these enterprises is not easy. They are numerous, have diverse needs, and are widely dispersed in urban and semi-urban areas. The Government has sought to provide inputs and advice through three institutions--the Bangladesh Small and Cottage Industries Corporation (BSCIC), the Bangladesh Handloom Board (BHB) and the Bangladesh Sericulture Board (BSB). However, the capacity of these institutions to reach their numerous potential clients is limited, and their performance has been below expectation. The vast majority of enterprises have remained outside these -157- programs. There is3 a need to review the objectives, operations, staffing and resources of these institutions, in order to make them effective in their special areas of interest. 7.29 In addition, it is desirable to identify other target groups which are profitable, yet in need of support for expansion. Roadside metal fabrication and engineering workshops are possible candidates. As in the case of the landless groups, it will probably be necessary for an intermediary--preferably non-governmental--to coordinate and guarantee credit while providing training and advice. Above all, it is necessary that the Government seek to foster a change of attitude on the part of city administrators and bureaucrats towards the informal sector in order to create a more sympathetic environment. Towards this end, a review of licensing and registration policy is desirable.l/ Easy access to licenses could relieve small entrepreneurs from their major worry of eviction. IV. STRENGTHENING INSTITUTIONS FOR EMPLOYMENT PROMOTION 7.30 The task of promoting economic opportunities among the poor is a complex one. Required are not only technical and logistical skills, but also a level of commitment and an understanding of local conditions that would be rare in any central government bureaucracy. The task is much too large for any one agency and the implementation problems presently confronting BRDB indicate that this institution may have been overburdened. Small rural poor programs are implemented by other government agencies such as the Ministries of Social Welfare and Women's Affairs, Labor and Manpower, Youth and Sports, and Health and Population, but these programs comprise a small part of the ministries' activities and sometimes suffer from neglect. Lack of technical and administrative capacity prevents their significant erpansion. 7.31 The recent decentralization initiative offers an important oppor- tunity to focus additional resources at the local level and can potentially overcome many of the difficulties that have traditionally plagued rural development efforts--including a lack of coordination of field activities, lack of popular participation in the development process and a lack of response to local needs. The Upazila Parishads have been given a wide range of development responsibilities and financial resources. They are expected to plan and implement schemes of local importance, including rural works and food for work programs, and to implement "divisible" components of selected ADP pro4ects such as agricultural extension, fisheries, livestock, population and health, water supply and ruraL roads and markets. In view of these responsibilities and the limited capacity of management and staff at the 1/ In this regard, the progressive restrictions being placed on rickshaws, while easing traffic congestion for those able to afford motorized transport, is likely to have deleterious effects on employment and could be reconsidered. -158- local level,l/ it will not be possible for local Governments to play an active role in implementing innovative programs for promoting self-employment among the assetless. They must coordinate support and facilitate such ef:!orts, but must for the most part rely on other agencies for the day-to-day implementation. In this regard, their working relationships with the NGOs must be strengthened. 7.32 The mechanism by which the Upazila Government can support these initiatives is not yet clear. One suggestion is the establishment of Upazila Employment Resource Centers (UERC).2/ These would be autonomous bodies largely independent from the Government yet supported by it. Their task would be to facilitate group formation and to provide training in functional literacy and numeracy, and in simple technical skills and market information, and to act as an intermediary between groups and the banking system. It has been suggested that they begin in a few Upazilas, and that the experience and resourcefulness of NGOs be employed in their day-to-day operation. 7.33 Partnership with NGOs. Despite their limited administrative and managerial capacity, many studies have identified NGOs as an important instrument for reaching the poor in rural areas. For example, the models developed by the Grameen Bank and BRAC for group formation, training and credit provisions, appear to achieve better results than the cooperative system. Many other NGOs, though they lack technical resources to assist the poor in income generating activities, have done a commendable job of social mobilizacion. The Government and NGOs have different and potentially com- plementary strengths in promoting rural employment. For example, the Government is in a good position to arrange for the provision of services, but it has difficulties in organizing credit recipients and in providing high quality supervision and support. NGOs on the other hand, are generally more successful in assisting with group formation, credit follow-up and marketing assistance. 1/ Some upgrading of staff has occurred--for example the Upazila Nirbahi Officer (UNO) and the Upazila Engineer--but the stock of well trained administrative and technical staff remains inadequate and in many instances there are insufficient qualified staff to fill positions. A high priority has been given to training local government staff, and a wide range of courses is provided by a number of institutions including the Public Administration Training Center (PATC) and four institutes under the Ministry of Local Government, Rural Development and Cooperatives, the National Institute of Local Government (Dhaka), the Bangladesh Academy for Rural Development (Comilla), the Rural Development Academy (Bogra), and the Rural Development Training Institute (Sylhet). 2/ See World Bank, Bangladesh - Employment Opportunities for the Rural Poor - A Feasibility Report, February 1985 for a detailed discussion of this proposal. -159- 7.34 In a few instances, the Government is beginning to utilize the unique strengths of the NGOs in partnership with their own programs. For example, BRAC is responsible for training target groups and extension staff under the Second Rural Development Project. In addition, NGOs are being used to imple- ment part of the population program in urban areas, and CARE is responsible for implementing the USAID-financed Food-for-Work Program. But many more opportunities for partnership exist and there remains no clear policy on the part of the Government on supporting the NGOs, especially in organizing the rural poor for self-employment. 7.35 There are currently over 200 NGOs in Bangladesh, with very mixed capabilities. Before utilizing an NGO, the Government would of course need to consider the organization's experience in mobilizing the poor in employ- ment and income generating activities, its capacity to expand, its recruit- ment methods and training facilities for staff, its record of innovative approaches and its accounting, auditing, monitoring and evaluation systems. Some might be selected for assistance by donors and others might be utilized as sub-contractors for implementing development programs. 7.36 Aware of the potential in this area and concerned about the lack of progress, the recent working level Aid Group meeting in Bonn encouraged the Government "to develop a policy framework to facilitate and stimulate the participation of the private sector, both non-profit and profit-making organizations as development agents in pursuing poverty alleviation and employment generation... This policy would recognize the vital role of NGOs in the development process complementary to the Government's own efforts. It would help to create the necessary positive environment these agents need to be effective in their attempt to advance the interests of the assetless and other target groups."1/ 7.37 Employment Planning and Policy. A number of innovative approaches to the poverty problem have been developed over the last few years, but there is currently nowhere within the government structure where these ideas can be tested and, if found successful, promoted on a large scale. There is there- fore a need for a unit in the Central Government for monitoring programs and assessing lessons learnt, and for ensuring that economic policies are suppor- tive of employment generation among the poor. 7.38 In view of this, the Government has recently decided to establish a unit for this purpose in the Planning Commission. It is suggested that its responsibilities should essentially be three-fold. First it would monitor and evaluate ongoing employment programs and ensure that emerging lessons 1/ Closing statement of the Chairman, November 18, 1986. -160- from experience are disseminated and incorporated in new initiatives.l/ Second, it would review the Government's overall expenditure program and assess the extent to which sufficient attention is given to providing oppor- tunities to the most needy. Third, it would explore the overall policy environment with respect to its impact on employment. In this regard, a number of new technologies--for example in rice milling, oil seed extraction, sugar/gur making, and poultry farming--have significant and sometimes nega- tive impacts on traditional employment. In addition, some of the current policies directed towarda "modernizing the economy, such as the promotion of motorized rather than pedal rickshaws, may have a negative impact on employ- ment opportunities for the poor. Such issues would fall within the respon- sibilities of the unit, as would more general policies effecting the mix of capital and labor. 1/ This unit for example would provide the focus for discussions on new initiatives such as the UERC proposal and the RMP program. -161- Chapter 8: PROMOTING ECONOMIC OPPORTUNITIES FOR WOMEN 8.01 Women in Bangladesh, in custom and practice, remain subordinate to men in almost all aspects of their lives; greater autonomy is the privilege of the rich or the necessity of the very poor. Most women's lives remain centered on their traditional tcdles and they have limited access to markets, productive services, schooling, health care and local government. This lack of opportunities locks women into high fertility patterns which diminish family well-being, damage the nutrition and health of children, and frustrate education and other national development goals. 8.02 About 86% of women live in rural areas. The majority of women, perhaps 70%, are in small cultivator, tenant and landless households; many work as laborers on a part-time or seasonal basis for others, usually in post-harvest activities, and receive payment in kind or meager cash wages. Another 15-20%, mostly in poor landless households, depend on casual labor, gleaning, begging, and other irregular sources of income; typically, their income is essential to household survival. The remaining 10% of women are in households mainly in professional, trading or large-scale landowning categories, and they usually do not work outside the household. 8.03 The economic contribution of women is substantial but largely unacknowledged. Women in rural areas are responsible for most of the post- harvest work which takes place in the homestead and for keeping livestock, poultry and kitchen gardens. Women in cities rely on domestic and tradi- tional jobs, but they are increasingly working in manufacturing jobs, especially in the garment industry. Those with more education work in Government, health care and teaching but their numbers remain very small. 8.04 Data on health, nutrition, education and economic performance indi- cate that the status of women in Bangladesh remains low and considerably inferior to that of men. Despite overall improvements in human development indicators during the last decade, there are few signs that women's situation has improved or that the differentials between men and women are narrowing. In fact, acute poverty at the margin appears to be hitting hardest at women, physically, socially, and economically, resulting in a high, gender-sanecfic wastage of human resources. As long as women's access to health care, educa- tion and training remains low, prospects for improving their productivity and earnings are poor. 8.05 Nonetheless, changes in custom and practice and the encouragement of women's advancement expressed at policy levels provide grounds for hope. This hope is strengthened by the recent experience which demonstrates that targeted development programs can reach women with resources and productive services in ways that improve their well-being, expand their productive capacity and generate a positive return to family and national well-being. Unfortunately, the overall picture is far from encouraging because these programs have reached fewer than 10% of women. What is needed is a strategy -162- to reach increasing numbers of women and improve their access to education and training and expand their economic opportunities by systematically refin- ing and replicating successful income-generation programs, while developing and phasing in other innovative approaches. 8.06 This paper first presents the trends and status of women in Bangladesh. Section II reviews programs affecting women. Finally, Section III outlines a strategy for improving women's economic opportunities. I. CURRENT STATUS AND TRENDS 8.07 Table 1 presents key indicators for women in Bangladesh.l/ There are fewer women than men, reflecting unusually high female mortality in childhood and during childbirth; maternal mortality rates remain among the highest in the world at around 6 per thousand live births (compared to 4.5 for developing countries), and in 1981 maternal mortality accounted for 27% of female deaths. The adult female literacy rate is around half that of males, at about 19%. Only about half of eligible girl5 go to primary school and many drop out after a year or two; the percentage of girls attending secondary school is less than 10% and has declined since the early seventies and only a tiny percentage of students above that level are women. Finally, women face a fairly segmented labor market and earn much less than men for similar jobs.2/ 8.08 As in other populations, male deaths exceed female deaths among infants but, between the ages of one and two, male and female mortality rates converge and thereafter the cumulative rate of female deaths overtakes that of males, the differential widening between the ages of 2 and 5.3/ The 1984 child mortality rate for females was over 30% higher than for males. The reasons for high female mortality are not well established but discriminatory 1/ For more details on the situation of women in Bangladesh, see Afruz Mahbub, Cule, Study on Women in Development, Vols. I-III, Dhaka, 1986, and Shaffer, Teresita, Profile of Women in Bangladesh, Dhaka, 1986. 2/ For a good discussion of women's employment and earnings, see M. Cain, S. Rokeya Khanam and S. Nahar, "Class, Patriarchy and Women's Work in Bangladesh," in Population and Development Review, pp. 405-38, 1979. 3/ Koenig, M. A., S. D'Souza (1986), "Sex Differences in Childhood Mortality in Rural Bangladesh," Social Science Medicine, Vol. 22,No. 1, 15-22, Bhuiya, A. (1983), Levels and Differentials in Child Nutritional Status and Morbidity in a Rural Area of Bangladesh, M.A. thesis, Australian National University. D'Souzs, S., L. C. Chen (1980), "Sex Differentials in Mortality in Rural Bangladesh," Population Development Review, 6, 2, June, 257-270. -163- weaning, feeding practices and health care appear to be important.l/ Small scale nutrition surveys record a gradual worsening of female nutritional status relative to male from infancy through childhood. A higher percentage of girls than boys become severely malnourished, the percentage rising as the degree of malnourishment increases. 1/ Black, R. E., K. H. Brown, S. Becker (1984), "Malnutrition is a Determining Factor in Diarrheal Duration, But Not Incidence, Among Young Children in a Longitudinal Study in Rural Bangladesh," American Journal of Clinical Nutrition, 37, 87. -164- Table 8.1: WOMEN IN BANGLADESH - KEY INDICATORS Population Indicators Women are 48% of population, with: % Rural women widowed/ 86% in rural areas divorced/separated: 47% under 15 years 25-49 years 11.4 69% married at 19 years 50+ years 54.3 95% married at 25 years All ages 13.3 Other Indicators Male Female --------percentages-- Weight at 60% or less of standard, percentage for age, 1981-82 0-1 year 8.33 17.41 at 5 years i3.73 30.19 Labor force participation 1981 Census Urban 70.1 5.5 Rural 74.9 4.1 1984 Labor Force Survey (all areas) 78.5 8.0 Daily wage rate of agricultural labor (1984-85, Tk per person/day) Less than 14 years old 18.9 9.2 15-19 22.5 11.5 19 and above 26.4 13.0 Literacy 15 years and over 39.7 18.8 5 years and over 31.0 16.0 Sources: Population, labor force participation, and literacy data are from 1981 Population Census, Labor Force Participation 1983-84, from Labor Force Survey 1983-84. Nutrition data and daily wage rates are from Socio Economic Indicators of Bangladesh, BBS, 1986. 8.09 Persistent poverty is changing the family structure, often making women's contribution to household earnings essential. The early age of first marriage, typically to an older man, leads to a high incidence of widowhood. Nuclear families are becoming the dominant household form, and many widows can no longer depend on th'ie protection of extended family networks. Rising dowry demands and higher frequencies of divorce, separation and abandonment -165- are additional signs of acute pressure on family bonding. Particularly among the poor, traditional support networks are breaking down, and women's earning capacity is becoming a matter of survival for growing numbers of poor families.l/ 8.10 Employment and Productivity. Continuing high rates of population growth and declining homestead-based work have meant that more women are looking for employment outside the homestead. Accordingly, the female labor force participation rate doubled since the 1974 Census, reaching close to 8% in 1984.2/ However, this official definition of participation, which excludes productive activities in the homestead, greatly understates the women's participation in the economy. For example, a recent study which measures women's contribution to income-earning activities, places 18-32% of women in the economically active population--about half the rate for men in the areas studied--and evidence from micro-studies suggests that female participation is even higher in areas where there are rural infrastructure or industrial projects.3/ 8.11 Because of poor health and nutrition, lack of schooling, limited access to improved technology and to social and economic services, the productivity of female labor tends to be low. Moreover, women tend to be restricted to low-productivity jobs. Consequently, female wage rates are low, typically ranging between two-fifths to two-thirds of male wage rates. Even for comparable work and after accounting for productivity differences, women tend to be paid less than men. The reported recent increase in male agricultural wage rates does not seem to have affected female wage rates equivalently. 1/ See Cain et. al. (op. cit), they argue that the increasing incidence of poverty is linked to a trend of increasing household "nuclearization." If such indeed is the case, then women, who are especially dependent on kindship bonds for their security, stand to suffer the most from this trend. 2/ Labor Force Participation (Refined Activity Rate), Labor Force Survey 1983-84. 3/ See Teresita C. Schaffer, Profile of Women in Bangladesh, (op. cit). -166- 8.12 Rural women work around 14 hours per day on average--as much as four more hours per day than men do.1/ Women's tasks typically include managing and decision-making as well as actual labor in homestead agriculture, poultry and livestock husbandry, crop processing, craft work, home and child care, hut construction and repair, cooking, water and fuel gathering. They do work for wage employment but the majority of them work in the homesteaid or in traditionally female occupations. 8.13 The type of rural women's work and their contribution to household income varies by season and by household income status.2/ Women with access to paddy may work up to 19 hours per day during the busiest rice processing season, while the most needy usually work fewer hours because they have fewer resources to manage and less regular employment and food to prepare. Micro studies suggest that the higher the percentage of landowning families in an area, the smaller the contribution of female income to aggregate household income. Conversely, the rising incidence of landlessness is increasing the number and percentage of households in which female income is necessary for household survival. 8.14 Changing Employment Opportunities. Surprisingly little is known about the overall impact of technology changes on women's employment or about what could be done to promote technologies which are more conducive to expanding productive employment for both men and women. However, evidence suggests that technical change in crop production and processing is hurting the poorest women, particularly by displacing gleaning incomes and 1/ See Ahsan, R., S.H. Hussain, E. Ahsan, Study of Women irn Agriculture, Workshop on Women in Agriculture, BARD, Comilla, March 24-25; Halim, A., M. Hossain (1983), "Time Allocation by Farm Family Members and Its Effect on Farm Income," Bangladesh Journal of Agricultural Science 10 (2), 153-161; Halim, A., F.E. McCarthy (1983), Women Labourers in Rice Producing Villages of Bangladesh, Women in Rice Farming Systems Conference, IRRI, Los Banos, Sept. 26-30; and Mazumder, S., Md, M. Rahman, M. H. Ali (1983), Women Participation in Agricultural and Non-Agricultural Activities in Bangladesh Villages, Graduate Training Institute, BAU, Mymensingh. 2/ See Begum, S., (1985), "Women and Technology., rice processing in Bangladesh," in IRRI Women in Rice Farming, Gower, Aldershot;, 221-242; Begum, S., M. Greeley (1979), "Rural Women and the Rural Labour Market in Bangladesh: An empirical analysis," Bangladesh Journal of Agricultural Economics, II (2), Dec., 35-54; and Westergaard, K., (1983), Pauperization and Rural Women in Bangladesh, A Case Study, BARD, Comilla. Cain et. al. (op. tit) report that in a sample of women in Char Gopalpur (1977), poor women spend more than twice as much time in income-earning work as richer women. -167- homestead-based post-harvest employment and income opportunities.l/ Capital intensive investments are also threatening women's traditional emDloyment in the handloom sector (spinning, preparing bobbins) which is the second largest source of employment in the country (after the agriculture sector). 8.15 New and promising commercial opportunities for a few women, such as ownership of hammer mills financed through group savings and credit, are not commensurate with the scale of need. Because of the constraints on men reaching women in the homestead, the rate at which services and opportunity can be opened up to poor women depends in part on the ability of relatively more educated women to take on non-traditional roles and work as field workers in development services and junior management. An estimated minimum of 100,000 women have been locally recruited for this type of employment. Both Government and NGOs report that the numbers of qualified applicants to field and management posts considerably exceeds the positions available. 8.16 New opportunities also depend on the growth of development services at union and upazila levels. Local administrative and line department offi- cials are learning how to work with women's groups and to direct services to them, but much more systematic effort is needed to improve their interaction. In turn, some among the most vulnerable women seem to be learning how to protect their interests and mobilize the support of elected parishad members. Recent experience in both cooperative and NGO programs, including VGF, shows that strong, regular monitoring and evaluation procedures can be helpful in checking exploitative behavior, in promoting understanding of women's roles and in providing informal training and management support to program administrators. 8.17 Intensifying Homestead Production. Women are deeply involved in homestead production and post-harvest handling of fruits, spices, vegetables, poultry, livestock, fuelwood, mini-ponds and fish drying. Not much is known about the economics of existing or intensified homestead production either for particular crops or activities,2/ but its positive nutritional impact 1/ Evidence indicates that technical change in rice milling, from the foot operated hammer-action dheki to the mechanical huller or hammer mill, continues to displace homestead-based employment. Up to 200 women may be displaced for every mechanized milling unit installed. The contract- ing market for dheki processing probably has affected well over two million women. 2/ Some positive examples are the BRDB and the Mennonite Central Committee which have promising early results with soybean products and cost estimates of dried potato production from BARC and the International Potato Research Center which appear to be competitive with farm-gate prices of rice. -168- seems well established.l/ Available information indicates that households typically consume around two-thirds of their production and sell the rest. There is considerable experimentation to identify prospects for intensifying homestead production and the consensus emerging from these efforts is that women are able and willing to increase their output and productivity when production services and information are made accessible to them. In order to accelerate this process, further testing of staffing and extension approaches is needed. 8.18 Many organizations are carrying out adaptive research, usually in collaboration with the universities and government research agencies, but the major effort on the research side is being made by the On-Farm Research and Development Program coordinated by the Bangladesh Agricultural Research Council (BARC). As part of this effort, and to facilitate access to the homestead site, female researchers have been hired and female scientists have been encouraged to conduct field work. BAlt the lack of suitably qualified female research and extension staff coupled with the difficulty of deploying centrally recruited female government staff at the village level are a con- straint to rapid program expansion.2/ NCO workers report few difficulties in training locally recruited women to provide basic horticulture, agriculture, poultry or livestock assistance to women at the homestead and, on the whole, have had good cooperation from government subject matter specialists, but the scale of their operations in these subject areas is still small and somewhat ad hoc in nature, lacking coherent planning for replication, input provision, marketing or testing of extension approaches. 8.19 Although many of the ongoing initiatives to intensify homestead production appear promising, none of these initiatives at present has any effective link to indigenous commercial enterprise, nor do the supporting organizations have much experience in industrial organization or developing marketing chains. The challenge lies in organizing the production process in ways which would not only increase income and productive opportunities for women but which would also allow women to invest in, manage and retain con- trol over the profits of commercially oriented activities. 8.20 Urban Sector. Very little is known about women's migration to urban areas but some strands are discernible. Individual male migration continues, particularly to Dhaka, and imposes special burdens on families left behind. 1/ CARE's kitchen gardening projects in Dhammrai begun in 1982, for example, show a high correlation between participation and nutritional status. 2/ The Department of Agricultural Extension has had great difficulty in deploying its centrally recruited female staff. Actual coverage (with 353 extension workers by end of 1986) is much less than anticipated for a number of administrative and procedural reasons. -169- Small-scale surveys in the squatter and slum areas of Dhaka show that rural families which have lost all means of support are migrating as a unit and rural women who have become destitute are increasingly adding to the urban population. 8.21 Some two-thirds of income-earning activities in Dhaka and Chittagong are in the informal sector. Backyard craft work, assembling and packaging for factories, piece--work, preparing snack foods for street selling, petty trading, domestic service and begging are among-the mainstays of poor urban women. The peri-urban areas provide some additional unskilled, low wage work. Industrial activities which employ women include coir works, tanneries, shoe factories, electrical and electronics companies, and pharmaceuticals. All these occupations are characterized by low incomes and poor prospects for upward mobility; the 1983-84 Labor Force Survey indicates that 87% of urban women earn less than Tk 100 per week. 8.22 The industrial sector has provided employment for urban women, tradi- tionally in the jute and cotton textile industries including handloom, and more recently in bakeries, glass, leather, garments, knitting, electronic, pharmaceutical, freezing and canning establishments. The major new source of employment for women is the modern garment sector, offering permanent work to about 80,000 women at relatively high wages of around Tk 800-1,000 per month.l/ It appears, however, that many women tend to remain locked into apprentice grades, and rapid mechanization may undermine the potential for expanding employment opportunities; policies are needed to strengthen linkages with the informal sector and increase domestic value added through more efficient and relatively labor-intensive processes. 8.23 Aside from manufacturing, women work in the urban professions, in government, administrative and educational services. There are also growing opportunities for women as teachers, health workers and in NOOs. II. PROGRAMS FOR WOMEN 8.24 In recent years, the Government and NGOs have initiated a number of programs to provide access to productive resources and services to women and to expand education and health care. Several programs focusing on production have been fairly successful although they have reached only 5-10% of women. Social service programs, particularly family planning, have reached a larger proportion of the population and have started to show improvements, but face serious operational problems. Small-scale innovative approaches in these sectors, often involving NGOs, are also producing promising results and could be expanded, but more evaluation is needed of specific program capacity and 1/ Up to 200,000 women apparently find periodic temporary work within the garment industry. -170- performance.l/ Donors have played an important role in supporting or initiating programs involving women; commitments to such programs from FY80 through FY86 are estimated at around US$125 million. Of this, roughly 25% has been allocated specifically to self-help development activities, 57% to population and health programs (predominantly population), 12% to education and training programs and the remaining to research and miscellaneous activities. Donor commitments to women's group self-help development programs are estimated at around US$63 million over FY80-86, of which about one-third has been allocated since 1985. 8.25 The Policy Environment. In its Five Year Plans the Government has recognized, on equity and economic grounds, the necessity of improving women's access to human development programs and to productive resources and employment opportunities. The direct allocation to women's programs in the TFYP is modest but higher than in previous years.2/ In addition, women benefit from the overall education, health and family programs, as well as from special components under many other programs. Local government staff have in some instances been effective in implementing women's programs. 8.26 But despite this positive lead, the Government lacks a discernible strategy for implementing programs involving women. An increased emphasis on programs for women beyond social welfare is required. The Ministry of Social Welfare and Women's Affairs is strengthening its staff and management capacity to play a stronger advocacy and advisory role at policy levels but has yet to fulfill its mandate as a policy and program coordinating body. At present, a large number of ministries (Agriculture, Rural Development, Local Government, Relief and Rehabilitation, Irrigation, Jute and Textiles, Industries) and agencies are involved with women in development activities but it has not been possible for the MSWWA to coordinate their programs. The structure and mechanisms for coordinating policies, programs and their monitoring have not yet been well established. A priority for the Government should be to clarify the substantive roles of the Planning Commission and the relevant Ministries with respect to implementing and monitoring women's programs and to provide the assistance and staffing required for those roles to be effective. Although considerable literature is available on women in Bangladesh, there is no central data and documentation unit, or any mechanism 1/ 900 NGOs are registered with the Directorate of Social Welfare and 712 with the Directorate of Women's Affairs (Dec. 1986). 2/ The Third Five Year Plan allocates Tk 500 million to women's programs in the Directorate of Women's Affairs in the Ministry of Social Welfare and Women's Affairs (MSWWA) and another Tk 500 million to women's programs in other ministries. A further Tk 115 million has been allo- cated to women's programs implemented by NCOs and financed by donors. However, the total accounts for well under 1% of the development program allocation under the TFYP. -171- for access and dissemination of information. This hinders effective coor- dination and planning, not only in the Planning Commission but within development ministries and among the Government, NGOs and donors. 8.27 The Government has raised its female employment quota from 10% to 15% and is maintaining pressure to fulfill it but line ministries have not received specific targets or guidelines for integrating services for women into their mainstream budgets. The Government has also taken the important decision to recruit women to the Civil Service. 8.28 Targeted Women's Programs. A number of targeted group approaches have proved particularly successful in reaching women and offer some basis for larger-scale programs. They can be classified in four categories: those for the most vulnerable, those for groups of poor working women, those for women in small-scale enterprises and targeted training programs. 8.29 (a) The Most Vulnerable. Over 600,000 of the most distressed and vulnerable women are being reached each year by the Vulnerable Group Feeding Program (VGF) and two modified Food-for-Work Programs--Post Monsoon Rehabilitation and the Road Maintenance Program (RMP)--which are implemented through union-level committees (see Table 2). The RMP and VGF programs have extended their scope beyond food and work to include development training in areas such as basic health and literacy and have sought to link their clients to the services and support of government and non-government agencies. 8.30 Two recent surveys of clients of the RMP and VGF show that the programs have been successful in reaching the target group; incomes of beneficiary households averaged considerably less than Tk 75 per week in FY85.1/ A survey of the RMP showed that 89% of sample beneficiaries are divorced, separated or widowed women, with an average of three children each. In 1984, 82% of beneficiaries estimated that they had insufficient food each month of the preceding year, about 95% had never been to school, more than 70% owned no land, and about 40% had no house. After one year in the program, which provides Tk 12 a day throughout the year, only 4% of beneficiaries claimed that they had insufficient food for the previous six months, and over 80% were able to prepare two meals a day. Expenditure on health care, housing, cereals and protein increased, and children's school attendance doubled to around 23%. Women's participation in the programs enabled families to withdraw other female family members and children from irregular and/or degrading work, while increasing the physical capacity of male members to work. 1/ See CARE International (1986), An Interim Evaluation of the Rural Maintenance Programme, Dhaka, Lfraft mimeo; and World Food Programme (1986), Report on a 1985 Survey of Vulnerable Group Feeding Programme Beneficiaries, Dhaka. -172- Table 8.2: THE MOST VULNERABLE - WOMEN'S PARTICIPATION IN FOOD AND WORK PROGRAMS Beneficiaries Total Days Worked Direct Scheme /a Coverage/Year (thousands) (thousands) Benefits Road Mainte- Nationwide 60 7,300 12 Tk/day nance Program FY85-86 all year Post Monsoon Nationwide 35 1,400 4.65 kg/day Rehabilitation Sept. 15 - 4 days/week Nov. 30, 1985 Vulnerable Group Nationwide 450 31.25 kg/month Feeding /b FY86-87 of wheat over two years /a The schemes included here are all ongoing programs. The information in the table is the most recent available. /b The VGF reaches another 25,000 women in Government/non-Government training centers and 60,000 women and children through institutional feeding programs. Source: Annual and Monitoring Reports. 8.31 Both surveys suggest that the regularity of food and income support lifts women out of destitution but that bigger rations and level of services are needed for establishing self-sustaining earning capacity. Program managers at central and union levels stress the humanitarian need to expand these programs and the desirability of promoting enduring productive skills. Consequently, both the type of work performed (RMP) and the composition of the food ration (VGF) are being examined to see how they could be expanded. Despite some procedural problems,l/ management capacity at union and upazila levels and monitoring controls are believed to be adequate to support expand- ing coverage. In order to address more adequately its development aspects, the VGF program requires more effective coordination and linkages at all levels and additional personnel at the upazila level. 1/ The VGF beneficiary survey undertaken by WFP revealed that on average women were receiving 66% of the stipulated ration in 1985 but there is no evidence of widespread malpractice. Handling losses and the pressure on union officials to disburse wheat to other distressed applicants are among the reasons for the shortfall. -173- 8.32 (b) The Working Poor. Good progress has been made over the last few years in forming women's groups for economic purposes. A number of programs have opened access to traditional small-scale income-earning activities and have strengthened women's economic capacity through homestead-based skills training, input provision, savings mobilization and credit. Table 3 shows the membership of the major group programs and Table 4 provides a brief description of each program. The number of participants in these programs is not known with any confidence. But, among the working poor, at least half a million women from landless households and possibly as many as three million, or roughly 10% of adult rural women, are involved in regular group meetings and activities. As a result, their asset holdings (other than land and housing) and their basic food and non-food consumption have been increasing, and the school attendance of their children has been encouraged. Family planning is also encouraged; compared to the national contraceptive prevalence rate (CPR) of about 28%, data from BRDB's women's cooperatives for July 1985-Sept. 1986, suggest a CPR of 73% for eligible couples or 42% for all members. -174- Table 8.3: FEMALE MEMBERSHIP IN SELECTED GROUP PROGRAMS /a Members (thousands) Organization Date Male Female Total % Female BRDB Jan. 1987 167 141 308 46 BRAC June 1986 54 51 105 49 PROSHIKA Dec. 1985 119 61 180 34 PROSHIKA Comilla June 1986 26 10 36 28 GRAMEEN BANK Dec. 1985 59 112 171 65 SWARNIVAR June 1986 132 274 406 67 SOCIAL WELFARE DIRECTORATE 1985 - 89 89 100 Mothers' Centres WOMEN'S AFFAIRS DIRECTORATE VOCATIONAL TRAINING Dec. 1986 - 7 7 67 CENTRES Total 557 745 1302 - /a The total number of clients (including other programs) served by the organizations listed is considerably higher. Program descriptions are given in Table 4. Source: Annual Reports. -175- Table 8.4: DESCRIPTION OF MAJOR WOMEN'S GROUP PROGRAMS BRDB In 1972 the. Government initiated a program of Integrated Rural Development, based on the two-tier cooperative system. The program was to mobilize farmers into cooperatives (KSS). In 1975-76, BRDB initiated a program to develop women's coops (MSS). These coops are affiliated to a central coop association at the upazila level. In 1984, another program was initiated by BRDB where the very poor rural women (destitutes, female heads of households) are mobilized into cooperatives (MBSS). The MBSS program operates in about 108 upazilas. BRAC The Bangladesh Rural Advancement Committee was created in February 1972 to strengthen the social and economic position of the landless through group action to develop occupational and managerial skills. BRAC works through village organizations made up of, single sex or mixed, functional groups of about 30 persons each. It restricts its loans to a list of activities and provides financial services along with training, inputs and services. It also launches and manages special campaigns, such as the ORT program which has reached over 7 million households. BRAC offers comprehensive programs in health, education, group support services (including training), rural development (including credit and savings), and integrated development programs in over 1,500 villages. PROSHIKA Proshika, formed in the late 1970s, has a comprehensive approach, based on organizing groups and developing analytic and problem-solving skills, sup- ported by income and employment generation, education, and agricultural services. Its women's program emphasizes developing self-awareness. Proshika's activities are in 20 districts. PROSHIKA, Comilla The Proshika Comilla Center for Development seeks to develop the socio- economic capacity of small farmers and the landless by functional group organization, income generation activities, and training of group leaders and development workers. It emphasizes practical training to female field workers and group leaders. Groups are encouraged to associate in village organizations, which are supported by 21 area development centers. GRAMEEN BANK The Grameen Bank began as an action research program in Chittagong in 1976. It has become a sophisticated individual and collective credit institution with 226 branches which extends basic financial services that are competitive with moneylenders and viable within the commercial banking system. It works through existing bank branches linked to small credit and savings groups of five members. It imposes no restrictions on loan use, assuming that its clients are best placed to spot opportunities for themselves. Most of its loans are concentrated in trading and services. Recently, the Grameen Bank has expanded its services to include housing loans, and has developed linkages to health and education services. SWARNIVAR Established by the Government in 1976 in response to flood disasters. In the early 1980s it was reorganized as an NGO. Working through volunteers in 138 upazilas, it aims to build leadership capacity through organized groups of landless, farmers, women, youth and vocational interests. The volunteers act as group mobilizers and liaise between the groups and service/input agencies at union and upazila levels, in the areas of family planning, literacy, cottage industry, agriculture and credit. The credit program operates in 76 upazilas and is financed through the nationalized banks. MOTHERS' CENTRES The Mothers' Centres are registered under the Rural Social Services Program of the Department of Social Welfare, Ministry of Women's Affairs and Social Welfare. Their programs focus on skills training and income-generating activities and promoting awareness of opportunities. VOCATIONAL TRAINING CENTRES Established under the Directorate of Women's Affairs to provide skills train- ing to vulnerable and destitute women. Each of the 148 centers enrolls 50 women a year. Between 1972-84, 26,000 women have completed the 1 year course. -177- 8.33 Although each program has its owni particular awrengths, successful ones share common characteristics. These include mobilization, organization, training, input provision and system management.l/ Group formation is essen- tial for mobilizing rural savings and promoting efficiency and discipline in credit use. For example, in one program, BRDB has mobilized over 40,000 women in over 1800 cooperatives, who have saved about Tk 4.58 million over two and a half years. And Grameen Bank is reaching over 112,000 women from landless households who deposit over Tk 1.5 million a quarter in savings. With only their savinigs performance as collateral, women have proven to be an excellent credit risk; their overall repayment rate over one year to the Grameen Bank is 98.4%, compared to 96.8% for men. Savings and credit activities are characterized by regular meetings, training sessions, rapid turnover of funds, tight peer group accountability, locally recruited field staff, and short managerial spans of control. In essence, the group struc- ture allows intermediate organizations to op,.rate as community-based finance houses through which capital is both accumulated and invested locally, with a minimum of procedural requirements and very low customer transaction costs. 8.34 Three categories of female beneficiaries from group programs can be discerned: (i) the poorest, those with few physical assets, whose livelihoods are raised and made more secure; (ii) those with slightly more or better quality assets, who have diversified investments and increased returns; and (iii) those with even larger or better resources, who command capital funds and access to relatively substantial lines of credit and are ready to make higher return investments.2/ 8.35 Average savings and loans are somewhat lower for women than for men, the range of investments narrower and the net returns smaller. Livestock and fish, crop processing and manufacturing of locally used articles, trading, and collective enterprises (such as rental of a fish pond) are among the most popular activities for women. An analysis of Comilla Proshika's group projects shows that the average financial cost (i.e. loan from Revolving Fund and contribution from group savings), for women's group projects is higher than for men's and that women contribute less out of savings.3/ The average capital cost varies by type of activity, with poultry as a relatively low cost collective investment at around Tk 4500 per project. 1/ J. Jiggins (1983), "Poverty-Oriented Rural Development: Participation and Management:," Development Policy Review, Vol. I, No. 2, 219-230. 2/ As a measure of capacity at the upper end of the range, Comilla Proshika reports that during April-June 1986 305 women contributed Tk 66,310 from savings and took Tk 174,190 in loans to finance 45 income-generating projects. 3/ Comilla Proshika, Progress and Financial Report, quarterly, 1985 to June 1986. -178- 8.36 Comipared with rural areas, urban areas have seen almost no large- scale governmental development programs focusing on women. The better known NCOs which are entirely or partially directed at urban women include: Bangladesh Mahila Samaj Kalyan Samiti in suburbs of Dhaka, CONCERN in Chittagong, Concerned Women for Family Planning in Dhaka, the Urban Volunteer Program of ICDDRB, Manabik Shahaya Sangstha (MSS), both exclusively active in Dhaka, and Terre des Hommes (Netherlands) in Dhaka. In cooperation with NCOs, the Government funded by UNICEF has recently developed a community program which includes a working fund for women along the lines of the Grameen Bank in secondary towns such as Noakhali, Kusthia, Sylhet and Mymensingh. Most organizations are not able to train more than 100 women annually in productive skills either because this is not their major objective, or because they are small and lack resources. 8.37 Contrary to rural development organizations, few urban programs emphasize group formation. Their primary goals vary from health and family planning to a more general employment generation objective. Some have com- prehensive programs including savings and loan programs, health, hygiene and nutrition education, skills training and literacy and day care. Because income generating and credit components are rare and recent, their benefits cannot be measured yet. 8.38 (c) Small-Scale Entrepreneurs. A few group investments are reaching the scale of sizable agri-business enterprises. For example, the Grameen Bank by end 1985 had provided 108 landless women's group with about Tk 420,000 in loans for the joint purchase and installation of 17 mechanized rice hullers. A number of government organizations including BARI, BAU (Mymensingh), BARD, Comilla, BRDB and MCC are exploring the commercial inputs and potential of intensified homestead-based livestock, fish, poultry, fruit, vegetable, spice and fuelwood enterprises but their success has been limited. Reasons include a lack of capacity to conduct market research, or to deliver inputs and production services to women in the homestead, an inability to organize wage and self-employment opportunities in mechanized processing, and inadequate development of marketing channels. 8.39 Few programs have been successful in developing new types of non- agricultural productive employment on a significant scale; BRAC's Manikganj sericulture and ericulture projects and the MCC's Mirpur Wheat Straw project remain isolated examples. Neither MIDAS nor BSCIC, established to promote small to medium-scale businesses, have been successful in creating more than a few business opportunities for rural women, either as individuals or as groups. Recent innovations include an attempt to link income-generating groups through BSCIC to the Krishi Bank, market outlets and business services. Handicrafts, which have received considerable support, appear not to be viable exports; a 1985 OXFAM review of returns to handicraft producers indicated that their average net income per month was only Tk 54 and the highest net income per hour a derisory Tk 2. -179- 8.40 (d) Training Programs. Training for female group members, field workers, trainers and managers is expanding. The programs offer diploma and short courses in subjects such as group dynamics and participatory problem diagnosis, as well as technical skills in subjects such as poultry vaccina- tion and management training. In addition to specialized institutes in the field of health and family planning, leading training centers include the two rural academies at Bogra and Comilla, the Village Education Resource Centre, Proshika Development Centres, and the Training and Research Centre of BRAC. 8.41 Women's participation in training remains constrained by home care obligations and social attitudes. Organizers of community-based training and outreach programs report that as the positive impacts of training become apparent, community attitudes become more supportive. Course organizers also report the importance of providing low-cost child care.l/ The weakest area at present lies in training for self-employment, business enterprise develop- ment and management, sales and marketing. Further experimentation seems necessary, particularly to match training to market demand, provide credit and follow-up support services and develop linkages between employers and training programs. III. A STRATEGY FOR IMPROVING WOMEN'S ECONOMIC OPPORTUNITIES 8.42 The last decade and a half has witnessed a rapid expansion of small- scale experimentation with bottom-up group and cooperative approaches to develop employment opportunities for the rural poor. A number of these have proved particularly successful in enhancing women's capacity to respond to economic opportunities. Replicating and expanding these approaches, in both rural and urban areas while strengthening management in experienced organizations, merits continued and larger-scale support from Government and donors. Simultaneously, new organizations and innovative approaches, both in the Government and NGO's, should be supported. The most promising strategy for improving women's opportunities is a disaggregated approach expanding and experimenting with various types of targeted programs aiming at different groups of women, such as the most vulnerable, women with some access to land or productive resources, or urban migrants. Some general principles for a strategy follow. - Improving policy and implementation incentives. Social and economic development policies, particularly those affecting human resources, should be reviewed to broaden the range of services and jobs accessible to women and to ensure that economic and financial policies do not discourage unduly the types of employment now available to women. Mechanisms should be developed 1/ Foundation for Research on Educational Planning and Development: Evaluation of Thirty-Eight Union Development Centres for Women in Bangladesh, with NORAD, for Ministry of Social Welfare and Women's Affairs, Dhaka, 1985. -180- to utilize the comparative advantage of NGOs in developing and testing innovative approaches to expand women's economic opportunities. Line minis- tries need guidance on including services for women in their mainstream budgets and programs. Central data collection and storage, information and documentation units need to be established. Monitoring and support to upazila and union officials is needed to strengthen their capacity to provide women with development services. - Expanding education and training. Education of girls deserves not only policy commitment to expand coverage and improve quality but also requires serious attention to influences now discouraging parents from educating their daughters. It is essential to expand both entry of female teachers to the public education system and increase enrollment of girls in all levels of education. In the short term, even modest expansion of educa- tion opportunities can change not only the capacity but also the willingness of women to seize development opportunities. Promising innovative approaches include: supporting non-formal primary schooling, adapting school schedules, modifying location and curriculum content to match local circumstances; expanding scholarship programs for secondary and higher education; providing non-formal and formal skills training to women in organized groups, linking content and trainers' skills to existing work patterns and market opportunities; expanding use of female community-based volunteers as basic trainers and resource persons, who can inform other women about institutional services and opportunities; expanding skill training to facilitate employment in small-scale backyard manufacturing; support and expand industry-based training to facilitate the promotion of women employed in manufacturing to supervisory grades; and expanding training for employment in the formal services sector (e.g., banking and sales). - Expanding fertility choices and improving women's health. Improving women s access to, ancd the quality and efficiency of health services and family planning programs, will help reduce fertility and raise health standards. Better quality of family planning services will allow women to plan pregnancy and space childbirth with greater confidence and ease, and expanding access to health care services, particularly better nutrition and maternal health care, will be crucial to encourage a fuller response of women to development opportunities. - Continuing re:Lief programs. The poorest women will probably continue to be helped most effectively by direct assistance through programs such as Food-for-Work and Vulnerable Group Feeding. Efforts to expand development oriented services provided to women through these programs and to enable women to capture e. larger proportion of the benefits should be continued. - Replicating and expanding existing target group programs. The objec- tive is to expand women's productive employment taking into account their spatial and functional specialization. In this regard, the greatest potnn- tial in the short term, in terms of coverage and spin-offs lies in intensify- ing homestead production. This would require increasing women's access to resources and support services such as credit and savings facilities, water pumps and improved wells, input supplies, extension and marketing services. In order to expand such access, much more effort is needed to: replicate and expaiid existing credit and savings programs, linking women's groups to formal financial services; develop the capacity of field workers to offer homestead- based services, including systematic linkage with non-government programs and organized groups; and encouraging innovative approaches to extension and Qutreach through female field staff and community volunteers, in both govern- ment and non-government programs, urban and rural areas, and social and economic service sectors. -182- Chapter 9: EDUCATION, HEALTH, POPULATION AND NUTRITION 9.01 There is no tradeoff between high economic growth and emphasis on human resource development. On the contrary, countries which give a high priority to education, health, population and nutrition programs are generally those that are most successful economically. Recognizing this, the Government of Bangladesh has repeatedly emphasized its commitment to human resource programs in its three Five Year Plans. During the last decade GOB devoted about 13.5Z of public expenditures to human development programs, and progress has been made. But expenditures and program accomplishments have been insufficient to improve the situation significantly. Further improve- ments will be increasingly difficult to bring about while the population continues to grow by over 2.5 million persons per year and the provision of services is hampered by limited funds, poorly trained manpower, substantial inefficiencies in the use of existing resources, and a weak institutional capacity to formulate and implement programs. 9.02 This chapter begins (Section I) with an overview of the current status of human development in Bangladesh. Section II reviews the patterns of public expenditure on human resource programs over the last decade. Sections III and IV discuss key issues facing policymakers and donors in health and population and in education and training, respectively. TI. HUMAN RESOURCE DEVELOPMENT - THE CURRENT STATUS 9.03 Considerable margins of uncertainty surround most data on human resource development in Bangladesh. However, as suggested by the summary indicators presented in Table 9.1, some conclusions appear clear. On the positive side, conditions have improved since the early seventies: birth, death and population growth rates have declined, and access to health and education services (on a per capita basis) has increased. However, despite these improvements, health and education indicators remain unacceptably low, and easily avoidable illnesses still account for a substantial proportion of deaths. Performance in Bangladesh continues to compare unfavorably to that of countries at a similar stage of development. Child and infant mortality rates, for example, are twice the average rates in low-income countries, an. literacy rates are among the lowest in the world. Similarly, while the availability of basic services has improved, it remains well below that in comparable countries. For example, while the population per nurse/midwife declined by half during 1980-85, it is still over three times the average in low-income countries in Asia and the Pacific. In addition, the limited data available suggests that the extremely poor--women and the rural landless-- have probably benefited less than the average from existing programs. 9.04 Malnutrition remains a pervasive and widespread problem in Bangladesh. Children under five years of age and pregnant and nursing women most seriously affected. Over 60% of all children below the age of 5 were estimated to be moderately or severely malnourished by accepted international standards, according to a 1981-82 national rural nutrition survey. As -183- Table 9.1: HUMAN DEVELOPMENT INDICATORS Reference Groups /a Bangladesh Low Income Mid-income 1973 1980 1985 Asia and Asia and Pacific Pacific POPULATION Population growth (percent per year) 2.6 2.7 2.4 1.9 2.3 Total Fertility Rate 6.9 6.3 5.7 3.6 3.8 Crude birth rate (per 1000 population) 48.4 43.3 39.0 27.1 29.7 Crude death rate (per 1000 population) 20.6 16.8 15.0 9.7 9.4 Infant mortality (per 1000 live births) 149.2 140.0 125.0 66.3 64.7 Child mortality (per 1000, 1-5 yrs) 22.8 24.0 22.0 7.4 6.9 Life expectancy at birth (years) 45 47 50 62 61 HEALTH Population per hospital bed (thousands) 4.8 3.6 1.1 0.6 Population per physician (thousands) 8.6 5.9 3.1 7.9 Population per nurse/midwife (thousands) 37.3 15.5 4.4 1.8 Immunization against Tuberculosis (% under 15 years) 50 60 DPT (% under 2 years) 1 2 Poliomyelitis (% coverage) - 2 Delivery by trained midwife/birth attendant (% deliveries attended) 2 5 Antenatal care (% pregnant women cared) 10 15 EDUCATION 1974 1981 1985 Adult Literacy Rate (15 years) 25.8 29.2 n.a. 26.0/b Male 37.2 39.7 Female 13.2 18.8 Enrollment Rate Primary (6-10 years) - Total 60.0 58.0 60.0 94.8 109.5 Male 79.0 70.0 73.0 104.2 111.6 Female 41.0 46.0 51.0 78.7 107.3 Secondary (11-17 years) - Total 18.1 13.0 14.0 33.0 47.8 Male 27.6 19.0 18.0 40.5 50.2 Female 7.9 8.0 9.0 24.7 44.7 Higher (18-21 years)/c - Total 6.0 6.0 5.0/b Male 9.0 10.0 Female 3.0 2.5 /a Most recent estimate from 1986 Social Indicator Data Sheet. Education Enrollment Rates are defined as percentage of school-age students. Differences in country practices in the ages and duration of school are reflected in the ratios given. For some countries with universal education, gross enrollment ma- exceed 100% since some pupils are younger or ol.der than the country's standard primary school age. /b Average for South Asia (1976) from World Bank, Comparative Educational Indicators. 7T Enrolled students could be older than standard age group. Sources: Population and Health. 1973: World Bank Social Indicators Sheet (except Total Fertility Rate - from WDR); 1980, 1985: TFYP, Planning Commission (except Total Fertility Rate - from WDR). Education. 1974, 1981: Bangladesh Education in Statistics and Population Censuses; 1985: Estimates. -184- expected, the greatest prevalence of acute malnourishment was 61% among rural children in the weaning age between 1 and 2 years. The greatest prevalence of chronic malnutrition was 75% among children between 4 and 5 years. While per capita food availability in Bangladesh has improved marginally and incomes have risen somewhat for part of the population, there are few specific policies, strategies and programs to address the nutrition problem. There is no reason to believe that the nutrition situation has improved significantly during the eighties. On the contrary, as the evidence in Chapter 6 suggests, the quality of the diet of the poor has probably declined since 1982. 9.05 Progress in education has been slow. Adult literacy rates improved during the seventies and reached 29% in 1981 and there is no evidence that it has improved since then. Primary education enrollment has increased slowly since 1981, but overall enrollment rates have remained stable and, in some instances, may have declined. Wastage in the system at all levels is very high, marked by high drop out rates in primary education, excessively high repetition rates at secondary level and failure rates for terminal examinations at the secondary and higher levels averaging about 50%. Although educational opportunities for females have improved and the gap between male and female literacy rates have declined, substantial inequalities remain. The rural/urban imbalance as well as the male/female differences are displayed dramatically in the adult literacy rates from the 1981 census: literacy in rural areas is 17% versus 35% in urban areas and female literacy is 18.8% compared to a male literacy of 39.7%. II. PUBLIC EXPENDITURES FOR HUMAN DEVELOPMENT 1/ 9.06 Public expenditure outlays for human resource development programs in Bangladesh currently average about Tk 120 (US$ 4) per person per year (see Table 9.2). As a proportion of CDP, expenditures declined from 2.4% during FY76-FY80 to 2.1% during FY81-FY86.2/ For the 1976-86 period as a whole, health and population programs accounted for 0.8% of GDP (0.4% each for development and recurrent expenditures) and education programs for about 1.4% of CDP (0.4% for development and 1.0% for recurrent expenditures). 3/ Such levels are among the lowest in the world and are well under half the 1/ Public expenditures include outlays funded under the Annual Development Program (ADP) and the Revenue (Recurrent) Budget. During FY76-FY86, public expenditures amounted to about 17% of GDP. 2/ During the Second Five Year Plan period (FY81-FY85), the revised ADP allocation for education, health and family planning programs amounted to Tk crore 1,438 (in current prices), or 9.5% of the overall revised allocation. The allocation to these sectors for the Third Five Year Plan period increased to 10.6% of the overall allocation (Tk 2,640 in FY85 prices). 3/ The share of education in GDP has been increasing and MOE estimates that in FY87 it would reach 2.3%. This is mostly due to increases in salary outlays in the secondary and college sub-sectors. -185- Table 9.2: PUBLIC EXPENDITURES IN HUMAN RESOURCE DEVELOPMENT /a (in percentages) FY76-FY80 (average) FY81 FY83 FY85 FY86 FY87 Share of Public Expenditure Category 1. Health and Population Development 5.8 4.6 5.4 6.1 4.4 5.1 Recurrent 4.6 5.2 4.7 5.2 3.3 6.4 Public Expenditure 5.3 4.8 5.1 5.7 3.9 5.9 2. Education and Training Development 4.2 4.1 3.9 4.3 3.5 5.3 Recurrent 14.1 13.9 13.7 16.8 17.5 18.6 Public Expenditure 8.4 7.9 8.3 10.2 10.2 11.2 3. Human Resource Development (1+2) Development 10.0 8.7 9.3 10.5 8.0 10.4 Recurrent 18.7 19.1 18.4 21.9 20.8 25.0 Public Expenditure 13.7 12.7 13.4 15.9 14.1 14.1 Share of Human Resource Expenditures in CDP Development 1.0 0.9 0.9 0.8 0.6 0.9 Recurrent 1.4 1.2 1.4 1.5 1.5 1.8 Public Expenditure 2.4 2.1 2.2 2.3 2.1 2.7 /a Public expenditures are those funded under the ADP Budget (Development) and the Revenue Budget (Recurrent). FY76-FY80: Both development and recurrent expenditures are revised budget estimates. FY81-FY86: Development expenditures are actual figures, recurrent expenditures are revised figures for FY81-FY84 and actuals for FY85-FY86. FY87: Budget figures. -186- estimated minimum expenditures required to fulfill the most basic of human development needs in low-income countries.l/ 9.07 Since FY76 human development programs have absorbed, on average, 13.5% of public expenditure, of which about 40% has been allocated to health and population and the rest to education. The share of education has been increasing, rising above 70% of the total in FY86. Within health and population, the share of the latter within the ADP has been increasing from 25% in FY75 to 59% in the FY87 budget, with recent increases due to the expansion of the MCH activities included in the population program. 9.08 Recurrent expenditures have been increasing more rapidly than development expenditures, and now account for over 70% of total expenditures on human resource development. This is mostly accounted for by the increase in operational outlays in the education sector; by FY86 over 80% of expendi- tures in education were funded under the recurrent budget. This increase is explained by a larger payroll resulting from the expansion in the system and from the 50% average increase in teacher salaries which took place in 1985, and (since FY85) by the growing government contributions to finance teachers' salaries in the private secondary and degree college system. III. HEALTH, NUTRITION AND FAMILY PLANNING 9.09 The Ministry of Health and Family Planning (MOHFP) is responsible for developing, coordinating and implementing the national health, maternal-child health care (MCH) and the family planning programs.2/ The Government's policy objective in the health sector has been to provide a minimum level of health services for all, primarily through the construction of health facilities in rural areas and training of health manpower. Infrastructure development has included both rural hospitals and expansion of Union Health and Family Welfare Centers (UHFWCs) and Rural Dispensaries (RDs) to provide out-patient care. Until recently, the program has focused mainly on curative services but the direction is now changing towards a larger role for preven- tive heaLth care. Given the severe financial manpower and institutional constraints, the priority has to be given to a few simple largely preventive services. Accordingly, the Third Five Year Plan promotes immunization (Expanded Program on Immunization--EPI), vitamin A distribution, treatment of diarrheal diseases and safe deliveries.3/ 1/ According to estimates published by the World Bank in 1980, in low- income countries the hypothetical government costs to provide comprehen- sive (up to 80% of the population) health care, hygiene, family planning and primary education range between 4 and 7% of GNP. 2/ See Annex 1 for a description of the organization of the Health and Family Planning Programs. 3/ Ministry of Health and Population Control (1985), Report of MCH Task Force, National Strategy for a Comprehensive Maternal and Child Health Program. -187- 9.10 In nutrition, the Government has recently upgraded policy-making capacity by creating a National Nutrition Council, but planning and implemen- tation of specific programs remain weak. The MOHFP is responsible for implementing nutrition programs, but to date, has implemented few initiatives and made only minor expenditures for this purpose. Other programs with nutrition implications such as the Food-for-Work and Vulnerable Group Feeding Programs are under the Ministry of Relief and Rehabilitation. 9.11 Family Planning. Progress in bringing down the rate of population growth over the last decade has been mixed. While the Contraceptive Prevalence Rate (CPR) has been raised from 10% in 1975 to about 28% today, the population continues to grow by an estimated 2.4% to 2.6% per year, a small decline from the 2.7% growth rate of the early 1970s. The 1985-86 period saw a number of implementation problems and program performance deteriorated. This was especially poor in FY85-86 for sterilizations and somewhat disappointing for IUDs. But the number of acceptors of both methods has been rising in FY87 and it is hoped that this marks a new impetus to the program. However, problems remain, and it is unlikely that the targets for a CPR of 40% and for a birth rate of 32 per thousand by 1990 will oe achieved. 9.12 Reasons for poor performance are varied and complex. They lie, to a large extent, in continued management and operational deficiencies partly derived from the frequent shifts in administrative arrangements for service delivery which have disrupted the program and have discouraged Family Planning Officers (FPOs). Other problems include poor supervision and accountability, lack of mechanisms to make the system more efficient and inadequate supplies and logistics: Improved coordination of multi-sectoral programs and activities to crystalize latent demand for family planning services are also needed. Stronger leadership of the program and community involvement are often mentioned as necessary ingredients for program improve- ment but they will not come about easily. 9.13 Health. Although Bangladesh now has a basic health infrastructure in place much remains to be done, particularly in rural areas. Only 30% of the population has access to primary health services and overall health care performance remains unacceptably low by all conventional measurements. Life expectancy at birth is 50 years compared with 61 years in comparable low- income countries. Morbidity and mortality rates for women and children are particularly high. Infant mortality rates exceed 150 deaths per 1000 live births in some parts of Bangladesh 1/ and even in the urban areas remain above 100 deaths per 1000 births.2/ Only 2% of children in the target group have been immunized against the common infectious diseases,3/ and potentially 1/ Demographic Surveillance System (1986), Teknaf, ICDDR, B. Scienti-fic Report No. 66. 2/ Stanton, B. and Clemens (1986), S., Role of Gender on Urban Childhood Mortality Rates, ICDDR, B. 3/ GOB/UNICEF/WHO (1985), Expanded Program on Immunization, Peoplest Republic of Bangladesh, Draft 12, December. -188- avoidable illnesses (e.g., tetanus, pertussis, nutritional deficiency, meas- les and diarrhea) account for nearly 50% of infant deaths and over one third of childhood deaths.l/ 9.14 Short birth intervals deplete mothers nutritionally and result in low birth weight babies. Fever, infections, diarrhea and parasites impede nutrient absorption and poor weaning practices and harmful food beliefs limit the consumption of more concentrated sources of calories, proteins and micro- nutrients. Intra-family food distribution favors adult men against women and children. The national family planning and maternal-child health care (MCH) program addresses health aspects of these constraints but nutrition education to deal with behavioral issues remains weak. 9.15 The high prevalence of infant and child mortality, morbidity and disability reflects poor maternal care, low standards of nutrition and hygiene, overcrowding and poor sanitation. Some of the poor health condi- tions such as tetanus and severe dehydration from diarrheal disease can be prevented or controlled by simple and direct interventions. Improvements in others such as malnutrition, respiratory infections and the prevention of diarrheal disease require more elaborate and relatively costly measures. 9.16 Maternal mortality and morbidity, while less studied, appear also to be exceptionally high. Data indicate that certain age groups (younger than 18 years, older than 30 years) are at greatest risk of death.2/ Compared to ratios of 5 maternal deaths per 100,000 deliveries in the Scandinavian countries 3/ and even 390 deaths per 100,000 in Indonesia,4/ ratios in 1/ Demographic Surveillance System (1985), Matlab ICDDR, B. Scientific Report No. 63. 2/ Koenig, M. et al (1986), Maternal Mortality in Matlab, Bangladesh, ICDDR, B. 3/ Bochat W., (1981), "Maternal Mortality in the United States of America", World Health Statistical Quarterly 34, No. 1, pp. 2-13. 4/ I-Chi, et al. "Maternal Mortality at Twelve Teaching Hospitals in Indonesia. An Epidemiological Analysis." International Journal of Gynecology and Obstetrics, 19, No. 4, pp. 259-266. -189- Bangladesh range from 510 to 770 deaths per 100,000.1/ 2/ Morbidity estimates are generally lacking although up to 70% of pregnant women are anemic and an equally high percentage are malnourished.3/ 9.17 Studies examining cause of death and infectious complications of contraceptive devices have found that potentially preventable causes (septic abortion, post-partum sepsis, tetanus) are responsible for nearly half of all deaths.4/ The main causes of maternal death could be reduced by expanded prenatal care with risk assessment--as early during pregnancy as possible-- and referral facilities and improved birth practices as well as by family planning practices that encourage birth spacing and discourage pregnancies for women under 20 and over 30 years of age. 9.18 The Mother and Child Health (MCH) Program. As in most developing countries, there has been a tendency to neglect MCH services, although the Government is now committed to expanding the program. The current level of services is especially bad in urban areas. Maternity services in municipalities are extremely limited. In Dhaka, for example, the Municipal Health System has one maternal clinic with 8 beds and there is one free maternity hospital. Three additional medical training hospitals and one government hospital offer some obstetric in-patient service but no outreach anti-natal care. Maternal services appear to be even more limited in other municipalities, with the possible exception of Chittagong, but detailed information is not available. NGOs operate two or three clinics, but in terms of the need, their effect is negligible. 9.19 Services for children in the urban areas are not much better than for mothers. In Dhaka, there are only about 180 municipal health workers charged with immunizing the estimated target population of 315,000 children less than 2 years old; their jobs also include providing Vitamin A to the one million children less than six years old and providing oral rehydration treatment for all episodes of diarrhea. It is therefore necessary to rely heavily on the services of the NCOs. Nearly 100 NGOs of varying sizes with different (and at times overlapping) coverage are involved in child health care activities in Dhaka. Service rates inevitably vary tremendously within the city; immunization coverage, for example, ranges from 5 to 60% of targeted age children. Numerous private and government hospitals have facilities for children, but the number of beds in relation to the need remains very small. 1/ L.C. Chen et al, (1974), Maternal Mortality in Rural Bangladesh, Studies in Family Planing 5, No. 11, pp. 334-441. 2/ L.S. Lindpainter, (1982), Maternity Related Mortality in Matlab Thana, Bangladesh, ICDDR, B. 3/ UNICEF, Maternal and Child Health in Bangladesh, 1984. 4/ Ministry of Health and Population Control (1985), Report of MCH Task Force, National Strategy for a Comprehensive Maternal and Child Health Program. -190- 9.20 Rural MCH services are provided by MOHFP staff in the Upazila Health Centers (UHCs), Union Health and Family Welfare Centers (UHFWCs) and Rural Dispensaries (RDs) with some input from NGOs (e.g., Bangladesh Rural Advancement Committee). Some of this care is now being provided jointly with family planning, but, again, the coverage is quite inadequate. Some services are largely non-operative due to staffing problems (for example, the satel- lite clinic at village level) and lack of support services (for example, blood banks, anesthesiologists). While complicated cases are supposed to be referred to a medical officer, the expense and difficulty of bringing the patient to the UHC, coupled with the scarcity of obstetricians/gynecologists and of essential supplies, render the system ineffective for most pregnancy complications. 9.21 Most deliveries, especially in rural areas, are not professionally attended. Maternal care is provided largely through the informal system of Traditional Birth Attendants (TBA). Although theoretically the Family Welfare Assistant (FWA) identifies pregnant women and refers them to the Family Welfare Visitor (FWV) for antenatal care and to the Health Assistant (HA) for tetanus immunization, in practice this rarely occurs. In recogni- tion of these inadequacies several measures have been taken. Training of TBAs (which began in 1978 and was stopped in 1982) was reinstated in 1984; the goal is to have one trained TBA in each of the 64,000 villages. In addition, additional FWAs are being hired and a new cadre of workers, Senior FWVs, has been proposed to aid in the teaching and supervision of FWAs and TBAs in their antenatal activities. Issues in Health, Nutrition and Family Planning 9.22 Improving the prospects for health, family planning and nutrition in Bangladesh will require that a number of issues be addressed in the coming years. These include low internal efficiency and lack of attention to the cost effectiveness of health care, inadequate program management, relatively weak MCH care, inadequate planning for urban health, the absence of a nutri- tion program and the need to define the future role of NGOs. These issues are discussed below. 9.23 Internal Efficiency. Although there is little evidence available, it appears that existing facilities are underutilized, particularly in rural areas. Cultural reasons play a role in explaining low utilization rates-- especially for women--but the problem also reflects the low quality of serv- ices resulting from lack of essential supplies, inadequate facilities, staff absenteeism and poor training of manpower; drug allocation in the UHCs, for example, is equivalent to only Tk 1 per person per year. Service delivery is often poor because of low staff efficiency and absenteeism which reflect poor supervision and accountability. 9.24 Another problem is the mismatch between available skills and the needs of priority activities. Health and family planning programs, for example, correctly place priority on delivering a few simple contraceptive and largely preventive services. But the relatively plentiful physicians trained in secondary and tertiary care in comparison to primary health -191- workers, as well as the weak capacity for training in family planning, con- traceptive and gynecological care, do not provide the mix of manpower that is best suited to deliver simple and preventive health services. 9.25 Cost Effectiveness of Health Care. There is currently no mechanism for assessing the relative health effect of different interventions in order to prepare a program which includes those with the most "effective" contribu- tion to health for a given level of expenditure. The overall "cost- effectiveness" of health interventions in Bangladesh therefore remains unknown. As in most covlntries, clinical care has often taken precedence over epidemiological, preventive, environmental and other health oriented interventions; such non-clinical interventions, in a country with the level of socio-economic development as Bangladesh, generally would be expected to lead to more beneficial health effects for similar or lower levels of expenditures. The principal efficacy of health care would probably improve substantially if the various alternative medical interventions were compared and only the more cost-effective ones chosen. In the fields of obstettlcs and gynecology, for example, these criteria could be used to assess the relative value of major surgery, minor surgery, in-patient care, out-patient care, diagnostic and therapeutic self-care, preventive measures such as high risk screening and family planning practices. At the same time care should be taken not to equate cost effective care with efficient care. It remains entirely possible in Bangladesh to very efficiently perform rather ineffec- tive medical care. Clearly, this is not a tidy nor clear-cut process, but in view of the scarcity of resources some form of comparative analysis will be essential. 9.26 Program Management. Performance in the health and family planning sectors has been significantly constrained by delays in recruitment of personnel, inadequate logistics and weak program supervision. The present administrative arrangements for implementing the population and health programs leave much to be desired but further structural changes would only result in further disruptions. The most appropriate strategy at present, therefore, is to strengthen and improve current arrangements. In this regard, it is hoped that actions for encadrement of FPOs and their inclusion as members in the Upazila Parishads will improve their performance. In addition, prompt recruitment of additional FWAs and improvement in the dis- tribution of ORT and Drug and Dietary Supplement (DDS) kits could sig- nificantly enhance the immunization, vitamin A and diarrheal programs, and could lead to a reduction in infant mortality. 9.27 Considerable improvements in the supervision and performance of MOHFP staff will also be needed. Such efforts require expanding efforts to collect sectoral information. For example, there is no system for reporting MCH activities, and this makes the process of monitoring and planning very difficult. MOHFP is improving its reporting system but it will need further restructuring, additional staff and financial support in order to become operationally effective. 9.28 Strengthening MCH Care. Recent efforts to improve MCH care are most encouraging, but considerable more work to strengthen the existing system and develop new approaches will be necessary. Basic antenatal care, for example, remains almost totally absent. Identifying pregnant women should be possible -192- following the training of the TBAs and the hiring of more FWAs, but mass education regarding the need for attention while pregnant remains an unmet priority. In addition, effective screening and teaching of pregnant women will require more and better trained FWVs and close supervision by SFWVs. In addition, a thorough inventory will be needed in order to replenish and repair UHFWC screening equipment. An effective system to identify and manage complicated pregnancies also needs to be developed; this will require a complex range of actions involving training, development of a referral system and substantial outlays for equipment and infrastructure. 9.29 Planning for Urban Health. Health services in urban areas are inade- quate and their coverage may be deteriorating. Many urban areas lack major government health input with the NCOs providing the bulk of urban health services. Programming and priorities of the NGOs are at best loosely coordinated, although in two municipalities the Government has redistributed the activities of NCO's and of the municipal health system in order to avoid overlaping of their services and increase coverage. While currently only an estimated 18% of the population reside in urban areas, by the year 2000 it is anticipated that about 30% of the population will reside in these areas. The health needs and strategies for providing these services are not being formu- lated and are not reflected in esxisting budgets. 9.30 The Need for a Nutrition Program. A number of direct interventions could improve nutritional status, particularly of infants, young children and women. But a strategy for dealing with problems of malnutrition and institu- tional arrangements for implementing programs are currently lacking. Policy linkages remain to be established particularly between food supply and the consumption needs of those in Bangladesh who live in absolute poverty at the edge of starvation. These policy measures might include setting production and consumption objectives for nutritionally important crops other than foodgrains, since the latter can provide only 80% of calorie requirements in a healthy diet. Establishment of a data system to provide seasonal surveil- lance as the basis of an early warning system on food conditions is also desirable to permit sharper geographic targeting of resources. 9.31 Principal responsibility for policy and strategy formulation at the interface of food and nutrition is not yet clearly defined but should rest with the Food Policy Committee (FPC), chaired by the Minister of Food. Its membership now consists of the Ministers of Agriculture, Local Government and Finance and could be expanded to include the Ministers of Industries and Health and Family Planning. Strengthening the Food Ministry's Food Planning and Monitoring Section would permit it to function as a secretariat to the FPC. An earlier effort to energize the National Nutrition Council (NNC) and build on its efforts to formulate a draft nutrition policy and program appears to have lost momentum but must be renewed if it is to play an essen- tial advocacy and advisory role. The NNC also needs broadening to include NCOs and other private sector representatives, and strengthening to develop and monitor nutrition intervention programs and coordinate the respective roles of concerned agencies and institutions. 9.32 Role of NGOs. The contribution of NCOs in the expansion of health and family planning programs has been substantial; it is estimated that they provide almost 40% of contraception from modern methods and for the majority -193- of MCH services in urban areas. In order to facilitate their further growth, some organizational issues must be addressed. First, following the examples mentioned in para 9.29, more municipalities should get involved in coordinat- ing activities with those of NCO's to minimize duplication of their efforts. In addition, there is a need to (i) define the role of NGO's more clearly; (ii) create mechanisms to improve coordination among NGO's and with the Government's programs; (iii) develop mechanisms to evaluate, supervise and monitor NGO's performance; and (iv) simplify procedares for NGO operation and expansion in both urban and rural areas. IV. EDUCATION 9.33 Tie Ministry of Education (MOE) is responsible for planning, financ- ing and managing education at the primary, vocational/technical and univer- sity levell. Secondary and college education is for the most part private, but heavily subsidized by the public budget. In the last two Plan periods the Government has made primary education a priority, seeking to increase enrollments and improve quality. It has also focused on increasing oppor- tunity in vocational and techL&ical education while stabilizing growth in non-technical university education. 9.34 Education faces a number of constraints which combine to reduce its effectiveness. These include the burden of a rapidly growing population, low expenditures and an underdeveloped planning, management and administra- tive capacity. As a result, access to education has only expanded modestly in relation to the growing needs and the quality of education leaves much to be desired. Presently there is growing discontent and frustration with the poor performance of the education system. 9.35 Social and political constraints also reduce the effectiveness cf the education system. Well organized interest groups of both students and teachers demand increased government support, and even greater nationaliza- tion of secondary and college level institutions. This environment has also led to widely available student stipends without regard to need or merit and to minimal tuition fees which have not changed in more than a decade. For the same reason, the Government has been increasing its contributions to financing secondary and college level institutions which has seriously raised its recurrent cost obligations without any commensurate improvement in quality. Another issue is the performance of primary school teachers which leaves much to be desired. 9.36 The Government is well aware of the constraints facing education and the issues that need to be addressed. The Third Five Year Plan confirms that the system has only expanded marginally and remains elitist in character and emphasizes the need for reform. It addresses most of the major policy issues, including the need to improve quality throughout the system, restruc- ture higher secondary and college education, increase cost recovery, strengthen management controls and introduce performance evaluations. However, specific programs to address most of the issues are lacking. Nevertheless, some progress is beginning to be made. For example, in primary education the Ministry of Education has established a Directorate and improvements have been started in field supervision, personnel management, teacher training, curriculum development, textbook supplies and in construc- -194- tion and maintenance of school facilities. Neverthe'less, the full impact of these changes is not expected to be felt for several more years. In prepara- tion of further reforms, MOE is conducting studies in teacher training and automatic promotion and is reviewing issues in respect of non-formal education. 9.37 However, the situation remains very serious. Unless the reforms initiated in primary education are expanded and developed, the p,rimary system will not only remain very wasteful, but will absolutely fail in its task of providing basic literacy and numeracy to a broad segment of the population. Secondary and higher education is also in urgent need of attention; examina- tion systems must be modified, and programs and curricula must be made more appropriate to the needs of the country. Increased emphasis on strengthening vocational and technical training is also needed. Key Issues in Education 9.38 Improving Education System Management. The organization and manage- ment of the education system has not grown according to its aspiratio-ns or its current responsibilities. But efforts are being made. For example, the Directorate of Primary Education has been restructured and strengthened. As a result, curricula are being modified and teacher personnel management improved. Management, supervision and support of teachers is being provided through Assistant Upazila Officers who are responsible for visiting schools monthly. In-service and pre-service teacher training has been increaged, free textbooks and improved facilities have begun to be provided and the numbers of female teacners are rising. Preliminary surveys show a reduction of the drop-out rate where these changes have been implemented. However, fully implementing these reforms in primary education will require continued attention for the next ten years. Similar reforms are essential for the other levels of the system. 9.39 The Directorate of Secondary and Higher Education is unable to provide the quality control necessary to improve the secondary schools and degree colleges. In part this is a structural problem, because the degree colleges are affiliated, with general universities who grant the degree, and in theory they are responsible to the universities for the quality of their curricula, texts and teacher deployment. In fact, the universities are not able to provide effective supervision of degree college programs. The Directorate of Secondary and Higher Education has its own inspection system, but it is seriously understaffed. It focuses entirely on regulatory com- pliance and not on monitoring teaching quality. A high proportion of their staff time is allocated to reimbursing schools and colleges for teachers' salaries. Unless this Directorate is strengthened and given a mandate for both planning and management, it will be difficult to improve the quality of instruction and efficiency of secondary and degree college institutions. 9.40 The universities are self-governing entities with 95% of their total expenditures provided by the Government as block grants. A University Grants Commission (UGC) was created in 1973 to coordinate the activities of the universities and to distribute their government grants. However, because of the strong tradition of autonomy in the universities, the UGC has been unable to provide either effective long range planning or quality control. -195- Nevertheless, pressure for increasing the accountability of university administrations is rising along with their costs. In the near future, it will be essential to reshape the management system of higher education in order to increase the accountability of university authorities while main- taining reasonable autonomy. 9.41 Inadequate information upon which to base policy and expenditure decisions is a serious problem in education, as in the case of health. For example, Bangladesh is one of the few countries in the world where it is impossible to assess class-by-class dropout and repeater rates in either primary or secondary education, and gross enrollments are generally overestimated. Developing a sound data base is not expensive and should be given a high priority. 9.42 Reducing High Wastage. High dropout and repeater rates currently greatly increase the cost of producing graduates at all levels of education. Hence, measures to reduce wastage, especially by improving quality of services, are essential. Fully 50% of first grade students drop out before second grade, and repeater rates at the primary level are estimated to average about 10% per grade. If the system continues to perform as it has in the first half of the eighties, primary enrollments will not even keep up with population growth by 1990. Given the low enrollment increases of the early 1980s, and the fact that less than one in five students who enter the system emerges literate, it is clear that a system with such wastage cannot be an effective tool to eradicate illiteracy. 9.43 Wastage in the secondary and college systems is most evident in the low pass rates associated with the terminal examinations. The Secondary School Certificate examination (at the end of tenth grade) and the Higher Secondary Certificate examination (at the end of twelfth grade) average a 50% pass rate. It is estimated that a further 20% of those enrolled in these two grades do not take the exams, largely because they have failed the pre- examination qualifying tests. Repetition in the secondary system is high and degree colleges have an even higher failure rate in their examinations; in many examinations only 35% pass. In the university system (Honors Degree) the examination pass rates are much better, averaging about 80%, but serious delays in graduation still occur because of the large number of strikes which often close the universities for months at a time. 9,44 External Efficiency. Student output does not appear to match country needs. Although employment statistics are extremely scarce, and current analyses are based upon limited surveys, most observers agree that there is substantial educated unemployment and underemployment, particularly of liberal arts graduates.l/ The education system is completely oriented to preparing students to advance academically. While such training is useful for some students, there is little attempt to provide more practical skills 1/ Much of the unemployment of degree holders is due to the embargo on new hiring for government service, which used to absorb as much as 75% of the post secondary output. In 1986, when there was a partial relaxation of the restriction, 26,000 job seekers applied for 5,000 posts. -196- to those who must drop out of the formal system during their primary or secondary years. The first opportunity for students to obtain a credential which is accepted in the job market is after completing the 12th grade and passing the HSC examination. But even this credential is of little value unless specific marketable skills are added to the academic preparation. The first practical credential is the pass or honors degree from degree colleges which opens opportunities for government and private employment. 9.45 Numerous difficulties must be overcome to improve the alignment of the output of the education system to the social and economic needs of the country. First, a concerted effort must be made to increase the practical relevance of primary 4nd secondary education. Second, GOB must limit the funding of higher education programs which do not provide training appropriate to productive employment. Third, GOB's planning capacity and that of university authorities must be strengthened to facilitate a transi- tion to more relevant curricula. 9.46 The Need for Cost Recovery. Cost recovery in the education system is almost non-existent. Monthly tuition fees average Tk 5.5 in lower secondary (US 18 cents), Tk 8.5 in upper secondary (US 29 cents), Tk 10 at the degree colleges (US 33 cents) and Tk 12 (US 39 cents) at the honors and advanced degree courses of study. Other fees are of comparable low magnitude. As a result, resource mobilization in the sector is minimal, contributing well below 10% of recurrent costs; this places an additional constraint to the prospects for improvirng quality and expanding educational services. The option of increasing tuition and fees at the higher levels and establishing programs of student aid on the basis of need and merit deserves serious consideration. 9.47 Non-Formal Education Alternatives. Community-based non-formal education approaches are a promising alternative to provide basic numeracy, literacy and skills to youths and adults who have not been able to enter (or advance in) the formal education system. NGOs have achieved considerable success in implementing innovative non-formal basic education programs and in reaching the rural poor with training, but their progress has been on a small scale. For instance, BRAC has been able to achieve low dropout rates (espe- cially for girls) in non-formal primary schooling with fairly low operational costs and minimal capital expenditures (excluding overhead costs). The most promising non-formal adult education system has also been developed by BRAC combining group formation, consciousness raising, literacy and numeracy and skills training and income generating activities into an integrated process. The BRAC model with appropriate amendments is now also being implemented by several other NGOs. Reviewing these non-formal activities with a view to assess the viability of expanding and replicating them by GOB and NGOs is desirable. To facilitate this process, the country must develop the organizational capacity to support a variety of delivery systems, and provide appropriate monitoring and auditing. -197- Annex 1 Organization of Health and Family Planning Program MOHFP has the Family Planning Wing (responsible for family planning and MCH programs) and the Health Wing (responsible for all other services). Each wing has its own Director General; a secretariat responsible for planning, budget and monitoring; and functional operational directorates. Health and family planning services are functionally integrated at the upazila level in the Upazila Health Complex (UHCO under the Health and Family Planning Officer (UHFPO) who belongs administratively to the Health Wing. He is assisted in the performance of FP and MCH functions by an Upazila Family Planning Officer (FPO) and a Medical Officer (MO) who provides technical supervision and heads MCH/FP efforts. In addition, the upazila staffing includes 7 MOs who provide primarily curative health care; a Health Inspector (HI) who supervises field operations of health workers, and an Expanded Program of Immunization (EPI) technician. At the union level, the Union Health and Family Welfare Center (UHFWC) provides the lowest tier of health referral; sterilizations and most IUD insertions also take place there. An Assistant Health Inspector and a Family Planning Assistant, both males (who are supervised by the HI and the FPO from the upazila level) supervise teams who work at the ward level. A Medical Assistant (MA), a Family Welfare Visitor (FWV) and occasionally a pharmacist, staff UHFWCs. At the ward level, a team of two workers delivers home outreach services: a male Health Assistant (HA) from the Health Wing and a female Family Welfare Assistant (FWA) from the Family Planning Wing. The HA is responsible for cholera and malaria control, environmental sanitation and general health matters; he also provides condoms. The FWA delivers pills and condoms while also motivating other forms of contraception and provides nutrition education. The FWA is assisted by a female helper who receives fees for referring sterilization and IUD cases. To complement domiciliary services, the FWA and HA conduct satel- lite clinics in selected villages on fixed days of the week. Each team is theoretically responsible for a ward population of 6,000, but population growth has probably increased the population:worker ratio. Around 90% of Bangladesh's 13,500 wards have FWA-HA teams. -198-' S T A T I S T I C A L A P P E N D I X -199- General Notes In most tables, data are presented in metric units. The conversion factors used are: 2.417 acre/hectare 2204.6 pounds/metric ton 26.7909 maund/metric ton 37.326 kg/maund 1.6093 km/mile 4.546 liter/imperial gallons The long ton, sometimes confused with the metric ton, is 2240 pounds. The seer is 1/40 of a maund. In some tables multi-year averages are presented. In this context, the following notation is used: Column Heading Period Referred to 70/75 July 1, 1970 through June 30, 1975 72/75 July 1, 1972 through June 30, 1975 75/80 July 1, 1975 through June 30, 1980 80/85 July 1, 1980 through June 30, 1986 -200- STATISTICAL APPENDIX Table No. Section/Title Page No. HUMAN RESOURCES . . . . . . . . . . . . . . . . . . . . .. . . 203-211 1.1 Population, 1960-2010 1.2 Population Benchmarks by District, 1961-1985 1.3 Population by District - Interpolated Estimates, 1969/70-1984/85 1.4 Health Indicators, 1980-84 1.5 Incidence of Malnutrition, 1984 1.6 Family Planning Statistics, 1980/81-1985/86 1.7 Education Statistics, 1980/81 and 1982/83 1.8 Employment Statistics, 1980/81 and 1983/84 1.9 Number of Persons Going Abroad for Employment, 1976/79-1986 1.10 Rural Infrastructure, Data by District, 1980/81 NATIONAL ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . 212-215 2.1 GDP at Current Prices by Sector of Origin, 1980/81-1985/86 2.2 Estimates of Private Fixed Investment, 1974/75-1983/84 2.3 GDP at Constant Prices, 1980/81-1985/86 2.4 GDP Deflators, 1977/78-1985/86 BALANCE OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . 216-226 3.1 Balance of Payments, 1980/81-1986/87 3.2 Balance of Payments - Requirements and Sources Format, 1980/81-1986/87 3.3 Trade Balance by Commodity Group, 1980/81-1985/86 3.4 Exports, 1980/81-1986/87 3.5 Jute Exports, 1980/81-1985/86 3.6 Tea, Leather and Fish Exports, 1980/81-1985/86 3.7 Non-Traditional Exports, 1980/81-1985/86 3.8 Import Values, Quantities and Prices, 1980/81-1986/87 3.9 Aid Pipeline, 1980/81-1985/86 3.10 IMF Operations, 1980/81-1985/86 3.11 Terms of Trade 3.12 Average Exchange Rates, Period Averages, 1972/73-1986/87 -201- Table No. Section/Title Page No. EXTERNAL DEBT . . . . . . . . . . . . . . . . . . . . . . . . 227-228 4.1 External Public Debt Outstanding Including Undisbursed (June 30, 1986) 4.2 Service Payments, Commitments, Disbursements and Outstanding Amounts of External Public Debt (June 30, 1986) PUBLIC FINANCE . . . . . . . . . . . . . . . . . . . . . . . . 229-233 5.1 Conventional Budget Summary, 1980/81-1986/87 5.2 Current Budget, 1980/81-1986/87 5.3 Taxes on Imports, 1980/81-1985/86 5.4 Annual Development Program, 1972/73-1986/87 5.5 Financial Performance of Public Sector Industrial Corporations, 1980/81-1985/86 MONEY AND BANKING . . . . . . . . . . . . . . . . . . . . . . 234-239 6.1 Money Supply and Domestic Liquidity, 1983-1986 6.2 Agricultural Credit, 1977/78-1985/86 6.3 Development Finance Institutions, 1976/77-1985/86 6.4 Interest Rates 6.5 Bank Branches in Operation, 1975/80-1985/86 FOOD AND AGRICULTURE . . . . . . . . . . . . . . . . . . . . . 240-261 7.1 Land Use Summary, 1984/85 7.2 Farm Size Pattern and Landlessness, 1960-1983/84 7.3 Area Under Crops by Season, 1980/81-1985/86 7.4 Area Under Main Crops. 1980/81-1985/86 7.5 Irrigation Sunmary, 1980/81-1985/86 7.6 Public Sector Irrigation Programs, 1980/81-1985/86 7.7 Commercial Fertilizer Distribution, 1980/81-1985/86 7.8 Average Crop Yields, 1970/75-1985/86 7.9 Production of Main Crops, 1970/75-1985/86 7.10 Public Foodgrain Distribution System Operations 7.11 Seasonality of Public Foodgrain Distribution System Offtake 7.12 Land Use and Population Density, 1984/85 7.13 Agricultural Input and Irrigated Area by District 7.14 Foodgrain Production by District, 1970/75-1985/86 7.15 Foodgrain Surplus and Deficit Districts, 1970/75-1984/85 7.16 Aus and Aman Production by District -202- Table No. Section/Title Page No. FOOD AND AGRICULTURE (Continued) 7.17 Production of Boro and Wheat by District, 1970/75-1985/86 7.18 Jute Production by District 7.19 Public Foodgrain Procurement by District, 1975/80-1985/86 7.20 Percentage Distribution of Foodgrain Production and Procurement by District, 1975/80-1985/86 7.21 Public Procurement of Aus and Aman Rice and Paddy by District, 1975/80-1985/86 7.22 Public Procurement of Boro and Irri Rice and Paddy and Wheat, 1975/80-1985/86 INDUSTRY, TRANSPORT AND ENERGY . . . . . . . . . . . . . . . . 262-271 8.1 Bangladesh Bureau of Statistics Industrial Production Indices, 1980/81-1985/86 8.2 Jute and Cotton Milling Statistics, 1980/81-1985/86 8.3 Sugar and Pulp and Paper Mill Statistics, 1980/81-1985/86 8.4 Production of Selected Industrial Products by Plublic Sector Corporations 8.5 Natural Gas Statistics 8.6 Petroleum Balances, 1975/80-1985/86 8.7 Electricity Production and Consumption 8.8 Petroleum Product Demand by Sector and Product, 1985/86 8.9 Railway Statistics, 1972/75-1984/85 8.10 Transport Statistics, 1974/75-1984/85 PRICES AND WAGES . . . . . . . . . . . . . . . . . . . . . . . 272-279 9.1 Consumer Price Indices, 1980/81-1985/86 9.2 Natural Gas and Petroleum Product Prices, 1980-1986 9.3 Electricity Tariffs of the Bangladesh Power Development Board 9.4 Wholesale Prices of Consumer Goods in Urban Areas, 1980/81-1985/86 9.5 Public Foodgrain Ration Quotas and Issue and Sales Prices, 1965-1986 9.6 Daily Wages for Unskilled Labor, 1978/79-1985/86 9.7 Wage Differentials, 1978/79-1985/86 9.8 Agricultural Wage Rates, 1980/81-1985/86 -203- Table 1.1 POPULATION, 1960-2010 [millions] PROJECTION A: Net reproduction rate lowered to unity by 2000 1960 1965 1970 1975 1980 1985 1990 2000 2010 ---- ---- ---- ---- ---- ---- ---- ---- ---- Age 0-14 41.1 45.2 48.1 46.2 42.0 15-64 44.4 52.0 62.0 82.6 103.7 65+ 3.0 3.4 3.6 4.3 6.0 Total 52.4 60.5 69.3 71.1 88.5 100.6 113.7 133.1 151.7 PROJECTION B: Net reproduction rate lowered to unity by 2025 1960 1965 1970 1975 1980 1985 1990 2000 2010 ---- ---- ---- ---- ---- ---- ---- ---- --. Age 0-14 41.1 45.2 48.1 54.1 58.6 15-64 44.4 52.0 62.0 82.6 105.9 65+ 3.0 3.4 3.6 4.3 6.0 Total 52.4 60.5 69.3 71.1 88.5 100.6 113.7 141.1 170.5 PROJECTION C: Net reproduction rate lowered to unity by 2035 1960 1965 1970 1975 1980 1985 1990 2000 2010 -- ------- ---- ---- ---- ---- ---- ---- Age 0-14 41.1 45.2 49.0 61.1 68.0 15-64 44.4 52.0 62.0 82.6 109.7 65+ 3.0 3.4 3.6 4.3 6.0 Total 52.4 60.5 69.3 71.1 88.5 100.6 114.6 148.1 183.7 GROWTH RATES [percent per annum] PROJECTION A: Net reproduction rate lowered to unity by 2000 50-60 60-65 65-70 70-75 75-80 80-85 85-90 90-00 00-10 ----- ----- ----- ----- ----- ----- ----- ----- ----- Age 0-14 1.9 1.3 -0.4 -0.9 15-64 3.2 3.6 2.9 2.3 65+ 2.4 0.7 2.0 3.2 Total 2.3 2.9 2.8 0.5 4.5 2.6 2.5 1.6 1.3 PROJECTION B: Net reproduction rate lowered to unity by 2025 50-60 60-£35 65-70 70-75 75-80 80-85 85-90 90-00 00-10 ----- ----- ----- ----- ----- ----- ----- ----- ----- Age 0-14 1.9 1.3 1.2 0.8 15-64 3.2 3.6 2.9 2.5 65+ 2.4 0.7 2.0 3.2 Total 2.3 2.9 2.8 0.5 4.5 2.6 2.5 2.2 1.9 PROJECTION C: Net reproduction rate lowered to unity by 2035 50-60 60-65 65-70 70-75 75-80 80-85 85-90 90-00 00-10 ----- ----- ----- ----- ----- ----- ----- --- --- Age 0-14 1.9 1.7 2.2 1.l 15-64 3.2 3.6 2.9 2.9 65+ 2.4 0.7 2.0 3.2 Total 2.3 2.9 2.8 0.5 4.5 2.6 2.6 2.6 2.2 Source: Staff estimates. Table 1.2 POPULATION BENCHMARKS BY DISTRICT, 1961-1985 (thousands) Extrapolation Division 1961 1974 -----------1981 Census------------ Average 1974-to-1981 to 1985 /a District Census Census Total Male Female Households Size Growth Rate Total Per ha ---------- ------ ------ ----- ---- ------ ---------- ------- ------------- ----- ------ Rajshahi 11850 17332 21087 10789 10298 3716 5.7 2.8 24339 625 Dinajpur 1710 2571 3198 1647 1551 580 5.5 3.2 3738 473 Rangpur 3796 5447 6490 3325 3165 1196 5.4 2.5 7401 677 Bogra 1574 2231 2718 1384 1334 489 5.6 2.9 3139 699 Rajshahi 2811 4268 5263 2677 2586 894 5.9 3.0 6121 556 Pabna 1959 2815 3418 1756 1662 557 6.1 2.8 3940 693 Khulna 10067 14195 17150 8831 8319 2884 6.0 2.7 19715 508 Kushtia 1166 1884 2273 1167 1106 359 6.3 2.7 2611 654 Jessore 2190 3327 4016 2069 1947 633 6.3 2.7 4614 600 Khulna 2449 3557 4353 2264 2089 741 5.9 2.9 5041 361 Barisal 3068 3928 4668 2398 2270 830 5.6 2.5 5315 646 1 Patuakhali 1194 1499 1840 933 907 321 5.7 3.0 2134 424 O Dhaka 15294 21316 26249 13632 12616 4643 5.7 3.0 30542 850 Jamalpur 1449 2059 2445 1241 1204 452 5.4 2.5 2783 718 Mymensingh 4083 5508 6543 3355 3188 1208 5.4 2.5 7449 674 Tangail 1487 2078 2444 1243 1200 420 5.8 2.3 2767 721 Dhaka 5096 7612 10049 5376 4673 1705 5.9 4.0 12151 1347 Faridpur 3179 4060 4768 2417 2351 858 5.6 2.3 5393 690 Chittagong 13630 18636 22565 11597 10968 3892 5.8 2.8 25996 504 Sylhet 3490 4759 5650 2897 2753 966 5.9 2.5 6436 456 Comilla 4389 5819 6880 3481 3399 1203 5.7 2.4 7811 1025 Noakhali 2383 3234 3813 1899 1914 680 5.6 2.4 4322 570 Chittagong 2983 4315 5476 2913 2563 906 6.0 3.5 6474 759 Chittagong H. T. 385 508 746 407 339 137 5.5 5.6 959 57 TOTAL 50840 71479 87052 44850 42202 15135 5.8 2.9 100592 605 Note: Data shown represent actual census results, not adjusted for probable undercounting. The adJusted 1981 Census estimate of total population is 89,940,000 for the Census date of March 8, 1981. /a Extrapolated to 1985 at 1974 to 1981 growth rate and adjusted proportionately to estimated 1985 total. Source: Bangladesh Bureau of Statistics and staff estimates. Table 1.3 POPULATION BY DISTRICT - INTERPOLATED ESTIMATES, 1969/70-1984185 (thousands) Division/District 1969/70 1971/72 1973/74 1975/76 1977/78 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 ----------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Raj3shahi 16804 17678 18525 19541 20554 21446 21997 22561 23139 23732 24339 Dinajpur 2461 2606 2748 2917 3088 3242 3336 3432 3531 3633 3738 Rangpur 5344 5589 5822 6105 6383 6620 6770 6923 7079 7238 7401 Bogra 2161 2275 2385 2516 2648 2764 2835 2909 2984 3060 3139 Rajshahi 4106 4336 4562 4831 5101 5342 5490 5642 5797 5957 6121 Pabna 2732 2873 3009 3172 3334 3477 3565 3656 3748 3843 3940 Khulna 13817 14507 15172 15972 16767 17459 17890 18330 18781 19243 19715 KURhtia 1835 1926 2014 2119 2224 2314 2371 2429 2488 2549 2611 Jessore 3240 3401 3556 3743 3928 4089 4189 4292 4397 4504 4614 Rhulna 3437 3622 3802 4017 4232 4423 4541 4661 4784 4911 5041 Barisal 3859 4033 4198 4399 4596 4763 4869 4977 5088 5200 5315 Patuakhali 1446 1525 1602 1694 1787 1869 1919 1971 2024 2079 2134 1 Dhaka 20550 21678 22785 24110 25445 26645 27382 28138 28917 29718 30542 ° Jamalpur 2024 2115 2201 2305 2408 2495 2550 2607 2664 2723 2783 1 Mymeasingh 5413 5656 5887 6168 6443 6677 6825 6976 7131 7288 7449 Tangail 2054 2140 2221 2320 2417 2498 2549 2602 2656 2711 2767 Dhaka 7043 7584 8136 8785 9458 10102 10483 10877 11287 11711 12151 Faridpur 4016 4183 4340 4531 4718 4874 4974 5076 5179 5285 5393 Chittagong 18130 19039 19918 20977 22034 22962 23539 24130 24736 25358 25996 Sylhet 4678 4888 5087 5328 5565 5766 5894 6024 6156 6292 6430 Comilla 5734 5984 6220 6507 6789 7026 7177 7331 7488 7648 7811 Noakhali 3192 3328 3457 3614 3767 3895 3978 4061 4147 4234 4322 Chittagong 4083 4348 4612 4924 5242 5536 5712 5894 6082 6275 6474 Chittagong H. T. 442 491 543 604 671 739 778 820 864 910 959 TOTAL 69300 72901 76400 80600 84799 88512 90807 93160 95574 98051 100592 ------------------------------------------------------------------.------------------------------------------------- Source: Staff estimates. -206- Table 1.4 HEALTH INDICATORS, 1980-1984 1980 1981 1982 1983 1984 CRUDE DEATH RATE [peer thousand] National 10.18 11.5 12.17 12.32 11.88 Rural 10.77 12.23 12.78 13.2 13.01 Urban 6.81 7.21 6.92 7.46 8.44 INFANT MORTALITY RATES (per thousand] National 101.4 111.5 121.9 117.5 121.1 Rural 103.5 112.5 123.2 120.8 121.5 Urban 80.7 99.4 103.0 98.8 120.2 Male 102.3 113.4 124.1 118.8 135.3 Female 97.4 109.4 119.4 116.0 106.1 LIFE EXPECTANCY AT BIRTH [years] National 56.9 54.8 54.5 53.9 54.0 Rural 56.6 53.3 53.9 53.1 54.0 Urban 61.9 oO.1 60.6 60.3 60.4 Male 57.0 55.3 54.4 54.2 54.3 Female 57.1 54.4 54.8 53.6 54.1 Source: Bangladesh Bureau of Statistics Table 1.5 INCIDENCE OF MALNUTRITION, 1984 [millions affected] Protein-Calorie Vitamin A Deficiency Malnutrition -------------------- --------------- Night Bitot Goiter Anemia Acute Chronic Blindness Spots ------ ------ Pre-school children 2.85 8.75 1.00 0.20 NA 12.10 School age children 3.50 20.40 NA NA 4.75 21.50 Adults NA NA NA NA 4.25 33.10 --------------------------------------------------------------------------------- NA = not available. Source: World Bank, "Bangladesh: Food and Nutrition Sector Review," January 1985. -207- Table 1.6 FAMILY PLANNING STATISTICS, 1980/81-1985/86 [thousands] 1980/81 1981182 1982/83 1983/84 1984/85 1985/86 Voluntary Sterilizations Tubectomies 232.50 235.08 274.84 336.50 232.39 116.42 Vasectomies 26.30 67.82 88.32 215.67 259.21 151.13 Total 258.79 302.91 363.16 552.17 491.60 267.55 Delivery of Contraceptive Devices IUDs 41.60 83.67 117.74 303.34 432.45 367.67 Pills (cycles) 8238 7751 8258 9726 11553 12137 Condoms 87112 93230 116821 131096 151940 135907 EMKO (philes) 60.79 63.55 69.63 64.25 71.98 46.42 Injections 112.01 81.07 72.70 122.46 165.93 21.6.49 Foam tablets 5011 4126 5404 4385 3222 3125 COUPLE-YEARS OF PROTECTION [thousands] By Sterilization /a Tubectomies 522 705 909 1155 1272 1261 Vasectomies 319 355 408 583 784 857 Total 841. 1060 1317 1738 2055 2118 With Contraceptive Devices /b IUDs /c 122 169 236 469 761 900 Pills 543 517 551 648 770 809 Condoms 581 622 779 874 1013 906 EMKO 15 16 17 16 18 12 Injections 28 20 18 31 41 54 Foam tablets 33 28 36 29 21 21 Total 1322 1371 1637 2067 2625 2702 Total 2130 2404 2918 3775 4680 4820 Married Females Aged 15-49 /d 16097 16629 17179 17746 18332 18937 Apparent Contraceptive Rate /e 13.2 14.5 17.0 21.3 25.5 25.5 /a Cumulative, assuming year-to-year carry-over of 90Z. /b Assuming one couple-year of protection per 15 cycles of pills, 150 condoms or foam tablets, or 4 doses of injectables or vials of EMKO. /c Cumulative, assuming year-to-year carry-over of 70X. /d Staff estimates based on age-specific marriage rates from 1981 census. /e Couple-years of protection per married female aged 15-49. Sources: MIS, Department of Population Control, Bangladesh Bureau of Statistics, and staff estimates. -208- Table 1.7 EDUCATION STATISTICS, 1980/81 and 1982/83 1980181 1982/83 ADULT LITERACY RATE (.ige 15 and up) National 29.2 Rural 25.4 Urban Male 39.7 Female 18.0 ATTENDANCE RATES Primary (ages 5-9) '$ 9 Secondary (10-14) 20.9 Higher Education (15-24) 1.9 STUDENT:TEACHER RATIO Primary 50.1 Secondary 27.7 College 31.4 University 15.8 ------------------------------------------- i------------------ Source: Bangladesh Bureau of Stati3tic3. -209- Table 1.8 EMPLOYMENT STATISTICS, 1980/81 and 1983/84 [millions] 1980/81 1983/84 Not in civilian labor force 64.0 67.0 Children 0-9 years 29.9 32.3 Household work 22.4 24.6 Other 11.8 10.1 Civilian Labor Force 25.9 Employed 25.3 28 Agriculture 15.4 Non-agriculture 9.9 Male 23.9 25.7 Female 1.4 2.2 Rural 19.6 24.1 Urban 4.1 3.9 Unemployed 0.6 0.7 Male 0.5 0.5 Female 0.1 0.2 Rural 0.1 Urban 0.6 NON-AGRICULTURAL EMPLOYMENT [thousands] 11648 Prof, tech, admin, & managers 1158 Clerical, sales, and services 6302 Production and transport 3587 Not reported 601 Mining & quarrying 48 Manufacturing 2108 Utilities 107 Construction 321 Trade, hotels, and restaurants 3271 Transp, Storage, & communications 1209 Finance & business services 178 Community & personal services 3250 Not reported 1089 Source: Bangladesh Bureau of Statistics. Table 1.9 NUMBER OF PERSONS GOING ABROAD FOR EMPLOYMENT, 1976/79-1986 MULTIYEAR AVERAGES CALENDAR YEAR DATA 76-79 80-84 1980 1981 1982 1983 1984 1985 1986 By Occupation ----- ----- ---- ---- ---- ---- ---- ---- ---- Construction workers 2119 2446 2590 3393 2641 3814 3779 5393 6053 Vehicle-drivers 1162 2111 1070 2575 3587 1881 1448 3026 3637 Workers (skilled, semi-skilled & unskilled) 4879 35434 17706 31478 34870 40410 37886 50956 50874 Technicicans 3057 5965 4247 10357 7597 6113 4992 9271 9581 Engineers 370 147 194 236 175 67 60 143 115 Doctors, nurses and 284 420 274 273 224 492 2003 1126 909 Professionals 398 1620 385 1905 2805 3371 3836 3620 2974 Catering workers 791 2187 1836 2653 2604 2225 1299 2052 2369 Miscellaneous 3946 1652 2271 2917 3072 827 1450 2107 1925 Total 17277 51982 30573 55787 57575 59220 56753 77694 78432 By Destination 0 United Arab Z"irates 5094 5937 4847 6418 6501 6616 5302 8329 8784 1 Qatar 1542 3910 1455 2268 5504 7561 2763 4751 5725 Kuwait 1623 6395 3687 5464 6846 10302 5677 7283 10823 Iraq 1410 7373 1927 13153 12152 4932 4701 5051 7765 Saudi Arabia 2799 14076 8695 13384 14770 12942 20587 37222 27686 Libya 1314 2934 2976 4162 1929 2215 3386 1546 2901 Bahrain 699 1880 1351 1392 1860 2470 2325 2969 3215 Oman 2052 8130 4745 7351 7309 11126 10119 9200 10667 Singapore 28 592 669 1083 304 178 728 20 0 Others 717 757 221 1112 400 878 1174 1323 866 -----------------------------------------,---------------------------------------------------------------------------------- Note: Data are for calendar years. Source: Bureau of Manpower, Employment and Training. Table 1.10 RURAL INFRASTRUCTURE, DATA BY DISTRICT, 1980/81 Villages Villages with Villages Villages Villages Total with Primary Primary Health with Primary with with Division/District Villages Schools Care Centers Markets Electricity Post Office --------------- -- -------- ------------ ---- ---------- ------------ ----------- ----------- Rajshahi 25859 8499 978 2753 970 1278 Dinajpur 5229 1494 128 604 313 206 Rangpur 5384 2179 239 795 200 318 Bogra 3813 1189 185 358 168 178 Rajshahi 7520 2165 268 576 175 333 Pabna 3913 1472 158 420 114 243 Rhulna 13564 6309 781 2623 629 1801 Kushtia 1609 803 148 231 155 163 Jessore 4103 1578 152 608 149 342 Rhulna 3680 1609 219 624 226 459 Barisal 2762 1611 203 798 83 622 Patuakhali 1410 708 59 362 16 215 Dhaka 25831 8538 1065 2982 1478 1714 Jamalpur 2239 814 107 262 22 176 Mymensingh 7063 2391 258 978 167 418 Tangail 2340 906 134 287 34 206 Dhaka 8061 2454 354 734 927 498 Faridpur 6128 1973 212 721 328 416 Chittagong 20396 7817 1155 2595 1724 1676 Sylhet 10189 3213 295 851 539 438 Comilla 5853 2304 423 76,5 614 564 Noakhali 2132 1184 255 525 207 372 Chittagong 1664 883 155 399 344 281 Chittagong Hill Tracts 558 233 27 55 20 21 Total 85650 31163 3979 10953 4801 6469 -------------------------------------------------------- t ---------------------------------------------------- Source: Bangladesh Bureau of Statistics, Socio-Economic Indicators of Bangladesh, September 1981. -212- Table 2.21 GDP AT CURRENT PRICES BY SECTOR OF ORIGIN, 1980/81-1985/86 (Tk crore) 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 Agriculture 10895 12184 13587 16933 20798 21468 ------ ------ ------ ------ ------ ------ - Crops 8363 9492 i0447 12984 15467 14790 - Forestry 585 655 850 1188 1193 1826 - Livestock 1245 1271 1477 1671 2673 3159 - Fisheries 702 765 813 1090 1464 1693 Industry 3670 4253 4471 5098 5950 6611 Mining & quarrying 3 6 3 4 0 1 Manufacturing 2286 2570 2807 3094 3463 3734 - Large & nedium-scale 1321 1473 1555 1725 1935 2069 - Small-scale & cottage 965 1097 1252 1369 1528 1665 Construction 1309 1586 1503 1810 2252 2606 Electricity, gas & water 74 96 161 194 235 271 Services 8761 10078 10784 12961 14949 17911 ------ ------ ------ ------ ------ ------ Transport & communications 1833 2286 2505 2601 2727 3333 Trade & catering 2081 2208 2315 2851 3528 3917 Banking & insurance 413 419 434 515 689 893 Owner-occupied housing 1733 1957 1952 2487 2800 3177 Other services 1848 2263 2546 3108 3436 4610 Public administration & defense 814 944 1033 1398 1769 1981 Gross Domestic Product at market prices 23326 26514 28842 34992 41696 45991 Net indirect taxes 1346 1382 1547 1885 2179 2552 Gross Domestic Product at factor cost 21980 25132 27295 33107 39517 43439 Lource: Bangladesh Bureau of Statistics. Table 2.Z ESTIMATES OF PRIVATE FIXED INVESTMENT, 1974/75-1983184 (Tk croLe) 1974/75 1975/76 1976/77 1977(78 1978179 1979(80 1980/81 1981/82 1982/83 1983/84 A. NON-MONETZIED SECTOR (1) Index of rural wages (1976(77 - 100) /a 10.3 9.9 10.0 10.6 12.2 14.0 15.4 17.3 19.0 21.9 (2) Non-monetized investment (in constant prices of 1976/77) /b 308.6 317.9 327.4 337.2 347.3 357.8 368.5 379.6 391.0 403.0 (3) Non-monetized investment (in current prices) (Al x A2/100) 317.9 314.7 327.4 357.4 423.7 500.9 567.5 656.7 742.9 882.6 B. INDUSTRY (1) Disbursements of BSB and BSRS *- 10.0 9.4 21.9 49.9 83.9 110.6 97.5 99.8 73.4 (2) Private industrial lnvestment (1.9 x B1) /c 10.0 19.0 17.9 41.6 94.8 159.4 210.1 185.2 189.6 208.0 C. AGRICULTURE (1) Medium-term agricultural credit Id 10.2 9.1 14.5 19.2 30.9 72.9 76.5 107.6 168.7 278.7 (2) Agricultural investment (1.3 x Cl) /a 13.3 11.8 18.8 25.0 40.2 94.8 100.4 139.9 219.3 362.3 D. CONSTRUCTION If (1) Imports and domestic production of cement ('000 tons) 45.5 37.9 51.9 73.1 76.6 82.5 79.1 84.2 106.6 102.1 (2) 3-year moving average 33.4 45.1 54.3 67.2 77.4 79.4 81.2 75.5 97.8 105.0 (3) Construction c-st Lndex (1976/77 - 100) 9.8 11.2 10.0 10.2 10.7 12.6 15.3 16.7 17.5 17.6 (4) Total construction (D2/519 x D3/100 x 4390) /g 264.6 408.3 439.0 554.1 669.5 808.7 1004.3 1066.5 1439.4 1563.0 (5) Public construction Ih 104.2 145.2 203.7 232.2 325.1 400.4 464.1 531.0 613.1 631.7 (6) Industrial construction /i 4.0 7.6 7.9 16.7 37.9 61.0 83.2 74.1 75.8 83.2 (7) Private construction (4-5-6) 156.4 255.5 192.3 305.2 306.5 347.3 457.0 461.4 750.5 848.1 E. TRANSPORT (1) Imports and domestic production of trucks and buses (mill. Tk) 14.4 11.5 12.5 20.2 44.0 50.0 56.6 97.9 35.8 47.0 (2) Private investment /I 11.5 9.2 10.0 16.2 35.2 40.0 45.3 78.3 28.6 37.6 TOTAL 509.1 610.2 566.4 745.4 900.4 1142.4 1380.3 1521.5 1930.9 233.8 -----------------------------------------------,-------------------------------------------------------------------------------------------------------------------. .. - not available. /a Average daily wages (without food) of non-skilled agricultural labor (BBS). /b 1976/77 ba3ed on estimates of rural house and farm building construction and prlvate land improvement, in Planning Commision, Estimation of Gross Fixed Capital. Formation In Bangladesh, June 1980. /c Approximately 85% of BSB and BSRS loans sanctioned have been for private industry; debt:equity ratios have typically been 60:40, and it is estimated that projects financed by BSB and BSRS account for roughly 75% of private industrial investment (including small-scale industry). In 1983/84 BSB/BSRS accounted for only about 50% of private investment. /d Estimates for 1974/75 and 1975/76 are based on data for BKB alone. /I Institutlonal credit is estimated to account for 75% of private monetized investment in agriculture. /f Excluding indu3trial construction. /g Estimate for 1976/77 based on estimates provided in Planning Commission, op cit. Tlme series based on treds inr. s+.pply of cement and construction cost index. /h Estimated as 30X of public fixed investment financed through the CentraL Government's Annual Development Program. /i Estimated as 40% of private industrial investment. /J Assumed to be 80% of the total supply of trucks and buses. Source: Staff estimates. -214- Table 2.3 GDP AT CONSTANT PRICES, 1980/81-1985/86 [Tk crore at 1972/73 market prices] 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 Agriculture 3491 3523 3685 3744 3779 3909 - Crops 2763 2744 2879 2912 2946 3076 - Forestry 170 188 192 210 196 186 - Livestock 348 368 377 384 393 402 - Fisheries 210 222 237 239 245 245 Industry 1070 1102 1109 1201 1276 1306 Mining & quarrying 1 1 1 1 1 2 Manufacturing 760 772 760 788 813 828 - Large & medium-scale 439 443 421 439 454 459 - Small-scale & cottage 321 330 339 349 359 369 Construction 285 300 304 365 409 417 Electricity, gas & vater 25 30 45 49 53 59 Services 2604 2598 2689 2855 3035 3234 Transport & communications 485 485 523 534 548 579 Trade & catering 687 627 643 680 721 760 Banking & insurance 139 129 122 129 154 195 Owner-occupied housing 530 542 555 568 581 595 Other services 491 523 557 594 634 673 Public administration & defense 273 291 290 350 397 432 Gross Domestic Product, at market prLces 7164 7223 7484 7800 8090 8448 Net indirect taxes 413 377 402 420 422 469 Gross Domestic Product, at factor cost 6751 6846 7082 7380 7668 7979 (Real Annual Growth, in X) 6.2 1.4 3.4 4.2 3.9 4.1 ------------------------------------------------------------------------------------------------ Source: Bangladesh Bureau of Statistics. Table 2.4 GDP DEFLATORS, 1977/78-1985/86 (1972/73 - 1.0000] 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 Agriculture 2.3860 2.7610 3.0030 3.1211 3.4589 3.6870 4.5224 5.5041 6.2155 - Crops 2.3590 2.6470 2.8640 3.0272 3.4591 3.6282 4.4588 5.2502 5.8768 - Forestry 2.7280 3.1280 3.0780 3.4339 3.4803 4.4340 5.6687 6.0441 6.6180 - Livestock 2.4550 3.1740 3.8320 3.5810 3.4546 3.9206 4.3547 6.8015 8.0836 - Fisheries 2.3740 3.2740 3.3370 3.3422 3.4446 3.4265 4.5615 5.9755 6.8730 Industry 2.3350 2.4860 2.9640 3.4302 3.8579 4.0312 4.2450 4.6667 5.0109 Mining & quarryinig 2.0000 2.5000 2.250n 3.0000 3.0000 3.0000 4.0000 4.0000 4.0000 Manufacturing 2.1520 2.2410 2.7130 3.0072 3.3284 3.6944 3.9295 4.2595 4.4475 - Large & medium-scale 2.1520 2,2410 2.7130 3.0073 3.3284 3.6944 3.9294 4.2621 4.4531 - Small-scale & cottage 2.1520 2.2410 2.7130 3.0072 3.3285 3.6944 3.9297 4.2563 4.4403 Construction 2.8880 3.0290 3.7100 4.6004 5.2806 4.9465 4.9589 5.5061 6.1929 Electricity, gas L water 2.2150 2.4720 2.7200 2.9760 3.2399 3.5578 3.9979 4.4340 4.4610 Services 2.1830 2.4450 2.8730 3.3649 3.8792 4.0098 4.5396 4.9255 5.1827 Transport & communications 2.0710 2.0700 2.4430 3.7835 4.7110 4.7920 4.8704 4.9763 4.9764 Trade & catering 2.2840 2.5000 2.8090 3.0306 3.5209 3.5998 4.1943 4.8932 4.9240 Banking & insurance 2.2150 2.4650 2.7230 2.9784 3.2413 3.5582 3.9907 4.4740 4.8595 Owner-occupied housing 2.1850 2.5320 3.0360 3.2707 3.6837 3.5180 4.3795 4.8193 5.2189 Other services 2.1400 2.6480 3.3110 3.7640 4.3303 4.5748 5.2318 5.4196 5.9056 Public administration & defense 2.2150 2.4670 2.7210 2.9777 3.2402 3.5579 3.9931 4.4559 4.8611 ------ ------ ------ ------ ------ ------ ------ ------ ------ Gross Domestic Product at market prices 2.3110 2.6090 2.9510 3.2559 3.6710 3.8541 4.4860 5.1564 5.6397 Average annual aggregate inflation rate [Z] 30.4 12.9 13.1 10.3 12.7 5.0 16.4 14.9 9.4 --------------------------------------------------------------------------------------------------------------------------- Source: Bangladesh Bureau of Statistics. -216- Table 3.1 BALANCE OF PAYMENTS, 1980/81-1986/87 (US$ millions) 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 Merchandise exports, fob 710.7 626.0 686.0 811.0 934.0 819.0 980.0 Merchandise imports, fob/c&f /a -2533.0 -2572.0 -2309.0 -2353.0 -2647.0 -2364.0 -2460.0 Trade Balance -1822.3 -1946.0 -1623.0 -1542.0 -1713.0 -1545.0 -1480.0 Non-factor services, net 37.5 27.0 57.0 32.4 11.4 -1.9 -15.9 Non-factor services, receipts 222.3 214.0 213.0 222.4 228.0 221.0 221.0 (- Other transport) 40.3 36.0 -- 26.0 31.0 23.0 22.0 (- Travel) 16.6 16.0 -- 30.0 29.2 18.0 15.0 (- Government seLvices, n.e.i.) 30.3 33.0 -- 53.0 35.0 -- -- (- Other) 135.1 129.0 -- 113.4 132.8 180.0 184.0 Non-factor services, payments -184.8 -187.0 -156.0 -190.0 -216.6 222.9 236.9 C- Other transport) -39.2 -47.0 -- -63.0 -58.5 -39.0 -42.9 (- Travel) -18.4 -20.0 -- -24.0 -39.9 -53.0 50.0 (- Government services, n.e.i.) -37.0 -39.0 -- -78.0 -76.8 -- -- (- Other) -90.2 -81.0 -- -26.0 -41.4 -130.9 144.0 Investment income, net -22.6 -97.0 -169.0 -64.4 -89.6 -123.2 -110.5 Investment income, receipts 51.9 34.0 17.0 56.6 58.0 39.0 37.0 (- Interest on reserves /b) 18.4 13.0 -- 47.8 53.0 31.0 30.0 (- Other interest & investment income) 33.5 20.5 -- 8.8 5.0 8.0 7.0 Investment income, payments -74.6 -131.0 -186.0 -121.0 -147.6 -162.2 -147.5 (- Interest on external public M< debt) -42.0 -47.2 -46.3 -63.0 -65.0 -72.5 -81.5 (- IMF service charges) -8.0 -37.1 -33.7 -37.0 -37.0 -37.5 -26.0 (- Other interest & investment income) -24.6 -46.2 -105.0 -21.0 -45.6 -34.6 -20.0 Private unrequited transfers, net 379.1 424.0 628.0 627.0 476.8 586.0 670.0 Private unrequited transfers, receipts 379.4 424.1 628.0 627.0 477.0 586.0 670.0 Private unrequited transfers, payments -0.4 -0.1 -0.2 -0.2 - - Current Account Balance -1428.3 -1592.0 -1107.0 -948.0 -1314.4 -1084.0 -936.0 Amortization of public M< debt -50.1 -39.0 -74.0 -72.0 -110.0 -117.0 -138.0 Total IMF transactions, net 193.1 49.5 46.9 19.0 -7.0 -3.0 159.0 Aid disbursements, total 1147.2 1236.1 1345.5 1268.0 1267.0 1306.0 1469.0 Other long-term capital, net 40.1 0.0 0.0 -2.5 -1.0 -5.0 -36.0 C- Direct & portfolio investment, net) 0.0 0.0 0.0 0.2 1.2 -5.1 C- Subscriptions to int'l non-monetary orgs) -1.9 0.0 0.0 -2.8 -3.6 -0.2 C- Other, net) 42.0 0.0 0.0 0.1 -0.7 0.3 -36.0 Short-term capital, net 28.1 65.0 -36.0 64.8 -34.9 1.0 15.0 C- Resident official sector, net) 87.6 0.0 0.0 40.7 11.8 -- -- C- Deposit money banks, net) -94.3 0.0 0.0 33.6 -21.2 -- -- C- Other, net) 34.9 65.0 -36.0 -9.5 -25.5 -- -- Liabilities constituting foreign authorities' reserves, net 90.7 165.0 -6.0 -40.1 -30.0 0.0 0.0 Food borrowing, net 0.0 0.0 0.0 -9.0 91.0 -69.0 -96.0 C- Food Borrowing, gross) 0.0 0.0 0.0 51.0 190.0 13.0 0.0 C- Food Loan Amortization) 0.0 0.0 0.0 -60.0 -99.0 -82.0 -96.0 Errors & ommissions, net /c -45.2 -12.6 65.8 2.2 -4.7 39.6 -40.0 Change in reserves Id (- - increase) 24.4 128.0 -235.2 -189.0 144.0 -81.0 -397.0 --------------------------------------------------------------------------------------------------------------- MEMORANDUM ITEMS: Reserve level, end of June /c (US$ m) 250.0 105.1 340.3 516.0 395.0 476.0 873.0 - Reserves, excluding gold (U.S$ m) 231.5 87.9 322.5 499.9 357.5 459.8 404.6 - Gold, national valuation (US$ m) 18.5 17.0 17.8 16.1 14.3 -- -- Average annual exchange rate (Tk/US$) 16.3447 20.0400 23.7600 24.9000 26.0000 29.8861 30.8000 --------------------------------------------------------------------------------------------------------------- -- = not available separately. /a Merchandise imports are reported on a mixed valuation basis, partly fob and partly cif. /b 7X on average level of reserves. /c Including valuation changes other than those of reserves. /d Including changes in the valuation of reserves. Sources: Bangladesh Bank; Ministry of Finance and Planning, External Resources Division, Planning Commission; IMF; IBRD, External Debt Reporting System; and staff estimates. -217- Table 3.2 BALANCE OF PAYMENTS - REQUIREMENTS AND SOURCES FORMAT, 1980181-1986/87 (US$ millions) 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 FOREIGN EXCHANGE REQUIREMENTS CURRENT ACCOUNT Merchandise imports 2533.0 2572.0 2309.0 2353.0 2647.0 2364.0 2460.0 Paymnts on investments 74.6 131.0 186.0 121.0 147.6 162.2 147.5 Non-factor services 184.8 187.0 156.0 191.0 216.6 222.9 236.9 Subtotal 2792.4 2890.0 2651.0 2665.0 3011.2 2749.1 2844.4 CAPITAL ACCOUNT Public M< debt amortization 50.1 39.0 74.0 71.0 110.0 117.0 138.0 Food loan amortization 0.0 0.0 0.0 60.0 99.0 82.0 96.0 Long-term capital, net -40.1 0.0 0.0 2.5 1.0 5.0 36.0 Short-term capital, net -28.1 -65.0 36.0 -64.8 34.9 -2.0 -15.0 Subtotal -18.1 -26.0 110.0 68.7 244.9 202.0 255.0 TOTAL REQUIREMENTS 2774.3 2864.0 2761.0 2733.7 3256.1 2943.0 3099.0 FOREIGN EXCHANGE SOURCES CURRENT ACCOUNT Merchandise exports 710.7 626.0 686.0 822.0 934.0 819.0 980.0 Remittances 379.1 424.0 628.0 552.0 477.0 586.0 670.0 Investment income 51.9 34.0 17.0 56.6 58.0 39.0 37.0 Non-factor services 222.3 214.0 213.0 222.4 228.0 221.0 221.0 Subtotal 1364.0 1298.0 1544.0 1653.0 1697.0 1665.0 1908.0 CAPITAL ACCOUNT Aid disbursements 1147.2 1236.1 1345.5 1268.0 1267.0 1306.0 1469.0 IMF transactions, net 193.1 49.5 0.0 19.0 -7.0 -3.0 159.0 Food borrowing, gross 0.0 0.0 0.0 51.0 190.0 13.0 0.0 Other 90.7 165.0 -6.0 -40.1 -30.0 0.0 0.0 Subtotal 1431.0 1450.6 1339.5 1293.9 1420.0 1318.0 1628.0 TOTAL SOURCES 2795.0 2748.6 2883.5 2946.9 3117.0 2983.0 3536.0 Increase in gross reserves -18.1 -26.0 110.0 68.7 -144.0 81.0 397.0 Errors and omissions 38.8 -89.4 12.5 144.5 4.9 40.0 40.0 ------------------------------------------------------------------------------------------------------------ Sources: Bangladesh Bank; Ministry of Finance and Planning, External Resources Division, Planning Commission; IMF; IBRD, External Debt Reporting System; and mission estimates. -218- Table 3.3 TRADE BALANCE BY COMMODITY GROUP, 1980/81-1985/86 (US$ million) 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 Foodgrains and products -249.20 -285.00 -359.74 -394.51 -494.91 -202.30 Meat, fish, and related 42.93 52.81 74.68 80.16 90.19 121.50 Tea, fruit, spices, tobacco, etc. -33.46 37.94 50.34 67.01 65.44 34.39 Oil, oilseeds, oilcake -102.44 -76.00 -87.87 -88.91 -112.00 -147.00 Sugar, molasses 1.06 0.00 0.63 0.00 0.00 0.00 Subtotal: Food and related -341.11 -270.25 -321.96 -336.25 -451.28 -193.41 Jute and products 485.32 393.23 427.63 474.18 540.61 419.07 Leather and other animal products 57.43 63.08 59.55 86.68 71.02 61.84 Fibers, textiles, and garments -186.04 -122.45 -92.15 -171.56 -68.86 -23.09 Handicrafts and related 5.04 0.00 3.67 2.82 2.59 1.93 Subtotal: Non-food agro-based 361.75 333.86 398.70 392.12 545.37 459.75 Paper and related products 8.68 0.00 4.36 8.14 10.09 7.34 Cement and clinker -47.63 -31.00 -44.00 -37.00 -32.00 -40.00 Chemical industry products -92.20 -105.00 -52.26 -66.54 -132.21 -103.95 Crude oil and products -454.28 -505.59 -425.17 -329.16 -357.22 -340.04 Coal, coke, and pip iron -47.64 0.00 0.00 -8.00 0.00 0.00 Subtotal: Non-Ag industrial commodities -633.07 -641.59 -517.07 -432.56 -511.34 -477.04 Capital goods -689.40 -615.00 -681.00 -666.00 -616.00 -680.00 Other -520.48 -786.20 -501.06 -501.94 -710.58 -662.41 Subtotal: Other -1209.88 -1401.20 -1182.06 -1167.94 -1326.58 -1342.41 Trade balance -1822.32 -1979.18 -1622.40 -1544.63 -1743,83 -1553.11 --------------------------------------------------------------------------------------------------------- Source: Tables 3.4 and 3.8. -219- Table 3.4 EXPORTS, 1980/81-1986187 (USS million) 1980/81 1981/82 1982!83 1983184 1984/85 1985/86 1986/87 (lst half) Raw jute 118.86 101.69 109.81 117.19 150.81 123.89 37.86 Jute manufactures 357.03 283.50 305.32 336.12 357.72 294.32 127.50 Jute specialty products 9.42 8.04 12.50 20.87 32.08 0.86 0.00 Leather & leather products 56.68 63.08 58.46 85.27 69.80 60.73 61.62 Frozen shrimps, fiLsh & froglegs 39.95 52.81 72.06 76.99 86.85 114.70 86.60 Other fish products 1.98 0.00 1.64 2.19 2.45 5.42 0.48 Tea 40.67 37.94 46.58 68.90 61.02 32.78 21.28 Spices, incl. tamarind E sesame 0.22 0.00 0.28 0.61 0.48 0.15 0.10 Fruits & vegetables 1.02 1.47 0.00 3.43 4.25 14.75 9.17 Tobacco 0.02 0.00 2.28 3.25 2.57 0.66 1.13 Betel leaves 0.96 0.00 1.20 1.25 1.38 4.33 1.79 Raw cotton 0.17 0.00 0.00 0.14 0.46 0.43 0.03 Cotton waste 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Cotton yarn & thread waste 0.12 0.00 0.36 0.31 0.16 0.00 0.00 Kapok 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Sugar 0.03 0.00 0.00 0.00 0.00 0.00 0.00 Molasses 1.03 2.00 0.63 0.00 0.00 0.00 0.00 Oil cake 0.56 0.00 0.13 0.09 0.00 0.00 0.00 Wheat & rice bran 1.16 2.42 2.26 3.49 3.09 0.00 0.00 Rice 0.00 5.88 0.00 0.00 0.00 0.00 0.00 Crude fertilizers 0.49 0.00 0.40 0.32 0.24 0.39 0.16 Animal casings 0.14 0.00 0.19 0.08 0.05 0.00 0.00 Lizard skins 0.06 0.00 0.40 0.95 0.91 1.11 0.00 Tortoise 6 turtle meat L shells 1.00 0.00 0.98 0.99 0.90 1.38 0.68 Bees wax 0.06 0.00 0.10 0.06 0.02 0.00 0.00 Textiles, incl. silk & silk waste 0.83 0.55 0.65 0.42 0.32 0.00 0.00 Readymade garments 3.24 7.00 10.84 31.57 116.20 131.48 70.80 Handicrafts 3.45 0.00 2.48 2.38 1.91 1.93 1.58 Pottery & coir products 0.07 0.00 0.00 0.01 0.02 0.00 0.00 Wood & furniture components 0.28 0.00 0.36 0.20 0.08 0.00 0.00 Bamboo & bamboo products 1.24 0.00 0.83 0.24 0.59 0.00 0.00 Matches 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Pulp 0.01 0.00 0.05 0.02 0.00 0.00 0.00 Newsprint 7.55 0.00 4.16 6.54 8.50 7.34 3.03 Paper 0.98 0.00 0.11 1.56 1.59 0.00 0.00 Hardboard & particle board 0.05 0.00 0.04 0.03 0.01 0.00 0.00 Cellophane 0.08 0.00 0.00 0.00 0.00 0.00 0.00 Rayon 0.61 0.00 0.22 0.02 0.00 0.00 0.00 Pharmaceuticals L crude drugs 0.02 0.00 0.55 0.18 0.00 0.00 0.00 Glycerine 0.38 0.00 0.62 0.53 1.15 1.09 0.31 Urea 9.58 0.00 10.35 9.74 4.79 2.57 3.02 Ammonium sulfate 0.74 0.00 0.00 0.00 0.00 0.00 0.00 Naphtha 29.85 30.16 18.91 22.72 20.68 13.91 4.98 Furnace oil 19.28 11.25 8.31 0.00 0.00 0.00 0.00 Bitumen 0.00 1.00 4.00 3.12 0.11 0.05 0.00 Wire & cables 0.02 0.00 0.14 0.72 0.55 0.00 0.00 All others /a 0.77 18.18 8.42 8.54 3.87 3.59 3.08 Total 710.69 626.97 686.60 811.00 934.43 817.86 435.20 --------------------------------------------------------------------------------------------------------- MEMORANDUM ITEMS: Traditional exports 624.61 547.06 606.37 707.52 760.72 632.69 335.34 Readymade garments 3.24 7.00 10.84 31.57 116.20 131.48 70.80 Other nontraditional exports 82.84 38.76 69.39 69.28 53.25 53.69 29.06 /a In 1981/82, 1983/84 and 1984/85, includes all items for which details ve not shown separately. Source: Export Promotion Bureau; Bangladesh Bureau of Statistics; BanglacI.-i' Bangladesh Jute Mills Corporation; Bangladesh Jute Export Corporation; Bangladesh Tea Boardt Bangladesh Sugar and Food Industries CorporatLon; Bangladesh Petroleum Corporation; Planning Commission; and mission estimates. Table 3.5 JUTE EXPORTS, 1980/81-1985186 1980/81 1981/82 1982/83 1983/84 1984/85 1985186 --------------------------------------------------------------------- Raw Jute Value ('000 US$) 118864 101692 110000 117192 150809 123890 Quantity (bales) 1943946 1911370 2246000 1902000 1408000 2301000 Unit price (US$/bale) 61.14 53.2 48.91 6161 107.15 53.84 Hessian Quantity (metric tons) 182782 188562 224599 214097 184641 151371 Sacking Quantity (metric tons) 238676 292912 195961 162234 176945 242486 Carpet-backing Quantity (metric tons) 76244 54306 90750 94199 72600 69737 Carpets Quantity (metric tons) 57 221 697 236 213 315 Others/discrepancy Quantity (metric tons) 3677 1354 -3007 37234 -8550 Total Jute Manufactures Value ('000 US$) 357033 283502 306000 336115 357722 294318 Quantity (metric tons) 501436 537355 509000 508000 425849 463909 Unit price (US$/metric ton) 712.02 527.39 556.6 661.64 840.02 634.43 Jute Speciality Productsi Value ('000 US$) 9422 8035 12000 20047 32079 856 Quantity (metric tons) 14500 13200 22000 30000 35151 1011 Unit price (US$/metric ton) 650 608.71 545.46 668.23 912.61 846.69 Total Value ('000 US$) 485319 393229 428000 473354 540610 419064 ----------------------------------------------------------------------------------------------------------------- NA = not available. Source: Export Promotion Bureau and Bangladesh Jute Mills Corportation. Table 3.6 TEA, LEATHER AN~D FISH EXPORTS, 1980/81-1985/86 198o;81 1981/82 1982/83 1983/84 1984/85 1985/86 Tea Value ('000 US$) 40672 37938 46000 68900 61018 32780 Quantity ('000 lbs) 65675 69041 67647 67650 56533 65763 Unit price (US$/000 lbs) 619.29 549.5 680 1018.5 1079.3 498.5 Leather and Leather Products /a Value ('000 US$) 56682 63081 58000 85261 69799 60730 Quantity ('000 square feet) 80607 87278 9)890 102910 81750 71520 Unit price (US$l000 square feet) 703.19 722.76 617.74 828.5 853.8 849.1 Frozen Shrimps, Froglegs and Fish Value ('000 US$) 39950 52811 72000 95000 86845 114700 Quantity ('000 lbs) 16552 20573 27490 38462 38240 47160 Unit price (US$/lb) 2.41 2.57 2.62 2.47 2.27 2.43 Other Fish Products and Preparations /b Value ('000 US$) 1984 1473 .. 2186 2450 5420 Total Value ('000 US$) 139288 155303 176000 233345 220112 213630 --------------------------------------------------------------------------------------------------------------------- /a Excludes hides and skins, but includes leather goods. /b Includes dried and salted fish and fish products, sharkfins, and fishmavs. Source: Bangladesh Export Promotion Bureau and Bangladesh Tea Board. -221- Table 3.7 NON-TRADITIONAL EXPORTS, 1980/81-1985/86 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 Newsprint Value ('000 US$) 7552 5998 4000 6540 8498 7340 Quantity (tons) 16498 10542 9000 14000 18000 16000 Unit price (US$/ton) 457.75 487.48 462.22 467.14 472.11 458.75 Paper Value ('000 US$) 983 12 .. 2560 1586 Quantity (tons) 1689 25 .. 2371 2453 Unit price (US$/ton) 582 4O0 .. 657.95 646.56 Naphtha Value ('000 US$) 29845 30160 19000 26000 20677 13910 Quantity (metric tons) 116367 106910 59000 100700 89000 80000 Unit price (US$/metric ton) 256.47 282.11 320.5 258.18 232.33 173.88 Furnace Oil Value ('000 US$) 19281 11250 8000 Quantity (metric tons) 106344 69169 50000 Unit price (US$/metric ton) 181.31 162.65 166.2 Bitumen Value ('000 US$) 0 1000 4000 3120 106 50 Quantity (metric tons) 4323 16000 13000 459 209 Unit price (US$/m.etric ton) 0 231.3 225.63 240 230.94 239.23 Rice Value ('000 US$) 0 5880 0 0 0 0 Quantity ('000 tons) 0 20000 0 0 0 0 Unit price (US$/ton) 0 294 0 0 0 0 Urea Value ('000 US$) 9584 0 10000 9734 4790 2570 Quantity ('000 tons) 39764 0 66000 61000 26300 20499 Unit price (US$/ton) 241.02 0 156.82 159.57 182.13 125.37 Sugar Value ('000 US$) 26 0 0 0 0 0 Others Value ('000 US$) 18811 24137 37000 52533 142837 161296 Total Non-traditional exports ('000 US$) 86082 78437 82000 103476 173707 185166 in constant prices of FY73 ('000 US$) 48995 53123 53085 57025 70389 52276 percent of total 12.1 12.5 12.0 12.6 18.6 22.6 Growth rate (% p.a.) -8.9 4.5 26.2 67.9 6.6 in constant prices of FY73 ('000 US$) 8.4 -0.1 7.4 23.4 -25.7 Total Exports ('000 US$) 710689 626969 686000 822000 934426 817860 in constant prices of FY73 ('000 US$) 404497 424629 444100 453000 429825 463216 -----------------------------------------------.------------------------------------------------------- .. = not available separately. Note: Non-traditional exports exclude raw jute, jute manufactures, tea, leather, shrimt, fish, froglegs, and other fish products. Source: Export Promotion Bureau; Bangladesh Bureau of Statistics; Bangladesh Bangladesh Jute Mills Corporation; Bangladesh Jute Export Corporation; Bangladesh Tea Board; Bangladesh Sugar and Food Industries Corporation; Bangladesh Petroleum Corporation; Planning Commission; and missioni estimates. -222- Table 3.8 IMPORT VALUES, QUANTITIES, AND PRICES, 1980/81-1986/87 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 Rice /a Value (mill. US$) 40.4 46.0 97.0 56.0 176.0 8.0 47.5 Quantity (long tons) 82 - 144.0 345.0 179.0 700.0 39.0 235.0 Unit Price /a (US$) 487.7 319.4 281.2 313.0 251.4 205.0 202.1 Wheat /a Value (mill. US$) 210.0 239.0 289.0 342.0 322.0 212.0 264.6 Quantity (long tons) 976.6 1111.0 1527.0 1877.0 1899.0 1164.0 1637.0 Unit Price /a (US$/long ton) 215.0 215.1 189.3 182.0 169.6 182.1 161.6 Edible Oil /a Value (mill. US$) 92.0 71.0 83.' 87.0 103.0 135.5 42.5 Quantity ('000 tons) 141.0 109.0 129.0 100.0 136.0 272.0 100.0 Unit Price (US$/ton) 652.5 651.4 643.4 870.0 757.4 498.0 425.0 Oilseeds Value (mill. US$) 11.0 5.0 5.0 2.0 6.0 0.1 3.0 Quantity (metric tons) 29.7 13.0 17.0 5.4 20.0 0.4 15.0 Unit Price (U5$/metric ton) 370.0 384.6 294.1 370.0 300.0 368.0 200.0 Crude Petroleum /b Value (mill. US$) 343.6 334.0 373.0 233.0 226.0 177.0 145.7 Quantity ('000 tons) 1304.7 1177.9 1443.0 1004.0 985.0 1008.0 1085.6 Unit Price (US$/ton) 263.3 283.2 258.5 232.0 229.4 175.6 134.2 Petroleum Products /c Value (mill. US$) 159.8 213.0 83.0 122.0 133.0 165.0 100.0 Quantity ('000 tons) 523.9 583.0 219.0 464.0 570.0 805.0 700.0 Unit Price (US$/ton) 305.1 365.4 379.0 263.0 233.3 205.0 142.9 Fertilizer /d Value (mill. US$) 104.0 104.4 66.0 75.0 137.0 108.0 23.3 Quantity (long tons) 350.3 457.2 330.0 356.0 666.G 639.0 150.0 Unit Price (US$/long ton) 296.9 228.3 200.0 211.0 205.7 169.0 155.0 Cement Value (mill. US$) 32.8 31.0 44.0 37.0 26.0 57.0 36.0 Quantity (metric tons) 446.0 435.0 759.0 748.0 588.0 1333.0 900.0 Unit Price (US$/ton) 73.5 71.3 58.0 49.0 44.2 42.8 40.0 Raw Cotton Value (mill. US$) 108.0 79.0 56.0 125.0 106.0 51.6 75.0 Quantity ('000 bales) 256.0 187.0 194.0 388.0 305.0 181.0 300.0 Unit Price (US$/bale) 421.9 422.5 288.7 322.0 347.5 285.0 250.0 Staple Fibres Value (mill. US$) 13.0 5.0 4.0 9.0 3.0 1.0 2.0 Quantity ('000 bales) 42.0 16.0 13.0 27.0 10.0 3.0 10.0 Unit Price (US$/bale) 309.5 312.5 307.7 333.3 300.0 342.0 200.0 Yarn Value (mill. US$) 20.1 22.0 30.0 39.0 31.0 50.0 66.0 Quantity (million .lbs) 14.0 18.0 20.0 37.0 26.0 56.0 60.0 Unit Price (US$/.lb) 1428.6 1222.2 1500.0 1054.1 1192.3 892.9 1100.0 ---,------------------------------------------------ - -------------------------------------------------------------- /a As a laige portion of food imports is financed on a grant basis, unit prices are often available for accounting purposes only. /b Does not include crude oil shipped to and refined in Singapore for the account of BPC during FY80-FY83. /c Includes petroleum products imported by BPC from its refining operations in Singapore as well as imports of non-fuel petroleum products. /d As some fertilizer imports are financed on a grant basis, unit prices are often available for accounting purposes only. Note: 1 bale of raw cotton - 500 lbs; 1 bale of polyester - 618 lbs; 1 bale of viscose - 441 lbs; 1 bale of yarn - 400 lbs. Sources: Ministry of Finance and Planning, External Resources Division; Planning Commission; Bangladesh Bank; Bangladesh Bureau of Statistics; Ministry of Food; Bangladesh Petroleum Corporations Bangladesh Agricultural Development Corporation; Bangladesh Chemical Industries Corporation; Ministry of Industries and Commerce, Coal Controller; Bangladesh Railways; Trading Corporation of Bangladesh; Bangladesh Textile Mills Corporation; World Food Programme, Dhaka; and mission estimates. -223- Table 3.9 AID PIPELINE, 1980/81-1985186 (US$ million) 1980/81 1981/82 1982183 1983/84 1984/85 1985/86 FOOD AID Opening pipeline 50.00 58.80 48.86 41.76 60.41 194.4 Commitments 202.87 220.56 248.35 285.16 380.16 329.57 Disbursements 194.07 230.50 255.45 276.38 244.50 202.75 Closing pipeline 58.80 48.86 41.76 50.54 196.07 323.83 COMMODITY AID Opening pipeline 398.77 361.18 454.32 476.70 591.69 374.73 Commitments 354.87 513.00 474.38 528.17 251.77 408.93 Disbursements 392.46 419.86 452.01 439.19 431.57 393.39 Closing pipeline 361.18 454.32 476.70 565.67 362.81 460X44 PROJECT AID Opening pipeline 2002.65 2444.23 3044.25 3374.13 3644.48 4061.8 Commitments 1001.49 1189.29 799.80 881.66 1339.56 922.94 Disbursements 559.91 589.27 469.93 552.82 590.91 709.79 Closing pipeline 2444.23 3044.25 3374.13 3702.96 4063.12 4633.19 TOTAL Opening pipeline 2451.43 2864.22 3547.44 3892.58 4296.58 4630.93 Commitments 1559.24 1922.85 1522.53 1694.99 1971.48 1661.44 Disbursements 1146.45 1239.63 1177.38 1268.40 1266.98 1305.93 Closing pipeline 2864.22 3547.44 3892.58 4319.17 4622.00 5417.46 DISBURSEKENTS RELATIVE TO RULES OF THUMB (PERCENT] Food aid [100% OPL + 75% NC] 96.0 102.8 108.6 108.1 70.8 45.9 Commodity [75% OPL + 25% NC] 98.8 111.7 99.6 94.0 78.2 102.6 Project aid [20% OPLI 139.8 120.5 77.2 81.9 81.1 87.4 Total 115.7 111.5 90.3 89.3 80.1 79.8 Note: OPL-Opening pipeline, NC-New commitments. Commodity aid includes cash aid, and project aid includes technical assistance. Discrepencies between closing pipeline in one year and opening pipeline in the next year result from adjustments for currency revaluations, aid cancellations, and reclassifications. Sou-rce: Ministry of Finance, External Resources Division. -224- Table 3.10 IMF OPERATIONS, 1980/81-1985/86 (SDR million and US$ million) 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 Quota (SDR million) 262.3 228.0 228.0 287.5 287.5 287.5 Reserve Position in the IMF 0.0 7.5 7.5 22.4 22.4 22.4 END-FY BALANCES (SDR million) Use of IMF Credit, net 330.8 331.0 375.7 394.7 :188.2 385.6 -Credit Tranche Drawings (ordinary resources) 50.8 44.1 66.9 93.0 68.4 149.6 -Compensatory (CFF) Drawings 0.0 60.0 88.8 88.8 .139.1 101.2 -EFF Drawings (ordinary resources) 126.6 110.0 110.0 110.0 105.3 86.9 -EFF Drawings (SFF) 126.6 110.0 110.0 102.9 75.4 47.9 -Oil Facility Drawings 26.9 6.9 0.0 0.0 0.0 0.0 Trust Fund loans outstanding 140.6 122.2 120.8 113.5 99.3 75.6 BALANCE OF PAYMENTS ITEMS (US$ million) 175.7 -49.3 -2.2 0.0 0.5 0.0 Use of IMF credit, net 155.1 49.5 46.9 19.0 -7.0 -3.0 Stand-By Agreements -1.0 0.0 24.6 26.0 -24.0 94.3 Oil Facility -28.9 0.0 0.0 0.0 0.0 0.0 Compensatory Drawings -42.8 0.0 0.0 0.0 0.0 0.0 CFF: export earnings ohortfall 0.0 68.3 -20.9 0.0 55.0 -44.0 CFF: cereal imports excess 0.0 0.0 52.0 0.0 0.0 -9.7 Extended Financing Facility: ordinary 135.7 0.0 0.0 0.0 -5.0 -21.6 Extended Financing Facility: SFF 135.7 0.0 0.0 -7.0 -33.0 -31.9 Currency subscriptions & repurchases -19.3 0.0 0.0 0.0 0.0 0.0 Subscriptions & repurchases of reserve assets -24.4 -18.8 -8.8 0.0 0.0 0.0 Exceptional financing 10.1 0.0 0.0 -13.0 81.0 -- Trust Fund loans, net 8.7 0.0 0.0 -8.0 -13.0 -25.0 Subsidy Account grants 1.4 0.0 0.0 4.0 3.0 -- SFF Subsidy Account grants 0.0 0.0 0.0 0.0 0.0 -- Counterpart items 19.7 0.0 0.0 0.0 0.0 0.0 SDR allocations & cancellations 19.7 0.0 0.0 0.0 0.0 0.0 Other items 8.2 0.0 0.0 0.0 0.0 0.0 Distribution of IMF gold sale profits, net 8.2 0.0 0.0 0.0 0.0 0.0 Restitution of gold by the IMF 0.0 0.0 0.0 0.0 0.0 0.0 IMF Service Charges 8.0 37.1 33.7 37.0 37.0 37.0 --- ----------------------------------------------------------------------------------------------------------- CFF = Compensatory Financing Facility. Source: International Monetary Fund. Table 3.11 TERMS OF TRADE WEIGHTED BY NET TRADE OVER 1980/85 PEPIOD [80/85 AVERAGE PRICES - 1001 WEIGHTS ---MULTI-YEAR AVERAGES--- --------------------ANNUAL DATA---------------------- 72175 75/80 80185 1980/81 1981/82 1982/83 1983184 1984/85 1985/86 PRICE INDICES FOR NET EXPORTS --- ------- ------- ------- ------- ------- ------- ------- ------- 18.6 Raw jute 74.82 92.21 100.00 92.06 80 15 73.73 92.77 161.29 81,08 50.8 Jute manufactures 71.19 80.05 100.00 104.89 78.72 90.44 9S.56 126.40 93.46 2.6 Jute specialty products 17.24 35.94 100.00 96.02 89.92 80.56 98.71 134.80 125.06 5.9 Tea 39.73 74.18 100.00 78.45 69.61 86.15 129.03 136.75 64.29 10.5 Leather & leather products 39.16 82.93 100.00 94.38 97.00 82.88 111.17 114.56 114.56 10.6 Frozen shrimps, etc. 56.90 98.31 100.00 100.13 136.51 108.69 102.51 82.16 87.95 1.0 Newsprint 57.68 57.64 100.00 94.91 117.97 92.37 96.87 97.88 95.09 Weighted Average 64.76 83.90 100.00 99.00 84.00 87.98 101.52 127.50 92.90 PRICE INDICES FOR NET IMPORTS 3.0 Rice 82.00 90.98 100.00 145.87 95.52 89.83 93.60 75.19 72.79 10.9 Wheat 90.81 87.62 100.00 110.72 110.78 97.47 93.74 87.30 93.46 3.6 Edible oils 89.52 101.68 100.00 91.24 91.11 89.97 121.73 105.95 72.08 3.4 Fertilizers 91.56 92.18 100.00 130.93 99.98 96.38 93.46 79.25 65.33 11.6 Crude petroleum 26.68 49.50 100.00 103.94 111.92 102.03 91.56 90.56 69.60 4.3 Petroleum products 28.20 52.53 100.00 98.27 117.69 122.08 84.72 77.23 70.77 1.5 Cement 76.42 92.14 100.00 123.80 120.10 97.70 82.57 75.82 75.82 3.4 Raw cotton 77.82 85.52 100.00 117.88 118.02 80.64 89.95 93.51 86.23 1.3 Yarn 109.94 108.70 100.00 91.68 77.98 95.65 167.47 67.22 61.46 32.7 Capital goods 53.70 84.10 100.00 105.83 102.66 99.59 96.07 95.85 102.45 24.3 Others 53.70 84.10 100.00 105.83 102-66 99.59 96.07 95.85 102.45 Weighted Average 59.07 80.74 100.00 107.85 105.02 99.13 96.08 91.91 91.50 Terms of trade 1.14 1.03 1.01 0.92 0.80 0.89 1.06 1.39 1.02 Percentage change -18.24 4.85 -3.84 -22.00 -7.85 4.67 -1.30 7.30 -26.80 --------------------------------------------------------------------------------------------------------- ------------------- Note: The peak fiscal year value for this terms of trade index was 1.407, attained in 1972/73. Source: Staff estimates. Table 3.12 AVERAGE EXCHANGE RATES, PERIOD AVERAGES, 1972/73-1986/87 ------------FISCAL YEAR AVERAGES-----------| 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 (Taka) ------- ------- ------- ------- ------- ------- ------- Unofficial (Taka per US$) US$ SDR 100 Yen Basket a/ MONTHLY AVERAGES ------- ------- ------- ---------- 72/73 7.7808 8.8009 2.7121 9.0346 July 14.7174 18.2498 22.1397 24.5000 25.2000 28.0870 30.3000 73/74 7.9661 9.6103 2.8700 9.7943 August 15.3008 18.5420 22.3419 24.5070 25.2590 28.7070 30.3000 74/75 8.8759 10.8609 3.0038 12.0012 September 15.1027 18.9374 22.7745 24.6110 25.3880 29.2740 30.3000 75/76 14.8521 17.3820 4.9422 17.7130 76/77 15.4667 17.8732 4.1291 18.0240 October 15.6365 19.1705 22.9294 24.9170 25.5760 29.7610 30.3000 77/78 15.1215 18.1402 6.2371 18.4059 November 16.2532 18.8739 23.8690 25.0000 25.9770 30.1190 30.8000 78/79 15.2228 19.5135 7.6041 19.8163 December 16.5906 19.5321 24.1007 25.0000 26.0000 30.6430 30.8000 79/80 15.4777 20.1390 6.6382 19.9052 80/81 16.3447 20.5078 7.6427 20.6996 January 16.1987 20.3203 24.5000 25.0000 26.0000 30.8480 30.8000 81/82 20.0400 22.7777 8.5750 23.8804 February 16.8981 20.7867 24.5000 25.0480 26.2130 30.3600 30.8000 82/83 23.7629 25.7411 9.6172 26.5788 March 16.6974 21.2765 24.5000 25.2000 26.5000 30.3000 30.8000 93(84 24.9486 26.2046 10.6530 26.33'.7 84/85 26.0622 25.7747 10.4485 23.9581 April 17.2153 21.6819 24.5000 25.2000 26.5460 30.3000 30.8636 85/86 29.9166 32.8743 15.1594 31.4389 May 17.6162 21.2319 24.5000 25.2000 27.0000 30.3000 30.9000 June 17.9089 21.8762 24.5000 25.2000 27.0870 30.3000 QUARTERLY AVERAGES [Tk/US$] July-September 15.0403 18.5764 22.4187 24.5393 25.2823 28.6893 30.3000 October-December 16.1601 19.1922 23.6330 24.9723 25.8510 30.1743 30.6333 January-March 16.5981 20.7945 24.5000 25.0827 26.2377 30.5027 30.8000 April-June 17.5801 21.5967 24.5000 25.2000 26.8777 30.3000 tTk/SDR] July-September 19.8487 21.0619 24.3445 25.8791 25.5882 29.4697 36.4432 October-December 20.7835 22.2879 25.4622 26.2759 25.7036 32.5354 January-March 20.6265 23.6329 26.7491 26.3067 25.1509 34.3120 April-June 20.7726 24.1278 26.4086 26.3567 26.6560 35.1802 [Tk/100 Yen] July-September 6.8340 8.0109 8.6606 10.1180 10.3846 12.0220 19.4518 October-December 7.6715 8.5420 9.1008 10.6610 10.5077 14.5706 January-March 8.0742 8.9059 10.3928 10.8578 10.1822 16.2352 April-June 7.9910 8.8413 10.3145 10.9751 10.7197 17.8099 [Tk/Unofficial Basket /a] July-September 18.8908 19.7499 22.4589 24.0067 23.6471 27.3384 36.2187 October-December 19.8529 21.0121 23.4658 24.4797 23.6858 30.8717 January-March 19.7291 22.1458 24.9669 24.5475 23.4671 33.0821 April-June 19.6539 22.4609 24.6029 24.6092 25.0324 34.4632 ------------------------------------------------------------------------------------------------------------------------s---------------------- Note: Monthly averages are unvieghted averages of daily rates, quarterly averages are unveighted averages of monthly rates, and annual averages are unweighted averages of quarterly rates. /a The 'basket' referred to consists of 1 SDR plus 30 Yen minus US$ 0.20. 7his is equivalent to USs 0.34, DM 0.46, French franc 0.74, 69 Japanese yen and 0.071 pounds sterling. The result is a computationally convenient and approximately trade weighted foreign exchange index. It has no official standlng. Source: International Monetary Fund and Bank staff estimates. -227- TabLe 4.1 EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF JUN 30, 1986 INCLUDES ONLV DEBT COMMITTED 000000 - JUN 30, 1986 DEBT REPAYABLE IN FOREIGN CURRENCY AND GOODS (IN THOUSANDS OF U.S. DOLLARS) D E B T O U T S T A N D I N G I N A R R E A R S ------------------------------------------- --------------------------- DISBURSED : UNDISBURSED : TOTAL PRINCIPAL : INTEREST ----------------------------- -------------- ---- -- -------------- ---- CREDITOR TYPE . SUPPLIERS CREDITS AUSTRIA 255 - 255 - - CHINA - 9,179 9,179 - - FRANCE 2,502 16,787 19,289 - NETHERLANDS 7,197 - 7,197 - - PAKISTAN 6,662 - 6,662 - - ROMANIA 1,786 6,067 7,853 - - SINGAPORE 1,279 - 1,279 - - USSR 3,865 75,750 79,615 - - VUGOSLAVIA 6,358 - 6,358 - - ------------------------------------------- --------------------------- TOTAL SUPPLIERS CREDITS 29,904 107,783 137,687 - - CREDITOR TYPE : FINANCIAL INSTITUTIONS AUSTRIA 7,060 - 7.060 - - FRANCE 22,635 642 23,277 - - INDIA 7,743 630 8,373 - - NETHERLANDS 1,240 5,023 6,263 - - UNITED KINGDOM 16,120 109 16,229 - - TOTAL FINANCIAL INSTITUTIONS 54,798 6,404 61,202 - - CREDITOR TYPE . MULTILATERAL LOANS ASIAN DEV. BANK 644,867 1,211,673 1.856,540 - - EEC 48,000 - 48,000 - - IBRD 52,682 - 52,682 - IDA 2,215,328 1,347,373 3,562,701 - - IMF TRUST FUND 92,074 - 92,074 - - INTL FUND ARG(IFAD) 6X,639 82,580 149,219 - - ISLAMIC DEV. BANK 44,766 38,559 83,325 - - OPEC SPECIAL FUND 105,519 11,979 117,498 - - TOTAL MULTILATERAL LOANS 3,269,875 2,692,1b4 5,962,039 - - CREDITOR TYPE . BILATERAL LOANS BELGIUM 25,017 14,038 39,055 - - BULGARIA 319 - 319 - - CHINA 45,824 38,595 84,419 - CZECHOSLOVAKIA 16,591 - 16,591 - - DENMARK 22,667 - 22,667 - - FRANCE 52,466 48,554 101,020 - - GERMAN DEM. REP. 3,296 - 3,296 - HUNGARY 17,476 - 17,476 - - INDIA 35,390 33,430 68,820 - - IRAN 11,668 - 11,668 - - IRAQ 24,571 68,745 93,316 - JAPAN 1,689,423 247,538 1.936,961 - - KUWAIT 102,786 39,348 142,134 - - NETHERLANDS 16,438 - 16,438 - POLAND 1,730 - 1,730 - - ROMANIA 14,397 - 14,397 - - SAUDI ARABIA 43,099 178,072 221,171 - SWITZERLAND 5,244 - 5,244 - - TURKEY 1,859 - 1,859 - - UNITED ARAB EMIRATES 72,609 17,952 90,561 - - UNITED STATES 1,057,228 14,888 1,072,116 - - USSR 114,853 56,073 170,926 - - YUGOSLAVIA 32,732 323 33,055 - ------------------------------------------- --------------------------- TOTAL BILATERAL LOANS 3,407,683 757,556 4,165,239 - - SUPPLI£RS CREDITS 29,904 107,783 137,687 - - FINANCIAL INSTITUTIONS 54,798 6,404 61,202 - - MULTILATERAL LOANS 3,269,875 2,692,164 5,962,039 - - BILATERAL LOANS 3,407,683 757,556 4,165,239 - - ------------------------------------------- :--------------------------- TOTAL EXTERNAL DEBT 6,762,260 3,563,907 10,326,167 - - NOTES: (1) ONLY DEBTS WITH AN ORIGINAL OR EXTENDED MATURITY OF OVER ONE YEAR ARE INCLUDED IN THIlS TABLE. (2) DEBT OUTSTANDING INCLUDES PRINCIPAL IN ARREARS BUT EXCLUDES INTEREST IN ARREARS TabLe 4.2 SERVICE PAYMENTS, COMMITMENTS, DISBURSEMENTS AND OUTSTANDING AMOUNTS OF EXTERNAL P DEBT PROJECTIONS BASED ON DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF JUN 30, 1986 INCLUDES ONLY DEBT COMMITTED 000000 - 198606 DEBT REPAYABLE IN FOREIGN CURRENCY AND GOODS (IN THOUSANDS OF U.S. DOLLARS) $ $ $ TABLE TOTAL * * * DATE DEBT OUTSTANDING AT T R A N S A C T I 0 N S D U R I N G P E R I 0 D OTHER CHANGES : END OF PERIOD ----------- ---------------------------.-----------------------------------------------------------. ----------------------- DISBURSED : INCLUDING COMMIT- : DISBURSE- S E R V I C E P A Y M E N T S CANCEL- ADJUST- ONLY : UNDISBURSED MENTS : MENTS : ------- LATIONS $ MENT ** : : : : PRINCIPAL INTEREST : TOTAL (1) (2) (3) (4) (5) (6) (7) (8) (9) 198106 3,636,682 5,787,483 1.047,484 626,593 49,506 51,454 100,960 22,847 - 198206 4,132,527 6,798,637 1,263,598 680,388 39,753 57,899 97,652 14,289 -198,402 198306 4,678,451 7,495,348 785,589 604,574 73,793 61,303 135,096 17,541 2,456 198406 5,133,011 8,182,789 874,524 562,249 64,931 74,048 138,979 33,732 -88,420 198506 5,471,541 8,765,105 988,221 554,744 121,183 76,765 197,948 132,614 -152,108 198606 6,762,260 10,326,167 844,760 722,084 137,194 98,405 235,599 89,984 943,480 * * * * * * THE FOLLOWING FIGURES ARE PROJECTED * * * 198706 7,513,527 10,115,556 - 961,879 210,616 118,133 328,749 - 5 198806 8,164,440 9,907,497 - 858,976 208,051 123,803 331,854 - -8 198906 8,600,202 9,683,309 - 659,945 224,187 125,704 349,891 - -1 199006 8,829,097 9,460,418 - 451,793 222,896 130,795 353,691 - 5 199106 8,895,197 9,223,712 - 302,816 236,716 129,498 366,214 - 10 199206 8,824,066 8,981,075 - 171,504 242,627 125,809 368,436 - -10 199306 8,665,892 8,720,121 - 102,792 260,964 122,138 383,102 - 10 199406 8,434,437 8,445,166 - 43,502 274,946 116,927 391,873 - -9 199506 8,148,177 8,149,724 - 9,193 295,441 111,083 406,524 - -1 199606 7,830,306 7,831,853 - - 317,851 104,892 422,743 - -20 199706 7,508,407 7,509,952 - - 321,881 99,432 421,313 - -20 199806 7,196,402 7,197,947 - - 311,996 94,170 406,166 - -9 199906 6,889,795 6,891,340 - - 306,595 89,088 395,683 - -12 200006 6,581,410 6,582,95E - - 308,370 84,176 392,546 - -15 200106 6,280,129 6,281,673 - - 301,258 79,273 380,531 - -24 200206 5,978,063 5,979,607 - - 302,056 74,560 376,616 - -10 200306 5.675,096 5,676,639 - - 302,951 70,024 372,975 - -17 200406 5,367,328 5,368,871 - - 307,744 65,487 373,231 - -24 200506 5,060,065 5,061,608 - - 307,243 61,006 368,249 - -20 200606 4,755,948 4,757,491 - - 304,096 56,740 360,836 - -21 * PROJECTED AMOUNTS IN THIS COLUMN ARE AMOUNTS EXCLUDED FROM PROJECTIONS BECAUSE OF UNKNOWN TERMS. * THIS COLUMN SHOWS THE AMOUNT OF ARITHMETIC ICABALANCE IN THE AMOUNT OUTSTANDING INCLUDING UNDISBURSED FROM ONE PERIOD TO THE NEXT. THE MOST COMMON CAUSES OF IMBALANCES ARE CHANGES IN EXCHANGE RATES AND TRANSFERS OF DEBTS FROM ONE CATEGORY TO ANOTHER IN THE TABLE. Table 5.1 CONVENTIONAL BUDGET SUMMARY, 1980/81-1986/87 (Tk crore) 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986187 Revised Revised Revised ----------------------------- --------------- --------------- ------- Budget Budget Budget Revised Preliminary Revised Budget Budget Actual Budget Budget Budget Revised Budget /b A-REVENUE BUDGET Receipts 2323 2554 2711 3397 3033 2953 3569 3477 3951 4073 4840 Expenditures -1462 -1850 -2147 -2414 -2503 -2452 -2803 -2930 -3313 3421 3740 Revenue Surplus 861 704 5F' 983 530 501 766 547 638 652 1100 B & C-Foreign Grants & Loans 1841 2264 3040 3415 3483 2502 3897 3307 3885 4018 4472 D-DOMESTIC CAPITAL NET Domestic Loans & Advances -26 -42 -214 .. -109 .. .. -248 -383 -252 -254 1 Non-Development Capital Expr. > Net Public Accounts 0 0 79 .. 167 .. .. 148 174 160 162 N) Total Net Domestic Capital -26 -42 -135 .. 58 .. .. -100 -209 -92 -92 Total Budgetary Source 2676 2926 3469 4960 4071 3246 4530 3754 4314 4579 5480 Extra-Budgetary Resources 57 68 86 0 106 0 163 203 226 254 250 Debentures of ABs /a Self-financing by ABs /a Accumulated Balances of ABs /a Net Food Borrowing 209 0 0 0 0 0 276 -150 -249 -346 TOTAL RESOURCES AVAILABLE 2942 2994 3555 4767 4178 3199 4693 4233 4390 4584 5384 E-USE OF RESOURCES ADP 2369 2715 2977 3484 3433 3008 3896 3508 3826 4096 4764 Non-ADP Projects 0 0 34 0 210 0 235 207 130 144 154 Food Budget 572 168 544 1283 535 191 562 518 434 344 466 Food-for-Work 105 160 148 159 198 191 562 216 277 348 307 Net Food Outlay 467 8 396 1124 337 0 0 302 157 -4 159 ----- ------------------------------------------------------------------------------------------------------------------------------------- /a ABs - Autonomous Bodies. /b Including effect of new fiscal measures. Source: Ministry of Finance. -230- Table 5.2 CURRENT BUDGET, 1980/81-1986/87 (Tk crore) 1980181 1981/82 1982/83 1983/84 1984/85 1985/86 Revised Revised Revised Revlsed Revised RevLsed 1986/87 Budget Budget Budget Budget Budget Budget liudget REVENUES Tax Revenue 1782 1968 2160 2410 2807 3242 4045 Production, consumption and distribution taxes 1520 1666 1785 2028 2355 2710 3394 (Custom duties) 750 785 910 1000 1120 1338 1598 (Sales taxes) 340 350 316 345 410 461 659 (Excise duties) 373 463 480 600 705 772 991 (Stamp taxes) 53 64 72 75 110 125 130 (Motor vehicle taxes) 4 4 7 8 10 14 16 (Entertainment taxes) 0 0 0 0 0 0 0 Taxes on income 220 260 315 331 390 460 549 Land revenue tax /a 29 31 25 53 40 51 56 Other taxes and duties lb 13 12 36 18 22 21 46 Non-Tax Revenue 561 586 551 623 670 888 795 Nationalized sector 185 143 126 123 283 362 245 (Industries) 93 26 26 30 60 85 65 (Banks) 83 111 94 93 223 277 180 (Other public sector /c) 9 6 6 0 0 0 0 Interest receipts 145 161 100 102 140 233 180 Registration fees 23 27 29 30 40 43 56 Forest 30 35 28 29 36 50 45 Railways 105 125 158 154 -30 53 (-)49 Post Office and T&T (net) 1 8 2 -2 8 0 17 Other /d 73 87 1C9 187 193 253 301 Total Current Revenue 2343 2554 2711 3033 3477 4130 4840 EXPENDITURES General Services 724 855 948 973 1126 1367 1492 - General administration 264 280 387 289 317 404 462 - Justice and police 178 219 133 153 304 348 352 - Defense 274 348 418 521 493 596 659 - Sclentific departments 8 9 10 10 13 19 19 Social Services 296 326 475 627 904 923 1159 - Education 207 232 294 365 493 600 697 - Health and population planning 77 83 102 129 167 113 241 - Social welfare 12 12 79 133 244 210 221 Economic Services 107 121 111 195 199 247 330 - Agriculture 30 32 41 80 110 95 160 - Manufacturing and construction 34 37 31 47 9 64 70 - Transport and communications 43 51 39 44 51 55 59 - Others 0 0 0 24 31 33 41 Debt Service 116 217 251 274 318 428 428 Food Subsidy 109 182 193 160 250 141 121 Railways 124 139 168 170 0 NA NA Contingency 5 5 1 104 133 315 210 Total Current Expenditures 1482 1845 2147 2503 2930 3421 3740 /a Tax levied on land holdtngs. /b Includes electricity duties, estate duty on agricultural land, taxes on immovable property, gift taxes, capital gains tax, toll taxes, betterment tax on commercial establishments, and other levies. /c Includes receipts from nationalized insurance, other industrial operations and disinvestment of industrial units. /d Receipts of various Government departments, especially under civil works, education and health. Source: Ministry of Finance. Table 5.3 TAXES ON IMPORTS, 1980181-1985186 Budget 5-YR AVG ----------------ANNUAL DATA------------------ Estimate 80185 1980/81 1981/82 1982/83 1983184 1984/85 1985/86 Total imports (US$ m) 2480 2533 2572 2309 2353 2633 2371 Foodgrain imports (US$ m) 366.2 250 285 385 398 513 220 Oilseeds, edible oil fertilizers, crude petroleum 464.4 551 51.4 391 395 471 433 Other imports (US$ m) /a 1649.4 1732 1773 1533 1560 1649 1718 Total imports (Tk billion) 55.02 41.4 51.5 54.9 58.7 68.6 70.9 Other imports (Tk billion) 36.4 28.2 35.5 36.4 38.9 43 51.4 Dutiable imports lb (Tk billion) 32.14 27.1 26.6 29.3 32.7 45 45.8 Customs duty (Tk billion) 8.82 7.0 7.6 8.5 9.2 11.8 13.4 Sales taxes (Tk billion) 3.5 3.2 3.2 3.0 3.6 4.5 4.6 Percentages Dutiable/total imports (X 59 66 54 53 56 66 65 Dutiable/non-foodgrain imports (X) 69 73 60 64 67 81 71 Dutiable other imports /a (X) 84.4 96 77 80 84 85 89 Average customs duty (X) 27.4 26 28 29 28 26 29 Average sales tax /c (X) 11 12 12 10 11 10 8 /a "Other" imports are imports less foodgrains, crude petroleum, fertilizers and edible oil (non-dutiable to FY84) and oils. lb Dutiable imports as recorded by the National Board of Revenue. These imports form the basis for collection of Custom Duties and Sales Taxes (CDST). - /c These percentages are share of dutiable imports as recorded by NBR. Source: Staff estimates. Table 5.4 ANNUAL DEVELOPMENT PROGRAMME, 1972/73-1986/87 (Tk crore) 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1980/81 Revised Revised Revised Revised Revised Revised Revised Revised Revised Budget Budget Budget Budget Budget Budget Budget Budget Budget ActuaLs -- -- - -- -- -- - -- -- -- - -- -- -- - -- -- -- - -- -- -- - -- -- -- - -- -- -- - -- -- -- - -- -- -- -- - Agriculture, Rural Development 135.0 157.9 178.4 299.0 314.8 348.0 468.8 665.8 754.8 789.3 and Water Resources (Agriculture) 0.0 57.6 63.9 115.0 152.9 154.0 234.4 293.8 322.7 282.3 (Rural Development) 0.0 30.6 28.5 48.0 42.0 51.0 61.9 74.8 74.9 98.1 (Water and Flood Control) 0.0 69.7 86.0 136.0 119.9 143.0 172.5 297.2 357.2 408.9 Industry 29.4 52.5 65.0 136.0 143.0 190.0 304.0 362.7 336.7 277.6 Power, Scientific Research and Natural Resources 0.0 53.7 71.2 151.0 131.3 168.0 252.5 398.9 377.8 375.9 Transport 115.7 96.5 81.2 125.0 196.2 176.0 213.5 404.0 375.1 465.9 Communications 0.0 13.1 18.6 34.5 30.7 51.0 43.1 80.2 71.3 66.9 Physical Planning and Housing 30.7 23.3 34.0 66.0 63.0 81.0 96.6 144.8 146.7 155.9 Education and Training 0.0 30.7 28.8 45.0 47.3 58.0 64.1 64.9 97.0 97.0 Health 0.0 20.7 21.8 33.0 32.0 43.0 47.6 70.0 65.8 61.2 Population Plannlng 0.0 5.0 7.7 25.0 21.6 31.0 46.7 59.3 69.6 46.6 Social Welfare 87.0 2.1 2.0 4.0 2.9 5.0 6.5 21.6 24.2 19.1 Manpover and Employment 0.0 0.3 1.3 3.0 2.0 4.0 6.9 9.7 10.5 9.1 Cyclone Reconstruction 0.0 8.0 15.0 28.5 8.0 14.0 16.2 5.0 0.0 0.0 Other /a 0.0 Total ADP 397.8 463.8 525.0 950.0 1005.7 1203.0 1602.6 2330.0 2369.0 2364.5 1981/82 1981/82 1982/83 1982/83 1983/84 1983/84 1984/85 1984/85 1985/86 1985/86 1986/87 Revised Revised Revised Revised Revised Budget Actuals Budget Actuals Budget Actuals Budget Actuals Budget Actuals Budget -- -- - -- -- -- - -- -- -- - -- -- -- - -- - - --- - -- -- - -- - --- - -- -- -- - -- -- -- - -- - -- - --- -- - --- - Agriculture, Rural Development 882.0 783.4 956.5 838.2 1051.1 939.3 939.0 692.0 783.9 717.2 930.6 and Water Resources (Agriculture) 369.8 334.5 472.1 415.4 475.8 476.4 314.1 287.0 193.0 204.4 263.1 (Rural Development) 112.7 10)0.0 116.0 103.9 105.7 73.6 110.2 12.0 113.7 99.4 146.9 (Water and Flood Control) 399.5 368.9 368.4 318.9 469.6 389.3 514.7 393.0 477.2 413.4 520.6 Industry 367.7 270.0 314.5 247.0 332.5 233.6 239.8 241.0 590.5 536.9 709.9 Power, Scientific Research and Natural Resources 434.7 511.4 629.5 578.8 821.0 697.1 845.8 880.0 945.3 948.7 940.1 Transport 380.2 370.3 489.3 394.7 285.9 244.8 227.1 269.0 266.0 256.1 370.1 Communications 60.3 78.9 76.0 99.0 54.8 62.9 60.6 78.0 49.3 44.1 66.6 Physical Planning and Housing 177.4 146.5 149.6 130.0 147.2 163.6 108.2 114.0 102.9 114.0 156.4 Education and Training 107.1 86.1 108.6 105.2 133.4 137.0 128.8 138.0 181.7 128.1 253.4 Health 74.2 69.2 80.8 73.9 80.0 70.8 99.2 93.0 72.5 66.3 101.4 Population Planning 86.3 40.0 85.7 71.2 106.9 85.7 111.0 102.0 127.7 87.9 143.8 Social Welfare 29.6 20.5 13.8 12.1 15.5 14.2 18.3 16.0 14.7 13.5 27.8 Manpower and Employment 19.8 6.9 20.5 24.6 25.0 24.2 20.1 13.0 11.4 5.9 9.8 UpazLlas 7.3 343.2 319.6 423.0 396.0 425.0 126.0 /c 375.0 Other /a 96.0 7.9 201.4 105.7 188.2 13.2 287.5 141.0 524.6 384.7 679.1 Total ADP 2715.3 2391.1 3126.2 2687.7 3584.7 3173.0 3508.4 3173.0 4095.5 3429.4 4764.0 29.6 /b /a For 1984/85, Includes Tk 4,230 for Upazillas. /b Self-financing by autonomous agencies. /c Excluding upazIla development assistance of Tk 200 crore which is Included in sectoral expendltures. Note: Reported actual expenditures are: Tk 2,674 million for 1972/73, Tk 3,050 million for 1973/74 and Tk 3,932 million for 1974/75. It is believed that these totals may understate the level of expenditure due to the provislonal nature of some entries and the possibility of incomplete recording. Tk 8,500 million is the revised estimate for 1975/76. Source: Ministry of Finance and Planning; and Planning Commisslon. Table 5.5 FINANCIAL PERFORMANCE OF PUBLIC SECTOR INDUSTRIAL CORPORATIONS, 1980181-1985186 (Tk crore) Revised Revised Revised 1980181 1981/82 1982/83 1983184 1984/85 1985/86 ------------------------------------------------- ------- ------- ------- ------- ------- A. NET PROFITS la Bangladesh Jute Mills Corporation (BJMC) All Mills lb 33.8 -65.5 -- -- -- -- Bangladesh Jute Mills Corporation (BJMC) /c 25.5 -42.6 20.5 -28.1 -118.8 -160.3 Bangladesh Textile Mills Corporation (BTMC) All Mills /b -33.2 -68.1 -- -- -- -- Bangladesh Textile Mills Corporation (BTMC) /c -18.4 -41.8 6.9 43.4 22.9 -60.0 Bangladesh Sugar and Food Industries Corporation (BSFIC) 39.0 46.9 44.8 46.1 -20.6 -27.4 Bangladesh Steel and Engineering Corporation (BSEC) 12.4 -12.0 -23.7 -15.0 1.7 0.5 Bangladesh Chemical Industries Corporation (BCIC) 5.6 7.1 39.6 26.3 13.6 18.7 Bangladesh Forest Industries Development Corporation (BFIDC) 1.0 1.2 3.1 4.3 5.2 5.8 Bangladesh Petroleum Corporation -9.2 -278.9 59.7 160.0 206.4 248.7 Total 49.4 -369.3 150.9 237.0 110.4 26.0 U.%) B. GROSS SALES Bangladesh Jute Mills Corporation (BJMC) All Mills /b 640.3 620.9 -- -- -- Bangladesh Jute Mills Corporation (BJMC) /c 455.2 447.0 544.5 509.7 746.0 622.7 Bangladesh Textile Mills Corporation (BTMC) All Mills /b 321.8 335.6 -- -- -- -- Bangladesh Textile Mills Corporation (BTMC) /c 188.2 201.1 251.2 299.0 372.9 289.5 Bangladesh Sugar and Food Industries Corporation (BSFIC) 268.4 307.5 271.2 361.3 138.6 231.0 Bangladesh Steel and Engineering Corporation (BSEC) 331.7 278.9 205.5 369.2 430.5 410.8 Bangladesh Chemical Industries Corporation (BCIC) 351.3 375.5 470.9 638.6 649.6 778.5 Bangladesh Forest Industries Development Corporation (BFIDC) 17.6 18.2 30.5 36.5 42.4 50.1 Bangladesh Petroleum Corporation 1136.2 1268.5 1391.7 1161.5 1266.7 1396.3 T.otal 3067.3 3205.1 3165.5 3375.8 3646.7 3778.9 C. PROFIT/SALES RATIO (Z) Total 1.6 -11.5 4.8 7.0 3.0 0.7 ------------------------------------------------------------------------------------------------------------------------------- -- = not available. /a Pre-tax profits or losses. Negative sign (-) denotes net losses. /b These are the accounts of all the mills, including the ones that were transferred to the private sector in 1982/83. /c These are the accounts of the mills that are still in the public sector as of 1982(834 Sources: Sector Corporations; Ministry of Commerce and Industries; and Ministry of Finance. -234- Table 6.1 MONEY SUPPLY AND DOMESTIC LIQUIDITY, 1983-1986 (Tk billion) June 30, June 30, June 30, Dec 26, June 30, Dec 31, 1983 1984 1985 1985 1986 1986 -------- -------- -------- ------- -------- ------- 1. Credit (net) to Government 19.8 24.1 23.4 20.9 18.6 18.6 (of which Special Treasury Bonds) (-) (1.9) (1.9) (1.97 (-) (-) 2. Credit to Other Public Sector 24.6 25.5 32.3 34.2 40.4 38.9 3. Credit to Private Sector 31.0 49.1 68.9 73.4 85.2 85.5 4. Total Domestic Credit (1+2+3) 75.4 98.7 128.4 128.5 144.2 143.0 5. Net Foreign Assets -3.9 1.5 -0.1 -6.1 -1.6 -2.1 6. Other Liabilities (net) -12.5 -16.3 -19.2 -8.1 -19.2 -3.5 7. Total Liquidity (M2) 59.0 83.9 105.3 114.2 123.4 137.4 8. Currency Outside Banks 11.4 -5.6 17.2 19.3 19.5 20.1 9. Demand Deposits 14.9 19.9 25.1 26.2 29.8 30.0 10. Currency and Demand Deposits (Ml) 26.3 35.5 42.3 45.5 49.3 50.1 11. Time Deposits 32.7 48.3 63.0 68.7 74.1 87.3 Changes by Major Components (X) June'82/ June'83/ June'84/ J,-e'85/ De- 1985/ June'86 June'82 June'83 June'84 June'85 June'86 Dec '86 ------- ------- ------- ------- -------- -------- 1. Credit (net) to Government and Public Sector 1.2 11.6 12.3 -1.1 7.1 -2.5 Government (1.4) (21.7) (-2.8) (-10.7) (11.0) (0.0) Other Public Sector (1.1) (3.6) (26.5) (5.9) (18.1) (-3.9) 2. Credit to Private Sector 31.0 58.7 40.2 6.5 16.1 0.4 3. Total Domestic Credit (1+2) 11.6 30.9 26.2 0.0 12.2 -0.8 4. Total Liquidity (M2) 29.7 42.2 25.6 8.5 8.1 11.3 ------------------------------------------------------------------------------------------------- Source: Bangladesh Bank, Statistics Department. Table 6.2 AGRICULTURAL CREDIT, 1977178-1985/86 (Tk crore) 1977/78 1978/79 1979/80 1980/81 1,;81/82 1982/83 1983/84 1984/85 1985/86 - ------- ------------------- ----------- ------------------- -------------- Commercial Banks /a Short-term agricultural loans 76.7 64.8 87.4 103.8 95.0 148.0 288.1 349.0 164.2 Other agricultural financing /b 0.5 0.5 1.0 5.7 11.4 45.0 77.1 103.6 50.8 Fisheries financing 1.1 3.8 2.7 1.1 1.1 1.2 3.4 4.4 18.2 Tea production and development financing 3.5 6.3 6.7 2.8 3.6 2.4 2.7 6.7 6.3 Cold storage facilities for agricultural 2.6 2.3 3.6 3.6 6.2 4.4 10.3 25.0 13.2 products Total 84.5 77.7 101.3 116.9 117.3 200.9 381.5 489.8 252.7 Bangladesh Krishi Bank Short-term agricultural loans 18.7 17.3 25.5 73.0 110.0 216.1 329.8 192.8 101.8 Other agricultural financing /b 16.0 25-8 68.9 66.7 92.7 120.3 198.3 312.2 137.6 Fisheries financing 1.4 4.0 4.8 7.4 7.0 12.1 24.2 15.3 10.4 Tea production and development financing 17.9 24.8 41.2 58.0 56.3 45.9 33.3 81.4 1CO.8 Cold storage facilities for agricultural 0.2 1.3 1.7 4.7 5.1 6.5 6.9 13.0 14.5 products Total 54.2 74.2 142.0 209.7 271.0 400.8 592.4 614.7 365.1 Bangladesh Samabaya Bank Short-term agricultural loans 13.1 16.6 22.5 20.7 13.7 19.0 18.0 23.0 9.6 Other agricultural financing /b 2.7 3.5 3.1 5.0 3.7 3.5 3.3 5.3 4.4 Total 15.8 20.1 25.6 25.7 17.4 22.5 21.3 28.3 14.0 Totals by loan type Short-term agricultural loans 108.5 98.7 135.4 197.6 218.7 303.1 635.9 564.8 275.6 Other agricultural financing /b 19.3 29.9 72.9 77.4 107.7 168.7 278.7 421.1 192.8 Fisheries financing 2.5 7.7 7.5 8.5 8.0 13.4 27.6 19.8 28.5 Tea production and development financing 21.4 11.1 47.8 60.7 59.9 48.3 36.0 88.1 107.1 Cold storage facilities for agricultural 2.9 3.6 5.2 8.3 11.4 10.8 17.2 38.0 27.7 products Total 154.5 172.0 268.9 352.3 405.7 624.2 995.2 1132.8 631.7 Of which: Channelled through Cooperatives Under Bangladesh Rural Development 3oard Paddy 10.2 11.3 19.1 23.8 24.6 393.2 289.5 120.2 57.1 T. Aman 3.3 3.4 5.1 7.1 7.3 55.4 96.5 120.2 18.5 Boro 4.8 4.5 8.5 11.5 13.2 168.9 96.5 0.0 33.1 Aus/B. Aman 2.1 3.3 5.5 5.1 4.0 168.9 96.5 0.0 5.5 Wheat 0.2 0.4 0.8 1.1 0.9 9.6 33.2 0.0 0.7 Potato 0.4 0.6 0.6 0.8 0.4 3.7 0.0 0.0 1.8 Total 10.9 12.2 20.5 25.6 25.8 406.5 322.8 120.2 59.6 ---- -------------------------------------------------------------------------------------------------------------------- ---------------- /a Includes refinancing provided by Sonali Bank to TCCAs/KSSs through the IRDP/RDB. /b Includes agricultural term credit as well as financing for marketing, transport and agro-industrien. Sources: Bangladesh Bank, Agricultural Credit Department; Bangladesh Krishi Bank; Bangladesh Samabaya Bank, Ltd.; and commercial banks. -236- Table 6.3 DEVELOPMENT FINANCE INSTITUTIONS, 1976177-1985186 (Tk crore) 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 19841/8 t985/86 A. BANGLADESH SHILPA BANK (BSB) Loans sanctioned Food and allied products 2.5 9.2 6.3 28.9 49.5 20.3 0.5 0.4 1.0 0.9 Specialized textiles and handloom sector /a 5.0 13.1 10.9 23.4 43.1 41.5 2.5 13.6 48.8 69.9 Paper, board, printing and publishing /b 4.2 4.5 4.0 10.8 10.5 4.0 0.0 1.0 0.4 0.4 Tannery, leathcr and rubber industries 0.8 C.0 2.5 6.8 10.6 1.2 1.2 1.2 4.3 15.2 Chemicals, pharmaceutLcals and allied industries 1.1 3.3 1.4 10.4 10.4 9.0 0.1 2.2 0.2 6.5 Engineering Industries 0.7 1.1 7.5 13.8 15.6 20.6 2.6 2.9 8.8 2.4 Non-Metallic minerals /c 0.0 0.2 0.0 1.1 2.3 0.0 1.3 0.1 2.5 1.1 Miscellaneous industries 0.0 0.0 0.0 0.0 0.0 0.6 0.1 0.5 0.0 0.6 Sub-total 14.3 31.4 32.6 97.1 142.0 97.2 8.3 21.9 66.0 97 Service Industries /d 6.1 8.4 17.6 12.1 16.9 12.1 0.7 0.5 0.3 2.1 Total Sanctions 20.4 39.8 50.2 109.2 158.9 109.3 9.0 22.4 66.3 99.1 Private sector 17.9 34.5 49.4 102.6 158.9 109.3 9.0 22.4 66.3 99.1 Public sector 2.5 5.3 0.8 6.6 0.0 0.0 0.0 0.0 0,0 0.0 Total Disbursements 4.5 11.6 28.1 35.2 52.4 64.6 62.2 36.9 28.8 12.2 End-fiscal year Resource Position ForeIgn. Currency Resources (US$ million) Resources available from aid agreements 33.0 9.0.6 58.6 60.4 104.8 94.4 96.8 65.3 49.7 71.6 (-) Disbursements 2.2 4.1 11.1 12.0 15.0 17.8 23.9 11.8 7.7 2.4 Resources available for disbursement 30.8 ,'6.5 47.5 48.4 89.8 76.6 72.9 53.5 42.0 69.2 (-) Funds committed but riot yet disbursed 7.4 11.0 15.1 17.1 32.5 40.9 37.1 22.9 16.9 33.5 Resources available for commitment 23.4 15.5 32.4 31.3 57.3 35.7 35.8 30.6 25.1 35.7 (+) Cancellations & withdraVals 0.0 0.0 0.6 1.9 5.5 2.6 2.1 2.5 0.9 5.6 (-) Approvals not yet committed 4.8 6.1 9.3 32.3 47.9 64.1 31.0 12.1 24.8 31.6 Foreign currency resources available for approval 18.6 9.4 23.7 0.9 14.9 -25.7 6.9 21.0 1.2 9.7 Local Currency Resources (Tk million) Cash on hand/in banks 3.9 15.1 15.7 27.3 19.2 11.1 39.7 57.8 74.2 90.9 (+) Money At call 37.3 37.0 27.2 14.3 7.9 11.0 0.0 16.3 b/* 8.0 b/* 6.8 (-) Reserves on deposit 6.8 10.1 10.9 13.8 14.2 3.8 4.5 5.7 6.5 6.7 (-) Comnitments & approvals not yet disbursed 3.0 8.6 16.9 25.4 36.5 36.5 30.1 35.1 32.0 28.5 Local currency resources available for disbursement 31.4 33.4 15.1 2.4 -23.6 -18.2 5.2 33.3 43.7 62.5 ----------------------------------------------------------------------------------------------------------------------------------- B. BANGLADESH SHILPA RIN SANGSTHA (BSRS) /e Loans sanctioned Food and allied products 3.0 9.7 9.9 25.1 18.8 5.4 0.2 2.7 0.3 1.0 Specialired textiles and handloom sector /a 7.6 18.5 11.2 12.5 16.9 0.3 1., 50.a 0.6 10.3 Paper, board, printing and publishing lb 0.0 0.5 0.4 0.5 0.0 0.0 0.0 0.0 0.0 0.0 T-.nery, leather and rubber industrles 0.8 0.0 0.1 1.8 0.0 0.4 0.0 0.9 0.0 0.0 Chemicals, pharmaceuticals and allied industries 1.0 2.0 1.1 17.5 7.6 1.8 3.2 1.9 0.8 0.2 Engineering industries 0.9 1.0 6.1 2.2 10.4 0.8 3.5 0.8 0.1 0.0 Non-Metallic minerals /c 0.0 0.0 0.0 2.2 10.3 0.0 0.3 4.3 0.0 0.8 Miscellaneous industries 1.1 4.3 0.3 0.9 1.3 0.0 1.5 1.0 1.0 f .0 Sub-total 14.4 36.0 29.1 62.7 65.3 8.7 9.5 61.5 2.8 12.3 Service industries /l 0.0 0.8 10.4 20.0 4.5 0.0 4.4 0.2 1.6 0.4 Total Sanctions 14.4 36.8 39.5 82.7 69.8 8.7 13.9 61.7 4.4 12.7 Private sector 13.0 35.8 38.7 82.7 67.5 8.7 9.8 60.1 2.8 12.7 Public sector 1.4 1.0 0.8 0.0 2.3 0.0 4.1 1.6 1.6 0.0 Total Disbursemerts 4.9 11.0 21.8 48.8 58.2 33.7 46.9 42.4 19.7 8.9 ----------------------------------------------------------------------------------------------------------------------------------- /a Includes jute and allied fibers. /b Includes forestry and wood products. /c Includes glass and ceramics. /d Includes inland water and road trAnsport, cinemas, hotels, and clinics. /e Net of subsequent cancellations and adjustments. Sources: BSB & BSRS. -237- Table 6.4 INTEREST RATES (percent per annum) August 1977 - Oct. 16, 1980 Jan. 1985 - Sept. 1985 July, 1986 Oct. 15, 1980 - Dec. 1984 Sept. 1985 June, 1986 - Present - .-- -- -- -- - -- -- -- -- -- -- - -- -- -- -- -- - -- - -- -- -- -- - -- - -- -- -- -- - Bank Rate - Discount Rate 8.0 10.5 11.0 11.25 10.75 - Rate for borrowing by Bangladesh Krishi Bank 6.0 8.5 8.5 8.5 8.50 - Rate for borrowing by Bangladesh Samabaya Bank (Apex Cooperative Bank) 6.0 8.5 8.5 8.5 8.50 Deposits /aa (1) - Special notice accounts or deposits withdrawable at notice of 7 to 29 days 4.0 4.5 4.5 4.5 4.50 - Special notice accounts or deposits withdrawable at notlce of 30 days or more 4.2 4.5 4.5 4.5 4.50 (2) - Savings bank accounts with checkilng facilities /co 4.5 8.5 8.5 8.5 8.50 - Savings bank accounts without checking facilities lb /c /dd 7.0 10.0 10.0 10.0 10.00 (3) - Fixed (or term) deposits - For 3 months and over but less than 6 months 7.0 12.0 12.0 12.0 12.00 - For 6 months -.nd over but less than 1 year 7.5 13.0 13.0 13.0 12.50 - For 1 year and over but less than 2 years If /d 8.2 14.0 14.0 14.0 13.25 - For 2 years and over but less than 3 years /f /e 9.2 14.5 14.5 14.5 13.75 - For 3 years and over /f /g 10 2 15.0 15.0 15.0 14.25 (4) - Currenit accounts - - - - Postal Savings Accounts - General accounts /g 8.5 11.5 11.5 11.5 11.50 - Flxed deposit accounts: - 1 year Ig 9.2 15.0 15.0 15.0 15.00 - 2 years /g 10.2 15.5 15.5 15.5 15.50 - 3 years /g 11.2 16.0 16.0 16.0 16.00 - Bonus accounts (6 years) /i /k 16.6 22.0 22.0 22.0 22.00 - Bonus & profit-cum-bonus accounts (6 years) 9.25+B 9.25+B 9.25+B 9.25+B 9.25+B - Savings Certificates /k - Pratirakkha Sanchaya Patra (8 years) /1 15.0 21.0 21.0 21.0 21.00 - Bonus Sanchaya Patra (6 years) /r 16.6 22.0 22.0 22.0 22.00 - Sanchaya Patra (5 years) Im 12.2 12.2 12.2 18.0 18.00 Advances /bb - Genieral advances eastended by smaller banks /n /o 11-1 15.5 18.0 18.0 18.00 - General advances extended by larger banks /n /o 11-1 15.5 18.0 )X6.0 18.00 - Advances for exporting jute, jute goods & tea 10.5 12.0 12.0 12.0 9.00 - Advances for exporting other commoditles /p 10.5 9.0 9.0* 9.0* 9.00 Industrial Lending Bangladesh Shilpa Bank & Bangladesh ShilpA Rin Sangstha Iq - Short-term loans /r Is 11.5-13 14.0 14.0 14.5 14.50 - Long-term loans Ir /s 11.5-13 14.0 14.0 14.5 Iff - Small Loans Scheme for small-scale and cottage industries, etc. 11.0 13.0 13.0 13.0 10.00 House Construction Landing Bangladesh House Building Finance Corporation Constructionlrehabilitation loans for: - Multi-dwelling units 5.0 10.5 10.5 10.5 10.50 - Single-dwelling units 11.0 13.0 '.3.0 13.0 13.00 Agricultural Lending (1) Bangladesh Krishi Bank - Short-term loans 11.0 12.0 16.0 1-B.0 16.00 - Tea 10.5 14.5 14.50 - Ju' e 10.5 16.0 16.00 - Potato storage 12.5 16.0 16.00 - Other purposes (inul. livestock, forestry L fisheries) 11.0 12.0 16.0 16.0 16.00 - MedLum- and long-term loans 11.5 16.0 - Shallow tubewells 13.0 16.0 16.00 - Tea development 9.0 9.0 9.00 - Horticulture development In the Chittagong Jilll Tracts S.0 5.0 5.00 (2) Bangladesh Sa±nabaya Bank (Apex Cooperative Barn') to TCCA. /u 7.0 7.0 7.0 10.0 10.00 - Thana Centtral Cooperative Associaticns (TCCAs) to BSSs (v 9.0 9.0 9.0 13.0 13.00 - Primary Societies (BSSs) to BSS members Iv 12.0 12.0 12.0 16.0 16.00 (3' tegrated Rural Development Program (IRDP) Short- term: - Bangladesh Bank to Sonall Bank Iw /x lee - 6.0 8.5 8.5 8.50 - Sonali Bank to TCCAs /w /x lee 6.0 7.5 10.0 10.0 10.00 - TCCAs to Farmers' Cooperative SocIeties (XSSs) ly /x /ee 14.5 14.5 14.0 13.0 13.00 - KSSs to KS. members /y Ix lee 17.5 17.5 19.0 19.0 19.00 Medium-term: - Sonall Bank to TCCAs /w Ix /ee 6.0 7.5 10.0 11.0 }1.00 - TCCAs to Farmers' Cooperative Societies (KSSs) /y 14.5 14.5 14.0 14.0 14.00 - KSSs to KS$ members /y /x /ee 17.5 17.5 19.0 16.0 16.00 (4) i00-Crore Special Agricultural Credit Program (SACP) Iz 11.0 12.0 16.0 16.0 16.00 Money Lenders (Unorganized Sector) Rates vary; typical annual rates zre: .. 30 and above.................. - not in effect. = not available. B bonus, * Effective from July l J 1983. Source: Bangladesh Bank. -238- Notes to Table /a With effect from June 21, 1974. lb Accounts from which withdrawals are permitted otily with withdrawal slip and upon presentation of passbook. /c From October 1, 1978, to October 15, 1980, interest on accounts opened by individuals in rural areas was 7.75%. /d From October 1, 1978, to October 15, 1980, interest on accounts opened by individuals in rural areas was 8.5%. /e Interest on accounts opened by individuals in rural areas was 8.5% from December 16, 1977, to September 30, 1978, and 9.0% from October 1. 1978, to October 15, 1980. /f Depositors have the option of withdrawing accumulated interest every twelve months or leaving iLuterest to be added to principal. a From December 1, 1977. lo October 15, 1980, interest on accounts opened by individuals in rural areas was 9.25%. /h With effect from July 1, 1976. Ii With effect from January 2, 1974. ai With effect from April 16, 1980. /k Savings certificates can be purcha,:Ad directly, but they can also be acquired by purchasing Savings Stamps (in denominations of Tk 0.25, Tk 0.5 and Tk 1) at post offices or National Savings Offices and exchanging these for savings certificates. Savings stamps can also be exchanged for Prize Bonds or used to open post office savings accounts. /1 Introduced with4 effect-from March 8, 1976. . - /m Introduced with effect from December 20, 1977. /n Includes loans extended by Bangladesh Krishi Bank under the "Special Agricultural Credit Program" (see note z). /o Increased to 16.0% on December 5th, 1981. /p With effect from July 19, 1976. /q Lending rate is 3.5% iabove the Bank Rate. Onlending of foreign aid funds is in accordance with the terms of the respective aid agreements. /r To encourage development in the Chittagong Hill Tracts, interest on loans and advances for this district was 11% only. Is Only 13.0% in the Chittagong Hill Tracts and for certain industries in less-developed areas. These rates were increased on August 1, 1981, to 14.5% (and 13.5% for the Chittagong Hill Tracts). /t Special credit program for small and cottage industries, weavers (through weavers' cooperatives), salt producers, rural bank (Grameen Bank) project, and self-employment program. /u Bangladesh Samabaya Bark borrows from Bangladesh Krishi Bank and lends to Thana Central Cooperative Associations. /v TCCAs borrow from Bangladesh Samabaya Bank and lend to Farmers' Cooperative Societies (KSSs), and KSSs lend to their individual D:Lembers. /w Refinancing from Bangladesh Bank to Sonali Bank for IRDP lending was initiated on July 1, 1982. /x With effect from July 1, 1982. /y Rates charged by TCCAs and KSSs include a service charge of 0.5%. /z Introduced on February 15, 1977. /aa For deposits, Bangladesh Krishi Bank and langladesh Shilpa Bank (Agricultural Development Bank and Industrial Development Bank of Bangladesh, respectively) are allowed to quote 1% more than the rates shown above. However, deposits with these institutions have been negligible because their services are more limited than those provided by commercial banks. /bb For advances, the rates given are maximum rates. Effective rates are 2-3 percentage points higher than nominal rates because of margins (15-30%, depending on the creditworthiness of the borrower or on the type of commodity financed). /cc 10.5% in rural areas (individuals only). /dd 11.0% in rural areas (individuals only). /ee Short term. /ff With effect from August 12, 1986, rates of interest on term loans have been revised. A number of interest rates, varying from 10% to 13.5%, have been fixed, which depend on debt-equity ratio and location of investment. -239- Table 6.5 BANK BRANCHES IN OPERATION, 1975180-1985/86 5-YEAR AVERAGES ANNUAL DATA ---------------- ----------------------------------------------------- Division/District 1975/80 1980/85 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 ----------------- ------- ------- ------- ------- ------- ------- ------- ------- Raishahi 600 1066 '.01 1026 1059 1113 1131 1158 Dinajpur 91 161 149 155 161 169 170 177 Rangpur 137 246 237 240 242 255 257 263 Bogra 103 178 166 173 179 185 189 195 Rajshahi 165 288 267 271 286 304 311 317 Pabna 105 193 182 187 191 200 204 206 Khulna 481 r55 808 823 8$7 882 916 968 Kushtia 74 136 130 133 135 138 145 153 Jessore 1ll 203 196 200 203 206 211 236 Khulna 144 249 238 239 247 257 263 269 Barisal 112 191 175 180 190 200 210 220 Patuakhali 41 1'5 69 71: /2 81 87 90 Dhaka 824 1397 1327 1348 1381 1437 1494 1531 Jamalpur /a 96 90 85 86 88 93 100 102 Mymensingh 64 226 213 220 225 234 239 244 Tangail 48 114 107 108 110 120 123 126 Dhaka 514 776 742 752 770 796 818 838 Faridpur 101 192 180 182 188 194 214 221 Chittagong 795 1328 1242 1273 1316 1385 1422 1456 Sylhet 218 364 342 351 362 378 386 389 Comilla 179 308 299 303 307 313 320 330 Noakhali 119 206 201 203 204 209 212 226 Chittagong 247 377 349 361 372 392 410 420 Chittagong Hill Tracts 31 73 51 55 71 93 94 91 Total 2700 4648 4378 4470 4613 4817 4963 5113 ------------------------------------------------------------------------------------------------- /a Included in MymensLngh through 1978/79. Note: Includes all branches of scheduled commercial banks and specialized financiat institutions. Source: Bangladesh Bank. -240- Table 7.1 LAND USE SUMMARY, 1984/85 (thousand hectares) ---------Land area and classification------------ ------------------------Land Utilization----------------------- Division/ Total Not Culti- Forests Cultivable Cultiva- Current Net Cropped Single Double Triple Gross Cropped District Area vable /a Area /b ble Waste Fallows Area /c Cropped Cropped Cropped Area /d ------ ---------- ------- ---------- --------- -------- ----------- -------- -------- -------- ------------- RAJSHAHI 3456 741 14 2701 54 84 2564 1314 1042 208 4022 Dinajpur 676 126 10 540 13 17 511 340 143 28 710 Rangpur 959 217 2 740 24 23 693 167 437 89 1308 Bogra 389 30 0 299 0 6 293 113 143 37 510 Rajshahi 946 211 2 733 17 21 695 500 174 21 911 Pabna 486 97 0 389 0 17 372 194 145 33 583 YFULNA 3411 729 609 2073 45 73 1955 1336 534 85 2659 Kushtia 348 61 0 287 0 31 256 146 99 11 377 Jessore 658 142 0 516 6 20 489 350 127 12 640 Khulna 1205 187 575 443 2 8 433 330 89 14 550 Barisal 723 203 17 503 22 5 476 307 132 37 682 Patuakhali 477 136 17 324 15 9 301 203 87 11 410 DHAKA 3092 641 93 2358 36 100 2224 1019 1020 185 3614 Jamalpur 340 53 7 280 7 4 269 91 154 24 471 Mymensingh 971 193 16 7k$2 16 33 713 228 427 58 1256 Tangail 337 35 43 259 6 6 247 103 112 32 423 Dhaka 746 173 27 546 6 31 511 332 155 24 714 Faridpur 698 187 0 511 1 26 484 265 172 47 750 CHITTAGONG 4514 803 1426 2285 155 230 1896 1058 722 116 2850 Sylhet 1272 345 67 860 92 105 663 443 204 16 899 Comilla 672 118 1 553 2 37 514 215 269 30 843 Noakhali 546 90 58 398 22 21 355 198 119 38 550 Chittagong 701 137 215 349 14 43 291 142 117 32 472 Chittagong HT 1323 113 1085 - 125- 25 24 76 -60 - 13 3 95 Total 14473 2914 2142 9417 290 487 8639 4727 3318 594 13145 -------Area Irrigated--- ----Cropping Intensity----- Pumps and Other Total Irrigation A/e B/f C/g Tubewells Methods/h Percentage/i RAJSHAHI 1.57 1.52 1.49 494.0 118.0 612.0 22.7 Dinajpur 1.39 1.34 1.31 70.0 8.0 78.0 14.4 Rangpur 1.89 1.83 1.77 126.0 66.0 192.0 26.0 Bogra 1.74 1.71 1.71 108.0 13.0 121.0 40.5 Rajshahi 1.31 1.27 1.24 117.0 25.0 142.0 19.4 Pabna 1.57 1.5 1.50 73.0 6.0 79.0 20.3 KHULNA 1.36 1.31 1.28 193.0 124.0 317.0 15.3 Kushtia 1.47 1.31 1.31 63.0 48.0 111.0 38.7 Jessore 1.31 1.26 1.24 76.0 18.0 94.0 18.2 Ihulna 1.27 1.25 1.24 25.0 21.0 46.0 10.4 Barisal 1.43 1.42 1.36 21.0 36.0 57.0 11.3 Patuakhali 1.36 1.32 1.27 8.0 1.0 9.0 2.8 DHAXA 1.63 1.56 1.53 531.0 91.0 622.0 26.4 Jamalpur 1.75 1.73 1.68 84.0 6.0 90.0 32.1 Mymensingh 1.76 1.68 1.65 201.0 55.0 256.0 33.6 Tangail 1.71 1.67 1.63 84.0 4.0 88.0 34.0 Dhaka 1.40 1,32 1.31 126.0 19.0 145.0 26.6 Faridpur 1.55 1,47 1.47 36.0 7.0 43.0 8.4 CHITTAGONG 1.50 1.34 1.25 342.0 179.0 521.0 22.8 Sylhet 1.36 1.17 1.05 81.0 101.0 182.0 21.2 Comilla 1.64 1.53 1.52 128.0 31.0 159.0 28.8 Noakhali 1.55 1.46 1.38 27.0 15.0 42.0 10.6 Chittagong 1.62 1.41 1.35 101.0 25.0 126.0 36.1 Chittagong HT 1.25 0.95 0.76 5.0 7.0 12.0 9.6 Total 1.52 1.44 1.40 1560.0 512.0 2072.0 22.0 ------------------------------------- ------------------------------------------------------------------------------------ /a Rivers, tidal creeks, lakes, ponds, roads, buildings, :'inresteads, etc. /b Total area net of not cultivable area and forests. /c Area cropped at least once during the year. /d Sum of single-cropped area plus 2 x double-cropped area plus 3 x triple-cropped area. /e Ratio of gross cropped area to net cropped area. /f Ratio of gross cropped area to net cropped area plus current fallows. /g Ratio of gross cropped area to cultivable area. /h Area irrigated by gravity systems, canals and traditional methods (such as swing baskets, doons, etc.). /i Percentage of cultivable area irrigated. Source: Bangladesh Bureau of Statistics. -241- Table 7.2 FARM SIZE PATTERN AND LANDLESSNESS, 1960-1983/84 1960 1977 1983t84p - - -- - - -- - -- -- -- - Percentage of farms by farm size (ha) up to 0.40 24.3 15.9 40.5 0.41-1.01 27.3 33.8 29.9 1.02-3.04 37.7 40.9 24.7 above 3.04 10.7 9.4 4.9 Percentage of land operated by farm size (ha) up to 0.40 3.2 2.7 7.8 0.41-1.01 12.9 16.3 21.2 1.02-3.04 45.7 49.4 45.1 above 3.04 38.1 32.7 25.9 Rural Households ('000) Totar 8239 -10871 13818 Farm 6139 6257 10048 Non-Farm 2100 4614 3770 Landless 2100 4614 3770 Near Landless /a 803 342 2417 Subtotal 2903 4956 6187 -------------------------------------------- /a Cvning less than 0.2 ha. Sources: Agricultural Census Reports, 1960 and 1977, and preliminary estimates of 1983/84. -242- Table 7.3 AREA UNDER CROPS BY SEASON, 1980/81-1985/86 ('000 hectares) 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 ------- ------- ------- ------- ------- ------- YEAR-ROUND Sugarcane 152 165 170 170 167 160 Fruit 152 152 154 155 124 123 Tea 45 46 46 46 46 45 Betel.nuts 37 36 36 36 36 34 Betel leaves 12 13 13 13 13 12 Total 399 412 419 420 385 374 of which: irrigated 10 10 7 a 8 11 EARLY WET SEASON (April-July) Aus 3181 3216 3229 3209 3004 2845 Jute 649 584 590 594 691 1058 30% of Aman 1852 1844 1838 1843 1752 1806 Year-round 399 412 419 420 385 374 Total 6081 6056 6076 - 6066 5832 6083 of which: irrigated 175 182 194 205 200 233 LATE WET SEASON (August-November) 100X of Aman 6172 6146 6128 6142 5839 6020 Cotton 8 17 20 18 13 17 Vegetables 120 98 100 100 100 100 Year-round 399 412 419 420 385 374 Total 6700 6672 6667 6680 6337 6511 of which: irrigated 199 249 260 223 222 257 DRY SEASON (December-March) Boro 1186 1331 1465 1433 1610 1534 Wheat 604 546 531 538 691 540 Oilseeds 315 310 300 300 299 288 All other crops 731 654 531 679 579 600 Year-round 399 412 419 420 385 374 Total 3139 3236 3253 3246 3370 3336 of which: irrigated 1363 1410 1508 1600 1762 1612 unirrigated 1775 1826 1745 1646 1608 1724 MEMORANDUM ITEMS: Cultivable area 9370 9370 9370 9370 9370 9370 Cropping intensity (X) Early wet season 64.9 64.9 64.6 64.8 64.7 64.0 Late wet season 71.5 71.5 71.2 71.2 71.3 69.5 Dry season 33.5 34.5 34.7 34.6 36.0 35.6 Overall /a 141.6 141.9 14?a.2 142.0 138.9 142.0 Average percent of cultivable area under crops 56.6 57.0 56.9 56.9 57.3 56.5 of which: Rice & Jute 46.4 46.7 47.1 47.0 45.9 47.0 Other Crops 10.2 10.3 9.7 9.9 11.5 9.5 /a Total adjusted to avoid double cropping of aman and year-round crops. Source: Bangladesh Burgeau of Statistics. -243- Table 7.4 AREA UJNDER MAIN CROPS, 1980/81-1985/86 ('000 hectares) 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 Foodgrains 11220 11313 11462 11371 11188 10946 - Rice 10540 10693 10823 10784 10452 10399 (Aus) 3181 3216 3229 3209 3004 2845 (Anan) 6172 6146 6128 6142 5839 6020 (Boro) 1186 1331 1465 1433 1610 1534 - Wheat 604 546 531 538 691 540 - Barley 19 15 13 10 10 7 Pulses 334 315 287 280 262 243 - Granm 59 55 55 53 51 47 - Khesari 94 95 95 78 79 73 - Mashkalai 48 44 41 39 34 31 - Masur 86 77 75 74 72 67 - Matar 14 12 11 11 10 10 - Mung 15 16 15 16 16 15 Oilseeds 315 310 300 300 299 288 - Rape and mustard 206 197 191 192 203 190 - Til 38 43 41 41 34 36 - Groundnut 24 22 22 21 18 18 - Linseed 15 15 15 15 13 13 - Coconut 30 31 31 31 31 31 Fibres 668 612 620 715 705 1075 - Jute 649 584 590 594 691 1058 - Cotton 8 17 20 18 13 17 Drugs & Narcotics 148 152 149 147 147 145 - Tea 45 46 46 46 46 45 - Tobacco 53 56 53 53 53 54 - Betelnuts 37 36 36 36 36 34 - Betel leaves 12 13 13 13 13 12 Spices 147 154 153 315 131 124 - Rabi chillies 69 71 71 71 68 63 - Onion 31 34 34 34 35 34 - Garlic 13 13 13 13 13 12 - Turmeric 14 15 14 14 15 15 Tubers 174 180 179 177 177 164 - Potato 104 108 113 113 114 108 - Sweet potato 70 68 67 67 63 56 Sugar Plants 184 184 185 181 181 170 - Sugarcane 152 165 170 170 167 160 - Date palm 11 11 11 11 11 10 Fruits 152 152 154 155 124 123 - Banana 41 43 44 43 41 41 - Mango 45 46 47 46 46 46 - Pineapple 15 15 15 14 14 13 - Jackfruit 21 21 22 22 23 23 Vegetables 120 98 100 100 100 100 - Brinjal 28 29 29 29 27 26 Total, all crops 13455 13503 13587 13741 13101 14216 of which: crops shown 13211 13253 13367 13308 12321 13378 all others 245 250 220 433 780 838 ---------- ------------------------------------------------------------------------ Note: Crops with less than 10,000 ha average not shown separately. Source: Bangladesh Bureau of Statistics. -244- Table 7.5 IRRIGATION SUMMARY, 1980181-1985/86 ('000 hectares) 1980/81 1981/82 1982/83 1983184 1984/85 1985/86 BY METHOD ------- ------- ------- ------- ------- Modern methods 1033 1130 1340 1536 1739 1721 Tubewells 227 277 421 682 898 963 Low-lift pumps 681 720 763 682 696 609 BWDB gravity schemes 125 133 156 172 145 149 Traditional methods 643 634 549 463 376 377 Swing-baskets 85 88 87 86 81 84 Doons 377 364 300 244 188 170 Canals 28 34 8 0 2 14 Other 153 148 154 133 105 109 Total, net 1676 1764 1889 1999 2115 2098 of which: modern (X) 61.6 64.1 71.0 76.8 82.2 82.0 traditional (X) 38.4 35.9 29.0 23.2 17.8 18.0 BY CROP Aus 122 116 128 148 144 165 Aman 144 188 199 162 160 190 Boro 1021 1065 1165 1225 1314 1259 Wheat 199 194 198 219 290 267 Other cereals 4 5 4 7 3 3 Pulses 5 3 2 2 3 4 Oilseeds 5 4 5 7 12 12 Potato 73 79 75 75 71 68 Vegetables 44 48 51 45 50 53 Sugarcane 10 10 7 8 8 11 Cotton 2 2 3 7 4 3 Others 47 50 53 57 61 63 Total, gross 1676 1764 1889 1963 2120 2098 Errors and omissions 0 0 0 -39 1 0 IRRIGATED AREA AS PERCENT OF TOTAL AREA UNDER PARTICULAR CROP Aus 3.8 3.6 4.0 4.6 4.5 5.8 Aman 2.3 3.1 3.2 2.6 2.6 3.2 Boro 86.1 80.0 79.5 85.5 91.7 82.1 Wheat 32.9 35.5 37.3 40.8 53.9 49.4 Other cereals 5.9 7.2 27.3 58.7 6.1 n.&. Pulses 1.4 0.8 0.6 0.6 1.1 1.7 Oilseeds 1.5 1.4 1.6 2.4 4.0 4.2 Potato 70.0 72.5 66.4 67.0 63.1 63.0 Vegetables 36.9 36.1 52.0 45.0 49.9 53.0 Sugarcane 6.3 6.1 3.9 4.8 4.7 6.9 Cotton 22.7 14.0 16.8 37.5 22.5 17.7 ---------c--------------------------------------------------------------------------------- Source: Bangladesh Bureau of Statistics. -245- Table 7.6 PUBLIC SECTOR IRRIGATION PROGRAMS, 1980/81-1985/86 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 ------- ------- ------- ------- --.-------- AREA IRRIGATED UNDER BWDB SCHEMES ['000 HECTARES] Gravity Schemes 125.4 133.1 156.2 172.4 145.4 148.8 Deep Tube Wells [DTWs] 4.8 3.5 10.9 10.5 6.1 4.5 Low Lift Pumps [LLPs] 4.0 4.9 6.8 8.2 5.8 2.3 Total 134.2 141.5 174.0 191.1 157.3 155.6 BADC IRRIGATION PROGRAMS LOW LIFT PUMPS [LLPs] Number fielded 36049 41354 43039 43615 50661 51242 Avg. Cusecs per pump 1.80 1.71 1.82 1.65 1.65 1.65 Avg. area irrigated per cusec [ha] 8.7 8.2 7.1 9.6 9.1 9.7 Total area irrigated ['000 ha] 565.7 576.9 552.8 417.4 459.6 497.8 SHALLOW TUBE WELLS [STWs] Wells sunk 10900 20566 17338 6929 7678 964 Wells .ommissioned 10691 20517 19092 6919 7500 964 Wells li operation 20931 42843 64508 67803 73066 69763 Total area irrigated ['000 ha] 101.4 206.7 305.4 303.5 300.4 275.4 Avg. area irrigated per well [ha] 4.8 4.8 4.7 4.5 4.1 3.9 DEEP TUBE WELLS [DTWs] Wells sunk 1239 2085 2581 2406 1527 1295 Wells commissioned 6b3 1310 2522 2168 1987 1410 Wells in operation 10131 11486 13794 15519 16901 17883 Total area irrigated ['000 ha] 265.2 311.5 413.7 415.5 441.2 466.7 Avg. area irrigated per well [ha] 26.2 27.1 30.0 26.8 26.1 26.1 BANGLADESH KRISHI BANK STWs fielded 5714 4510 6116 11762 8633 4062 INTEGRATED RURAL DEVELOPMENT PROGRAMME HAND TUBE WELL [MOSTI] Cooperatives [TCCA] involved 30 21 131 261 78 159 MOSTI distributed 4187 2145 50000 69550 43480 30315 ------------------------------------------------------------------------------------------------------------ Note: Compa-ison with BBS data suggest that data for tube well and LLP acreage irrigated may be overreported by implementing agencies. Source: Bangladesh Bureau of Statistics, Bangladesh Water Development Board, Bangladesh Agricultural Development Corporation, Bangladesh Krishi Bank, and Integrated Rural Development Programme. -246- Table 7.7 COMMERCIAL FERTILIZER DISTRIBUTION, 1980181-1985/86 ('000 metric tons) 1980181 1981/82 1982/83 1983/84 1984/85 1985/86 ------- ------- ------- ------- ------- ------- Urea 569.5 518.8 629.1 708.1 831.8 794.9 Triple super-phosphate [TSP] 218.4 208.5 206.0 260.7 345.7 297.4 Di-ammmonium phosphate [DAP] 41.3 48.5 73.2 93.8 0.4 0.1 Muriate of potash [HP] 45.8 44.8 50.4 63.2 69.3 59.9 Hyper-phosphate [HP] 2.8 0.4 0.1 1.0 0.3 0.2 Super phosphate [SP] 0.0 0.0 0.0 0.0 0.0 0.0 Ammonium sulfate [AS] 0.0 0.0 0.0 0.0 0.0 0.0 Potassium sulfate [PS] 0.0 0.0 0.0 0.0 0.0 0.0 NitroPhosKa ENPKR 10.5 7.5 8.8 0.2 10.2 0.0 Triple phosphate [TP] 0.1 0.0 0.0 0.0 0.0 0.0 Zinc sulfate and oxy-sulfate 0.2 0.8 0.5 6.7 1.2 0.7 Gyp.sum 0.0 0.0 0.4 1.3 1.4 3.3 Total 888.7 829.3 968.4 1129.0 1260.2 1156.4 Source: Bangladesh Agricultural Development Corporation. -247- Table 7.8 AVERAGE CROP YIELDS, 1970/75-1985186 (metric tons per hectare) -e--FIVE-YEAR AVERAGES--- -------------------ANNUAL DATA----------------------- 70/75 75/80 80/85 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 ------- ------- ------- ------- ------- ------- ------- ------- ------- Foodgrains - Rice 1.10 1.22 0.78 1.32 1.29 1.32 1.34 1.35 1.45 (Aus) 0.84 0.95 0.99 1.04 1.02 0.95 1.00 0.93 0.99 (Aman) 1.06 1.23 1.27 1.29 1.17 1.24 1.29 1.36 1.42 (Boro) 2.06 1.96 2.35 2.22 2.36 2.42 2.34 2.43 2.4 - Wheat 0.86 1.71 2.00 1.80 1.77 2.07 2.26 2.25 1.93 - Barley 0.65 0.64 0.66 0.62 0.68 0.69 0.66 0.64 0.67 Pulses - Gram 0.74 0.72 0.72 0.63 0.68 0.74 0.78 0.75 0.77 - Khesari 0.77 0.70 0.73 0.68 0.69 0.75 0.75 0.78 0.76 - Mashkalai 0.79 0.72 0.69 0.69 0.68 0.70 0.69 0.69 0.67 - Masur 0.70 0.62 0.63 0.58 0.63 0.60 0.65 0.68 0.71 - Matar 0.72 0.65 0.63 0.61 0.63 0.60 0.62 0.66 0.66 - Mung 0.65 0.58 0.55 0.50 0.53 0.56 0.58 0.59 0.58 Oilseeds - Rape and mustard 0.55 0.60 0.65 0.60 0.62 0.64 0.69 0.70 0.71 - Til 0.58 0.54 0.53 0.51 0.54 0.55 0.55 0.49 0.58 - Groundnut 1.31 1.17 1.06 1.00 1.03 1.06 1.06 1.16 1.19 - Linseed 0.49 0.49 0.53 0.48 0.51 0.54 0.54 0.56 0.55 - Coconut 2.25 2.42 2.59 2.57 2.53 2.56 2.63 2.64 2.66 Fibres - Jute 1.23 1.38 1.48 1.38 1.44 1.54 1.64 1.38 1.53 - Cotton 0.87 0.75 0.53 0.46 0.85 0.48 0.45 0.40 0.32 Drugs & narcotias - Tea 0.56 0.80 0.71 0.88 0.85 0.90 0.93 0.83 0.97 - Tobacco 0.80 0.88 0.92 0.90 0.91 0.95 0.90 0.93 0.87 - Betelnuts 0.57 0.66 0.66 0.68 0.67 0.65 0.68 0.64 0.68 - Betel leaves 4.87 4.80 4.90 4.87 4.70 5.37 4.69 4.84 4.93 Spices - Rabi chillies 0.67 0.60 0.46 0.53 0.57 0.61 0.60 0.61 0.64 - Onion 4-90 4.31 2.99 3.09 3.84 4.12 3.98 4.04 4.04 - Garlic 3.44 3.19 3.12 2.95 3.16 3.20 3.20 3.07 3.07 - Turmeric 1.64 1.69 1.77 1.72 1.71 1.73 1.78 1.91 2.03 Tubers - Potato 9.37 9.28 10.07 9.57 10.01 10.21 10.35 10.19 10.17 - Sweet Poto-to 10.71 10.66 10.49 10.14 10.21 10.56 10.68 10.86 10.95 Sugar plants - Sugarcane /a 42.65 43.61 42.67 43.39 43.35 43.42 42.09 41.11 41.43 - Date palm (juice) 43.61 34.70 31.97 34.35 34.40 30.72 31.33 29.08 29.72 Fruits - Banana 15.21 15.26 16.01 15.8b 15.79 15.97 15.75 16.67 17.03 - Mango 8.12 5.51 3.94 4.55 3.96 4.19 3.46 3.52 3.45 - Pineapple 9.16 9.49 10.11 10.39 10.41 10.36 9.71 9.68 9.82 - Jackfruit 10.81 10.27 9.70 9.88 9.74 9.60 9.59 9.70 9.86 Vegetables - Brinjal 7.24 6.54 6.41 6.46 6.52 6.42 6.39 6.27 6.31 /a Mill farm yields; average for others is probably 60-65% of these figures. Source: Bangladesh Bureau of Statistics. -248- Table 7.9 PRODUCTION OF MAIN CROPS, 1970/75-1985/8B (thousand metric tons except as noted) ---FIVE-YEART AVERAGES--- --------------------ANNUAL DATA---------------------- 70/75 75/80 80/85 1980/81 1981/82 1982/83 1983/84 1984/85 .985/86 ------- -*--- ------- ------- ------- ----.--- ------- ------- ------- Foodgrains 11055 13101 15375 15026 14648 15321 15759 16120 16084 - Rice 10872 12615 14172 13882 13630 14216 14508 14622 15037 (Aus) 2670 3138 3126 3289 3270 3066 3222 2783 2827 (Aman) 6075 7337 7728 7963 7209 7603 7936 7930 8539 (Boro) 2128 2140 3317 2631 3152 3546 3350 3909 3671 - Wheat 109 429 1166 1092 967 1095 1211 1464 1042 - Barley 19 14 8 11 10 9 6 5 5 Pulses 250 229 86 216 212 204 192 191 176 -Gram 48 41 39 38 37 42 42 39 36 - Khesari 68 68 65 64 66 72 59 62 56 - Mashkalai 42 38 29 34 29 i9 26 24 21 -Masur 49 49 48 50 49 45 49 50 48 -Matar 15 10 8 9 7 7 7 7 6 -Mung 10 10 9 7 8 9 9 9 9 Oil seeds 243 252 155 251 256 258 267 273 268 - Rape and mustard 115 123 129 122 123 124 133 144 135 - Til 27 28 21 19 23 23 22 17 21 - Groundnut 34 27 23 24 23 23 22 21 22 -Linseed 7 7 8 7 8 8 8 7 7 - Coconut 58 66 81 77 77 80 84 84 83 Fibres - Jute ('000 bales) 5371 5302 4959 4943 4646 4881 5216 5111 8660 - Cotton ('000 bales) 7 5 39 10 54 58 46 29 29 Drugs & narcotics - Tea 25 35 40 40 39 41 42 38 43 - Tobacco 39 48 50 48 51 51 49 50 46 - Betelnuts 22 25 24 25 24 24 24 23 23 - Betel leaves 54 55 64 60 61 72 62 63 61 Spices 336 303 107 241 293 251 251 256 246 - Rabi chillies 50 46 33 37 43 43 43 43 40 - Onion 158 142 102 96 132 140 138 143 137 - Garlic 46 40 41 38 42 43 44 41 38 - Turmeric 22 23 26 25 25 25 26 29 31 Tubers 1522 1648 1456 1703 1776 1893 1909 1872 1715 - Potato 797 866 1123 999 1084 1167 1185 1178 1103 - Sweet Potato 725 782 708 704 692 725 724 694 612 Sugar plants - Sugarcane /a 6417 6575 7097 6599 7136 7477 7285 6990 6640 - Date palm (juictt) 472 376 353 378 379 343 350 317 312 Fruits 1426 1376 567 1405 1431 1280 1201 1226 1207 - Ban na 588 594 687 652 684 710 686 701 691 - Mango 343 243 183 203 184 199 162 166 159 - Pineapple 104 141 148 153 155 159 139 134 128 - Jackfruit 196 200 213 204 207 212 214 225 229 Vegetables 755 760 328 803 835 - Brinjal 205 179 182 178 185 187 185 174 166 /a Based on total area and mill farm yield estimates; probably substantially overestimated. Sourca: Bangladesh Bureau of Statistics. -249- Table 7. 10 PUBLIC FOODGRAIN DISTRIBUTION SYSTEM OPERATIONS ('000 metric tons) ---FIVE-YEAR AVERAGES-- --------------------ANNUAL DATA---------------------- 70/75 75/80 80/85 1980/81 1981/82 1982/83 1983/84 1984185 1985/86 ----- ----- ----- ------- ------- ------- ----------- ------- Opening Stocks 256 550 809 791 1240 616 611 800 1017 Domestic Procurement 100 396 425 1033 102 192 270 344 349 Imports 1981 1564 1757 1076 256 1843 2028 2590 1202 Total Availability 2336 2510 2991 2900 2807 2651 2909 3784 2569 Statutory rationing 386 419 303 349 312 308 293 282 160 Priority categories /a 312 710 651 611 665 648 641 712 467 Modified rationing 919 367 379 182 491 368 399 465 103 Relief 215 55 133 55 75 156 120 452 205 Food-for-Work & Canal DiggIng 0 239 427 349 370 338 441 458 468 Marketing Operations /b 1 19 47 0 110 0 51 8 8 Open Market Sales /c 0 31 81 0 46 118 107 201 129 Total Di3tribution 1832 1839 2021 1546 2069 1936 2052 2578 840 Losses 122 117 107 105 102 104 57 139 95 Exports & repayments in kind 0 0 5 0 20 0 0 0 0 Closing Stocks 472 556 8.,5 1249 616 611 800 1017 976 --------------------------------------------- -------|---------------------------------------------------------- /a Includes; essential priorities; other priorities; large employers; and direct sales to flour mills. /b Marketing operations involve direct sale of grains to dealers at subsidized prices. /c OMS in paddy and rice were initiated during 1981/82; wheat OMS began in 1978/79. Sources: Ministry of Food; Bangladesh Bureau of Statistics; and World Food Programme, Dhaka. -250- Table 7.11 SEASONALITY OF PUBLIC FOODGRAIN DISTRIBUTION SYSTEM OFFTAKE ('000 metric tons) ---MULTI-YEAR AVERAGES--- -------------------------ANNUAL DATA-------------------------- Month 72175 75/80 80/85 1980/81 1981182 1982/83 1983/84 1984185 1985186 1986/87 ----- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- July 188 153 124 107 90 l1 87 218 84 92 August 213 157 136 107 89 131 99 254 93 109 September 221 177 190 134 163 196 17' 286 125 151l October 210 200 235 145 249 281 214 286 164 235 November 168 154 185 125 190 171 175 262 132 196 December t134 118 148 90 163 123 129 236 115 121 January 140 145 171 110 156 178 162 251 148 197 February 137 160 197 142 214 191 218 222 155 220 March 152 163 198 161 214 187 232 196 159 246 April 160 156 182 160 232 '40 227 152 161 243 May 171 140 156 144 182 128 202 122 139 150 (p, June 171 141 110 121 126 93 135 77 65 115 (p) Total 2066 1866 2034 1554 2068 1935 2051 2562 1540 2075 (p) (Monthly kAeiLage) 172 156 170 130 172 161 171 214 128 172 (p) --------------------------------------------------------------------------------------------------------------- p = projection. Sourcn: Ministry of Food and World Food Programme, Dhaka. -25 1- Table 7.12 LAND USE AND POPULATION DENSITY, 1984/85 ('000 hectares) Pers/ha Pers/ha Division/ Total Not Cultivable Population on total on cultivable Dlstrict area Cultivable Forests Cultivable Waste ('000) area area --------- ------- ---------- ------- ---------- ---------- ---------- -------- -------------- RAJSHAHI 3456 741 14 2701 54 24339 7.0 9.0 Dinajpur 676 126 10 540 13 3738 5.5 6.9 Rangpur 959 217 2 740 24 7401 7.7 10.0 Bogra 389 90 0 299 0 3139 8.1 10.5 Rajshahi 946 211 2 733 17 6121 6.5 8.4 Pabna 486 97 0 389 0 3940 8.1 10.1 XHULNA 3411 729 609 2073 45 19715 5.8 9.5 Kushtia 348 61 0 287 0 2611 7.5 9.1 Jes3ore 658 142 0 516 6 4614 7.0 8.9 Khulna 1205 187 575 443 2 5041 4.2 11.4 Barisal 723 203 17 503 22 5315 7.4 10.6 Patuakhali 477 136 17 324 15 2134 4.5 6.6 DHAXA 3092 641 93 2358 36 30542 9.9 13.0 Jamalpur 340 53 7 280 7 2783 8.2 9.9 Mymensingh 971 193 16 762 16 7449 7.7 9.8 Tangail 337 35 43 259 6 2767 8.2 10.7 Dhaka 746 173 27 546 6 12151 16.3 22.3 Faridpur 6S8 187 0 511 1 5393 7.7 10.6 CHITTAGONG 4514 803 1426 2285 155 25996 5.8 11.4 Sylhet 1272 345 67 860 92 6430 5.1 7.5 Conllla 672 118 1 553 2 7811 11.6 14.1 Noakhall 546 90 58 398 22 4322 7.9 10.9 Chittagong 701 137 215 349 14 6474 9.2 18.6 Chittagong HT 1323 113 1085 125 25 959 0.7 7.7 Total 14473 2914 2142 9417 290 100592 7.0 10.7 ------Land Utilization----- Net Cultiva- Current Cropped Sintle Double Triple Gross ---Cropping Intenslty-- Division/ ble Area Fallows Area Cropped Cropped Cropped Cropped District [C] [N] Area [G] (N]:[C] [G]:[N] [G]:[C --------- -------- ------- ------- ------- ------- ---------------- ------- ------- ------- RAJSHAHI 2701 84 2564 1314 1042 208 4022 0.95 1.57 1.4 Dinajpur 540 17 511 340 143 28 710 0.95 1.39 1.3 Rangpur 740 23 693 167 437 89 1308 0.94 1.89 1.7 Bogra 299 6 293 113 143 37 510 0.98 1.74 1.7 Rajshahi 733 21 695 500 174 21 911 0.95 1.31 1.2 Pabna 389 17 372 194 145 33 583 0.96 1.57 1.5 KHULNA 2073 73 1955 1336 534 85 2659 0.94 1.36 1.2 Kushtia 287 31 256 146 99 11 377 0.89 1.47 1.3 Jessore 516 20 489 350 127 12 640 0.95 1.31 1.2 Rhulna 443 8 433 330 89 14 550 0.98 1.27 1.2 Barisal 503 5 476 307 132 37 682 0.95 1.43 1.3 Pa.tuakhall 324 9 301 203 87 11 410 0.93 1.36 1.2 DHAKA 2358 100 2224 1019 1020 185 3614 0.94 1.63 1.5 Jamalpur 280 4 269 91 154 24 471 0.96 1.75 1.6 Mymensingh 762 33 713 228 427 58 1256 0.94 1.76 1.6 Tangail 259 6 247 103 112 32 423 0.95 1.71 1.6 Dhaka 546 31 511 332 155 24 714 0.94 1.40 1.3 Faridpur 511 26 484 265 172 47 750 0.95 1.55 1.4 CHITTAGONG 2285 230 1896 1058 722 116 2850 0.83 1.50 1.2 Sylhet 860 105 663 443 204 16 899 0.77 1.36 1.0 Comilla 553 37 514 215 269 30 843 0.93 1.64 1.5 Noakhali 398 21 355 198 119 38 550 0.89 1.55 1.3 Chittagong 349 43 291 142 117 32 472 0.83 1.62 1.3 Chittagong HT 1,25 24 76 60 13 3 95 0.61 1.25 0.7 Total 9417 487 8639 4727 3318 594 13145 0.92 1.52 1.4 ------------------------------------------------------------------------------------------------------------------------------ Note: "Not cultivable" Includes rivers, tidal creeks, lakes, ponds, roads, buildings, homesteads, etc. Sources: Bangladesh Bureau of Statlstics and staff estimates. -252- Table 7.13 AGRICULTURAL INPUT AND IRRIGATED AREA BY DISTRICT COMMERCIAL FERTILIZER DISTRIBUTION ('000 metric tons) -- -FIVE-YEAR AVERAGES--- --------------------ANNUAL DATA-------------------- 70/75 75/80 80/85 1980181 1981/82 1982/83 1983/84 1984/85 1985/86 ------- ------- ------- ------- ------- ------- ------- ------- ------- Rajshahi 66.8 174.1 328.3 268.7 252.1 304.3 390.8 404.1 390.0 Dinajpur 12.6 32.3 58.1 45.9 40.8 52.1 68.7 79.2 57.4 Rangpur 14.5 35.1 69.0 57.0 50.6 f.4 85.5 84.1 83.3 Bogra 16.0 42.0 79.4 70.8 71.1 74.2 91.4 84.3 93.1 Rajshaht 14.3 38.6 73.7 59.6 56.2 65.9 87.2 94.9 80.4 Pabna 9.4 26.1 48.0 35.3 33.4 48.7 58.0 61.6 75.8 Rhulna 47.1 95.9 146.2 132.3 116.6 127.2 156.3 188.9 166.6 Kushtia 8.5 28.2 46.4 43.3 37.1 36.3 51.7 60.5 55.4 Jessore 8.8 29.2 49.4 41.3 39.6 41.2 55.2 66.6 52.9 Khulv.a 6.6 9.9 19,7 16.9 15.0 17.5 19.8 27.8 28.1 Barisal 17.8 21.9 24.7 24.6 20.0 25.2 24.6 27.7 25.3 Patuakhali 5.4 6.8 6.0 6.3 4.9 7.0 5.1 6.2 4.9 Dhaka 85.8 178.4 288.0 241.2 236.5 274.5 313.5 355.3 352.8 Jamalpur /a 34.3 24.8 29.9 38.3 42.1 43.0 Mymensingh /a 38.1 81.0 96.9 108.8 70.7 87.2 93.7 118.3 100.4 Tangail 7.5 22.3 44.3 35.8 37.7 46.2 48.5 50.5 41.2 Dhaka 34.1 63.0 97.8 82.0 87.6 91.3 108.1 113.9 139.0 Faridpur 5.9 12.1 21.4 14.7 15.7 20.0 24.9 30.5 29.2 Chittagong 123.7 215.9 266.2 247.0 224.1 262.4 268.5 311.9 247.0 Sylhet 15.3 21.0 33.8 26.9 25.8 29.7 37.9 46.6 35.3 Comilla 41.7 96.1 123.0 121.7 111.2 125.0 121.5 127.7 105.4 Noakhall 17.1 31.1 31.7 33.2 29.0 28.5 26.7 39.4 34.7 Chittagong 47.3 64.8 70.8 *60.7 53.1 75.5 74.7 85.2 58.0 Chittagong HT 2.3 2.9 6.9 4.5 5.0 3.8 7.7 13.1 13.6 Total 323.4 664.3 1028.7 889.2 829.3 968.4 112i'.1 1260.2 1156.4 IRRIGATED AREA, 1984/85 ('000 hectares) ------Irrlgated are------ CultLv- Pumps As X of able and Other Cultivable Area Tubevells Methods Total Area RAjSHAhI 2701 494 118 612 22.7 Dinajpur 540 70 8 78 14.4 Rangpur 740 126 66 192 26.0 Bogra 299 108 13 121 40.5 Rajahahl 733 117 25 142 19.4 Pabna 389 73 6 79 20.3 KHULNA 2073 193 124 317 15.3 Kushtia 287 63 48 111 38.7 Jessore 516 76 18 94 18.2 Khulna 443 25 21 46 10.4 BarLsal 503 21 36 57 11.3 Patuakhsll 324 8 1 9 2.8 DHAKA 2358 531 91 622 26.4 Jamalpur 280 84 6 90 32.1 MymensLngh 762 261 55 256 33.6 Tangall 259 84 4 88 34.0 Dhaka 546 126 19 145 26.6 Farldpur 511 36 7 43 8.4 CHITTAGONG 2285 342 179 521 22.8 Sylhet 860 81 101 182 21.2 Comilla 553 128 31 159 28.8 Noakhall 398 27 15 42 10.6 Chlttagong 349 101 25 126 36.1 Chlttagong HT 125 5 7 12 9.6 Total 9417 1560 512 2072 22.0 /a Jamalpur included in Mymensingh through 1980/81. Source: Bangladesh Agrlcultural Development Corporation, Bangladesh Bureau of Statistlcs. -253- Table 7.14 FOODGRAIN PRODUCTION BY DISTRICT, 1970/75-1985186 ('000 metric tons) ---FIVE-YEAR AVERAGES--- --------------------ANNUAL DATA---------------------- 70175 75/80 80/85 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 Divtsion/District ------- ------- ------- ------- ------- ------- ------- ------- ------- Rajshahi 3083 3559 4490 4277 4248 4355 4755 4817 4970 Dltiajpur 564 671 834 866 772 769 881 883 857 Rangpur 1073 1170 1466 1437 1399 1484 1467 1540 1609 Bogra 440 512 708 661 637 661 763 816 862 Rajshahi 704 783 937 857 892 878 1042 1018 1058 Pabna 302 423 545 456 548 562 602 560 584 Khulna 1920 2554 2778 2820 2561 2664 2829 3016 3073 Kushtia 191 273 345 342 309 307 357 413 405 Jessore 478 615 640 620 620 607 638 715 708 Khulna 380 575 640 646 573 610 634 739 725 Barisal 587 705 723 783 661 720 733 719 759 Patuakhali 284 386 428 428 394 421 467 430 476 Dhaka 2878 3401 4108 3807 4016 4323 4121 4270 4122 Jamalpur Ia 477 480 477 539 519 576 556 Mymensingh /b 1563 1687 1629 1571 1598 1646 1582 1746 1646 Tangail 277 418 545 491 541 620 563 512 533 Dhaka 627 745 862 838 864 912 865 832 773 Faridpur 413 464 554 428 537 607 592 606 614 Chittagong 3120 3529 3961 4071 3771 3969 4014 3982 3914 Sylhet 1071 1002 1193 1295 1177 1169 1191 1133 1133 Comilla 795 961 1145 1103 1113 1186 1173 1152 1135 Noakhali 523 720 694 720 600 687 702 759 706 Chittagong 640 743 823 838 778 826 842 831 826 Chittagong Hill Tracts 90 103 106 114 103 101 107 107 114 Total 10982 13043 15338 14975 14598 15311 15719 16086 16079 ---------------------------------------------------------------------------------------------------------- la Jamalpur was a subdivision of Mymensingh until December 26, 1978. lb Including Jamalpur from 1969/70 through 1978/79. Source: Bangladesh Bureau of Statistics. -254- Table 7.15 FOODGRAIN SURPLUS AND DEFICIT DISTRICTS, 1970/75-1984/85 [PRODUCTION IN OUNCES PER DAY PER CAPITA] ---FIVE-YEAR AVERAGES--- ---------------ANNUAL DATA--------Preliminary Division/District 70/75 75/80 80/85 1980/81 1981/82 1982/83 1983/84 1984/85 ----------------- ------- ------- ------- ------- ------- ------- ------- ------- RajshahL 16.5 16.7 18.7 18.8 18.2 18.2 19.3 19.1 Dinajpur 20.3 21.0 22.8 25.1 21.7 21.0 23.4 22.8 Rangpur 18.2 17.7 20.0 20.5 19.5 20.3 19.5 20.1 Bogra 18.2 18.7 22.9 22.5 21.2 21.4 24.0 25.1 Rajshahi 15.3 14.9 15.6 15.1 15.3 14.6 16.9 16.1 Pabna 9.9 12.3 14.0 12.4 14.5 14.5 15.1 13.7 Khulna 12.5 14.7 14.3 15.2 13.5 13.7 14.2 14.8 Kushtia 9.3 11.9 13.4 14.0 -12.3 11.9 13.5 15.3 Jessore 13.2 15.2 14.0 14.3 14.0 13.3 13.7 15.0 Khulna 9.8 13.1 12.9 13.8 11.9 12.3 12.4 14.2 Barisal 13.8 14.8 13.7 15.5 12.8 13.7 13.6 13.1 Patuakhali 17.6 20.9 20.4 21.5 19.3 20.1 21.7 19.5 Dhaka 12.5 12.9 13.7 13.4 13.8 14.4 13.4 13.5 Jamalpur 18.8 18.2 17.7 19.5 18.4 20.0 Mymensingh 19.0 19.6 22.1 22.2 22.1 22.3 20.9 22.6 Tangail 12.2 16.7 19.8 18.6 20.1 22.6 20.0 17.9 Dhaka 7.7 7.6 7.4 7.7 7.7 7.8 7.1 6.6 Faridpur 9.3 9.5 10.3 8.3 10.2 11.3 10.8 10.9 Chittagong 15.5 15.5 15.5 16.7 15.1 15.5 15.3 14.8 Sylhet 20.8 17.4 18.7 21.2 18.9 18.4 18.2 17.0 Comilla 12.6 13.7 14.8 14.9 14.7 15.3 14.8 14.3 Noakhali 14.9 18.5 16.2 17.5 14.3 16.0 16.0 17.0 Chittagong 13.8 13.7 13.1 14.2 12.8 13.1 12.9 12.4 Chittagong Hill 16.9 14.8 11.9 14.1 12.1 11.3 11.3 10.8 Total 14.2 14.9 15.5 15.9 15.1 15.5 15.5 15.5 [THOUSAND METRIC TONS, RELATIVE TO 16 OZ/CAP-DAY STANDARD] ---FIVE-YEAR AVERAGES--- ----------------ANNUAL DATA--------Preliminary Division/District 70/75 75/80 80/85 1980/81 1981/82 1982/83 1983/84 1984/85 ----------------- ------- ------- ------- ------- ------- ------- ------- ------- Rajshahi 82.6 159.0 654.8 634.7 512.8 523.8 815.2 787.5 Dinajpur 120.4 159.7 248.7 313.4 203.9 184.5 277.8 264.1 Rangpur 127.3 114,2 292.3 315.8 252.9 312.5 265.5 315.0 Bogra 53.8 74.0 213.2 192.0 155.5 167.5 255.0 296.2 Rajshahi -33.8 -60.8 -23.6 -52.4 -42.0 -81.9 53.5 4.7 Pabna -185.1 -128.4 -75.9 -134.1 -57.6 -58.7 -36.5 -92.5 Khulna -540.0 -219.6 -335.1 -142.4 -473.4 -445.4 -365.9 -248.4 Kushtia -135.7 -94.5 -66.9 -50.1 -93.3 -105.1 -66.5 -19.7 Jessore -98.6 -34.5 -88.8 -73.8 -90.8 -121.4 -109.7 -48.6 Khulna -235.3 -125.4 -152.8 -105.6 -198.7 -182.5 -181.3 -95.9 Barisal -95.5 -55.4 -119.8 -22.8 -162.6 -122.0 -130.8 -160.7 Patuakhali 25.1 90.1 92.4 110.0 67.9 85.5 122.3 76.4 Dhaka -806.8 -809.4 -686.3 -726.2 -642.2 -464.2 -812.6 -786.1 Jamalpur 0.0 4.3 76.4 57.3 44.9 97.4 67.1 115.4 Mymensingh 248.4 305.7 446.8 440.8 443.2 465.4 372.1 512.4 Tangail -84.6 18.6 105.1 68.7 109.7 180.1 112.9 54.1 Dhaka -676.9 -821.3 -1010.0 -897.3 -937.3 -956.3 -1079.6 -1179.7 Faridpur -293.7 -316.6 -304.3 -395.7 -302.8 -250.9 -285.0 -287.2 Chittagong -108.8 -116.7 -138.9 174.2 -224.4 -126.7 -195.4 -322.1 Sylhet 244.7 81.8 172.8 319.7 179.3 150.2 146.3 68.3 Comilla -215.9 -161.6 -95.6 -84.8 -101.1 -54.0 -97.2 -141.1 Noakhali -39.0 96.5 6.6 61.9 -71.9 0.3 -0.7 43.4 Chittagong -102.6 -124.8 -185.2 -107.5 -197.5 -180.8 -199.4 -240.7 Chittagong Hill 4.0 -8.6 -37.4 -15.0 -33.1 -42.4 -44.4 -52.0 Total -1392.7 -986.8 -505.0 -59.6 -826.1 -512.5 -558.7 -568.1 -------- ------------------------------------------------------------------------------------------- Source: Bangladesh Bureau of Statistics and Bank staff estimates. -255- Table 7.16 AUS AND AMAN PRODUCTION BY DISTRICT ('000 metric tons rice equivalent) ---FIVE-YEAR AVERAGES---- --------------------------ANNUAL DATA ------- ----------------- 70/75 75/80 80/85 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 AUS ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Rajshahi 768.8 904.7 870.9 868.2 939.6 822.7 895.9 827.9 803.2 748.1 Diniajpur 143.3 184.8 182.1 190.7 163.8 163.4 196.0 196.5 169.9 145.7 Rangpur 301.1 327.9 297.5 295.9 330.3 320.9 279.5 261.1 290.3 245.3 Bogra 84.1 108.4 114.6 136.1 120.8 118.1 112.7 85.7 84.3 90.9 Rajshahi 152.6 167.8 159.8 115.8 184.8 119.6 200.0 178.9 154.8 168.8 Pabuia 87.9 115.8 116.8 129.8 140.0 100.8 107.7 105.8 103.9 97.4 Khulna 562.4 662.8 615.1 758.0 591.8 572.3 636.8 516.5 601.8 859.4 Kushtia 113.6 128.6 132.8 143.8 127.7 96.9 136.5 159.3 170.3 Jessore 219.9 258.4 184.4 227.9 208.7 175.7 168.0 141.7 156.7 240.4 Khulna 37.9 48.0 55.0 81.7 46.9 58.4 58.0 30.2 32.2 37.4 Barisal /a 157.3 182.6 176.5 229.5 148.4 173.0 192.1 139.3 172.0 195.6 Patuakhali lb 33.4 45.2 66.5 75.0 60.0 69.2 82.2 46.0 70.6 88.2 Dhaka 701.8 850.1 922.2 897.6 930.6 945.9 958.0 878.7 812.8 873.9 Jamalpur /c 128.4 137.1 120.2 140.1 130.0 114.5 119.8 107.5 Mymensingh Id 337.2 435.0 381.0 356.2 378.4 361.6 378.0 430.8 343.5 331.7 Tangail Ie 76.0 113.1 99.9 115.3 107.0 111.3 93.8 71.8 76.0 79.1 Dhaka 140.8 158.2 176.4 165.3 182.0 184.4 195.8 154.6 123.7 143.9 Faridpur 147.9 143.7 136.5 123.7 143.0 148.5 160.3 107.0 149.8 211.7 Chittagong 637.0 720.4 733.3 764.7 807.7 725.1 730.9 638.1 609.1 748.0 Sylhet 145.7 167.8 198.6 209.4 254.5 203.0 178.4 147.5 163.1 230.2 Comilla 179.1 213.1 225.6 220.7 232.9 237.2 239.8 197.4 160.5 202.3 Noakhali 147.0 176.1 155.8 180.4 145.5 142.1 164.2 146.5 149.8 204.5 Chittagong 125.5 127.4 121.9 120.2 138.4 116.6 118.1 116.3 103.6 80.5 Chittagong H. Tracts 21.0 30.4 11.5 21.6 17.2 Bandarban /f 4.5 8.9 10.5 13.3 Total 2670.0 3138.0 3125.6 3288.6 3269.6 3066.0 3221.5 2782.5 2826.9 3129.4 AMAN Rajshahi 2046.1 2221.1 2496.9 2491.8 2394.3 2437.7 2594.9 2566.1 2691.2 2536.7 Dinajpur 405.3 437.7 490.4 505.6 450.0 461.0 506.2 529.1 545.8 525.1 Rangpur 727.9 737.9 876.1 865.6 834.7 866.4 885.9 928.1 930.0 887.8 Bogra 319.0 329.6 387.1 395.4 356.8 362.0 395.6 425.7 445.6 410.1 Rajshahi 445.8 482.9 529.7 524.1 521.9 516.4 560.5 525.4 557.3 510.1 Pabr.a 148.2 233.0 213.7 201.2 230.9 231.9 246.7 157.7 212.5 203.6 Rhulna 1087.5 1611.0 1709.1 1696.3 1544.4 1629.5 1778.0 1897.1 2068.5 1917.5 Kushtia 56.7 76.6 80.7 76.6 69.7 68.2 81.6 107.1 120.6 114.1 Jessore 227.7 303.1 304.2 297.8 271.9 295.8 333.0 322.4 412.2 380.7 Khulna 305.2 489.6 528.5 516.8 472.8 501.1 528.8 622.7 607.9 497.0 Barisal /a 302.1 428.0 449.9 462.7 411.8 430.8 463.2 481.0 531.5 546.5 Patuakhali lb 195.8 313.7 345.8 342.3 318.1 333.5 371.3 363.9 396.3 379.2 Dhaka 1380.4 1686.8 1651.1 1754.6 1582.5 1692.2 1639.0 1587.0 1763.5 1760.4 Jamalpur ERR 249.0 247.2 271.4 231.8 249.9 240.5 242.5 263.5 263.1 Mymensingh /d ERR 646.7 678.5 742.4 629.2 687.6 634.8 698.5 756.7 709.5 Tangail /e 142.5 195.9 191.3 201.0 187.6 204.2 205.1 158.9 177.9 193.5 Dhaka 285.0 347.3 361.0 343.0 523.4 319.9 317.1 301.3 309.7 335.5 Faridpur 188.6 241.9 213.7 196.8 213.7 230.7 241.5 185.9 255.7 258.8 Chittagong 1560.6 1818.0 1871.4 2020.0 1687.2 1844.1 1925.0 1880.6 2016.2 2052.2 Sylhet 523.4 490.2 541.6 577.6 517.2 534.2 573.5 505.6 582.7 552.6 Comilla 416.1 484.0 489.9 513.6 449.0 502.8 501.7 482.5 531.4 524.3 Noakhali 269.0 398.5 380.3 422.8 320.1 350.6 385.1 423.1 418.6 418.9 Chittagong 319.5 398.6 410.5 446.5 358.0 410.2 415.1 422.8 429.3 509.5 Chittagong H. Tracts 30.6 46.7 46.8 59.4 42.9 46.3 38.6 46.6 54.2 46.9 Total 6074.6 7336.9 7728.4 7962.7 7208.4 7603.5 7936.9 7930.8 8539.4 8266.8 /a From 1967(68 to 1969/70, including Patuakhali. lb From 1967/68 to 1969/70, included in Barisal. /c From 1967/68 to 1978/79, included in Mymensingh. /d From 1967/68 to 1969/70, including Jamalpur and Tangail; from 1970/71 to 1975/76, including Jamalpur. /e From 1967/68 to 1969/70, included in Mymensingh. /f Bandarban was a subdivision of Chittagong Hill Tracts until 1982. Source: Bangladesh Bureau of Statistics. Table 7.17 PRODUCTION OF BORO AND WHEAT BY DISTRICT, 1970/75-1985/86 ('000 metric tons, rice equivalent) ---FIVE-YEAR AVERAGES--- --------------------ANNUAL DATA---------------------- 70/75 75/80 80/85 1980/81 1981/82 1982/83 1983/84 1984/85 1985186 BORO ------- ------- ------- ------- ------- ------- ------- ----------- Rajshahi 193.1 235.5 544.9 307.8 461.2 550.7 666.4 738.4 1022.4 Dinajpur 9.6 13.6 30.5 21.0 26.0 31.7 35.2 38.4 52.6 Rangpur 34.4 42.4 118.8 76.6 107.5 126.9 128.2 154.5 280.7 Bogra 30.7 43.5 145.8 71.1 110.1 129.6 193.0 225.1 270.5 Rajshahi 83.3 94.8 134.8 97.6 115.2 132.2 169.8 159.1 237.9 Pabna 35.0 41.2 115.2 41.5 102.4 130.3 140.3 161.3 180.7 Khulna 237.8 180.1 246.0 169.0 225.7 264.0 215.9 355.4 233.1 KushtLa 4.0 3.9 7.5 4.1 7.3 9.0 6.9 10.2 19.4 Jessore 23.6 24.5 79.7 26.4 63.3 79.5 78.1 151.2 81.0 Khulna 36.4 29.7 49.6 39.8 41.2 44.9 42.4 80.0 74.9 Barisal 120.4 95.2 93.6 88.1 97.9 112.5 75.1 94.5 49.0 Patuakhali 53.3 27.0 15.5 10.6 16.0 18.2 13.4 19.5 8.8 Dhaka 739.9 777.5 1313.3 1001.0 1321.3 1456.3 1262.6 1525.3 1279.9 Jamalpur 0.0 9.1 119.9 62.8 115.1 131.5 117.9 172.4 140.6 Mymensingh 269.4 65.5 552.3 450.9 569.4 565.2 528.7 647.4 503.0 Tangail 49.9 87.1 213.6 132.8 209.7 266.4 223.9 235.1 229.5 Dhaka 189.6 214.0 315.8 298.1 320.9 360.4 301.2 298.5 264.0 Faridpur 53.2 55.9 111.6 56.4 106.1 132.8 90.8 171.8 142.8 Chittagong 886.4 910.7 1213.2 1152.5 1143.9 1275.1 1204.6 1290.0 1135.4 Sylhet 415.5 341.0 441.7 500.2 396.0 418.2 430.0 464.0 378.2 Comilla 175.2 203.5 299.1 245.3 308.7 336.2 287.5 317.7 302.1 Noakhali 87.5 143.3 155.8 115.2 132.4 193.4 151.4 186.5 135.7 Chittagong 187.1 203.2 290.8 271.1 283.4 299.1 308.4 292.2 292.5 Chittagong H. Tracts 21.2 19.7 25.8 20.6 23.4 28.3 27.2 29.5 26.9 Total: 2057.2 2103.9 3317.4 2630.2 3152.0 3546.2 3349.5 3909.1 3670.8 WHEAT RajshahL 49.0 117.6 577.8 609.5 453.8 543.5 598.1 684.3 453.0 Dinajpur 2.9 19.2 131.0 148.6 130.9 113.0 143.1 119.2 88.6 Rangpur 5.8 21.2 173.2 198.9 127.4 169.9 173.6 196.2 108.4 Bpgra 3.3 19.4 60.3 59.5 48.3 52.2 61.7 79.8 61.1 Rajshahi 14.4 28.5 113.5 118.9 72.3 109.3 112.3 154.4 108.4 Pabna 22.6 30.3 100.0 83.6 75.0 99.1 107.4 134.7 86.5 Khulna 19.2 74.9 207.8 196.7 199.7 198.2 197.8 246.7 170.2 Kushtia 14.4 51.1 125.2 117.7 108.4 132.1 131.9 136.1 94 3 Jessore 4.5 19.3 71.8 67.8 75.2 56.3 59.3 100.5 58.6 Khulna 0.2 4.2 7.4 8.3 13.3 5.1 4.7 5.6 10.4 Barisal 0.1 0.3 3.3 2.8 2.9 4.5 1.8 4.4 6.7 Patuakhali 0.0 0.0 0.1 0.1 0.0 0.2 0.0 0.1 0.2 Dhaka 27.3 47.4 237.3 153.4 183.8 228.9 261.6 359.1 265.8 Jamalpur 1.0 2.9 22.7 8.5 10.5 17.3 30.6 46.5 31.9 Mymensingh 1.1 6.0 32.6 20.8 22.0 32.1 40.2 47.8 43.2 Tangail 2.4 11.6 40.5 41.5 36.7 38.2 39.8 46.6 49.5 Dhaka 5.1 9.3 49.1 31.8 38.2 47.2 50.5 78.0 75.5 Faridpur 17.7 17.7 92.4 50.7 76.4 94.1 100.5 140.3 65.7 Chittagong 11.3 47.2 143.1 133.0 130.0 124.8 154.0 173.8 152.9 Sylhet 0.2 1.7 10.9 7.9 8.3 13.8 8.8 15.8 9.3 Comilla 10.9 44.4 130.2 122.9 120.6 109.3 143.7 154.7 140.9 Noakhali 0.2 1.0 1.6 1.5 0.8 1.4 1.3 3.0 2.4 Chittagong 0.0 0.1 0.3 0.4 0.3 0.2 0.2 0.2 0.2 Chittagong H. Tracts 0.0 0.0 0.1 0.2 0.0 0.0 0.0 0.0 0.1 Bandarban /a 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total : 106.7 287.2 1166.1 1092.5 967.4 1095.4 1211.5 1463.9 1041.9 ------------------------------------------------------------------------------------------------------------ la From 1967/68 to 1982/83, included in Chittagong Hill Tracts, Source: Bangladesh Bureau of Statistics. -257- Table 7.18 JUTE PRODUCTION BY DISTRICT ---FIVE-YEAR AVERAGES--- -------------------------ANNUAL DATA-------------------------- 70/75 75/80 80/85 1980/81 1981/82 1982183 1983/84 1984/85 1985/86 1986/87 ('000 bales of 400 lb.) ------- ------- ------- ------- ------- ------- ------- ------- ------- Raj.shaji 1600.2 1705.6 1659.8 1704.0 1501.5 1614.5 1625.8 1773.4 3067.2 2384.8 Dinajpur 179.2 179.7 163.6 182.4 165.8 150.8 142.2 177.0 215.6 242.9 Rangpur 926.2 1008.4 1007.4 1012.3 937.0 975.4 1014.7 1097.7 1634.3 1447.5 Bogra 118.2 136.0 170.6 168.3 177.1 266.9 121.1 119.6 356.3 176.8 Rajahahi 173.9 162.0 151.3 165.1 99.5 142.0 161.4 188.7 481.4 343.2 Pabna 202.7 219.5 186.9 255.9 122.2 179.4 186.4 190.5 379.6 174.4 Khulna 798.4 838.4 909.9 854.6 783.0 927.5 922.5 1061.7 1571.0 1052.5 Kushtia 172.5 180.1 263.2 202.8 191.6 253.5 289.4 378.6 474.9 299.9 Jessore 454.6 517.9 528.9 511.1 504.3 560.6 567.0 501.4 888.1 584.3 Khulna 98.6 110.1 113.0 102.8 70.8 100.1 121.8 169.8 198.1 150.0 Barisal 69.9 28.3 17.1 36.7 14.5 11.6 12.5 10.4 8.2 16.3 Patuakhali 2.8 2.0 1.6 1.2 1.8 1.7 1.8 1.5 1.7 2.0 Dhaka 2455.7 2392.8 2047.8 1929.2 2025.9 2033.8 2281.5 1968.7 3427.4 2674.0 Jamalpur 0.0 192.2 242.3 226.2 256.9 253.3 263.7 211.5 292.6 222.4 Mymensingh 1013.8 779.8 660.1 566.6 708.0 672.9 738.1 614.9 1207.0 893.1 Tangail 327.4 367.1 228.1 272.9 188.5 206.8 277.7 194.7 340.5 289.7 Dhaka 546.5 525.9 431.1 438.1 447.1 419.4 419.7 431.3 811.2 583.5 Faridpur 568.0 527.9 486.2 425.4 425.4 481.4 582.4 516.3 776.1 685.3 Chittagong 516.2 364.8 327.7 374.7 335.2 305.6 315.8 307.1 594.4 642.2 Sylhet 55.5 18.2 17.2 18.8 28.9 16.7 11.5 10.1 46.7 23.8 Comilla 399.7 301.8 285.9 289.5 285.4 275.4 292.7 286.3 530.5 610.7 Noakhali 58.4 42.9 23.6 65.1 19.4 12.7 10.7 10.0 16.1 7.4 Chittagong 1.0 0.7 0.4 0.6 0.6 0.4 0.3 0.2 0.0 0.0 Chittagong H. Tracts 1.5 1.2 0.6 0.7 0.9 0.5 0.5 0.5 1.1 0.3 Total : 5370.6 5301.6 4959.2 4942.5 4645.7 4881.4 5215.7 5110.9 8660.0 6753.5 ('000 metric tons) Rajshaji 290.3 309.5 301.2 323.7 272.4 292.9 295.0 321.8 572.3 445.0 Dinajpur 32.5 32.6 29.7 33.1 30.1 27.4 25.8 32.1 40.2 45.3 Rangpur 168.1 183.0 182.8 183.7 170.0 177.0 184.1 199.2 305.0 270.1 Bogra 21.4 24.7 31.0 30.5 32.1 48.4 22.0 21.7 66.5 33.0 Rajshahi 31.5 29.4 27.5 30.0 18.0 25.8 29.3 34.2 89.8 64.0 Pabna 36.8 35.8 33.9 46.4 22.2 32.6 33.8 34.6 70.8 32.5 Khulna 144.9 152.1 165.1 155.1 142.1 168.3 167.4 192.6 293.1 196.4 Kushtia 31.3 32.7 47.7 36.8 34.8 46.0 52.5 68.7 88.6 56.0 Jessore 82.5 94.0 96.0 92.7 91.5 101.7 102.9 91.0 165.7 109.0 Khulna 17.9 20.0 20.5 18.6 12.8 18.2 22.1 30.8 37.0 28.0 Barisal 12.7 5.1 3.1 6.7 2.6 2.1 2.3 1.9 1.5 3.0 Patuakhali 0.5 0.4 0.3 0.2 0.3 0.3 0.3 0.3 0.3 0.4 Dhaka 445.6 434.1 371.6 350.0 367.6 369.0 414.0 357.2 639.6 499.0 Jamalpur 0.0 34.9 44.0 41.0 46.6 46.0 47.8 38.4 54.6 41.5 Mymensingh 183.9 141.5 119.8 102.8 128.5 122.1 133.9 111.6 225.2 166.7 Tangail 59.4 6f.6 41.4 49.5 34.2 37.5 50.4 35.3 63.5 54.1 Dhaka 99.2 95.4 78.2 79.5 81.1 76.1 76.1 78.3 151.4 108.9 Faridpur 103.1 95.8 88.2 77.2 77.2 87.3 105.7 93.7 144.8 127.9 Chittagong 93.7 66.2 59.5 68.0 60.8 55.4 57.3 55.7 110.9 119.8 Sylhet 10.1 3.3 3.1 3.4 5.2 3.0 2.1 1.8 8.7 4.4 Comilla 72.5 54.8 51.9 52.5 51.8 50.0 53.1 51.9 99.0 114.0 Noakhali 10.6 7.8 4.3 11.8 3.5 2.3 1.9 1.8 3.0 1.4 Chittagong 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 Chittagong H. Tracts 0.3 0.2 0.1 0.1 0.2 0.1 0.1 0.1 0.2 0.0 Total : 974.4 961.9 899.8 896.8 842.9 885.7 946.3 927.3 1615.9 1260.2 Source: Bangladesh Bureau of Statistics. -258- Table 7.19 PUBLIC FOODGRAIN PROCUREMENT BY DISTRICT, 1975/80-1985/86 ('000 metric tons, rice. equivalent) 5-YEAR AVERAGES --------------------ANNUAL DATA--------------------- Division/District 75/80 80/85 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 ----------------- ------- ------- -------- ------- -------- ------- ------- ------- Rajshahi 196.6 253.1 482.0 174.1 121.3 227.3 260.7 280.4 Dinajpur 74.2 102.7 190.5 87.1 54.8 99.5 81.8 96.7 Rangpur 36.8 53.1 82.3 24.6 26.3 67.0 65.3 61.1 Bogra 24.5 34.4 50.5 13.6 20.5 35.8 51.8 57.3 Rajshahi 53.0 46.0 122.8 41.8 14.4 14.2 36.8 44.9 Pabna 8.1 16.8 36.0 7.0 5.4 10.8 25.0 20.4 Khulna 65.7 34.9 108.0 7.6 12.0 13.9 32.9 25.5 Kushtia 5.3 4.2 10.3 1.1 0.3 1.4 8.0 6.4 Jessore 8.0 7.5 8.1 0.1 2.7 5.1 21.5 6.9 Khulna 11.3 6.5 25.9 2.0 1.0 1.0 2.6 1.7 Barisal 15.4 6.6 27.0 0.6 2.0 2.4 0.8 4.1 Patuakhali 25.7 10.1 36.7 3.9 6.0 3.9 0.1 6.4 Dhaka 62.8 68.6 201.1 64.3 31.4 16.4 29.6 20.4 Jamalpur /a 2.5 11.5 35.1 7.7 5.5 5.1 4.3 0.8 Mymensingh 50.4 32.9 99.6 2°.1 17.9 8.4 9.7 3.7 Tangail 2.2 8.3 22.9 5.6 2.2 1.4 9.4 7.7 Dhaka 6.0 13.7 38.2 21.6 5.3 1.3 1.8 2.2 Faridpur 1.7 3.2 5.4 5.4 0.5 0.2 4.4 6.0 Chittagong 71.4 68.0 225.6 52.4 27.3 9.1 25.8 15.2 Sylhet 30.0 28.3 92.3 27.2 12.2 3.1 6.5 2.2 Comilla 16.1 16.5 41.7 13.4 8.2 3.0 15.9 8.9 Noakhali 11.1 10.6 45.8 1.1 3.4 1.6 0.9 1.1 Chittagong 11.7 7.0 29.6 3.3 1.6 0.3 0.1 1.4 Chittagong Hill Tracts 2.6 5.8 16.1, 7.3 1.9 1.2 2.4 1.6 Total 396.5 424.6 1016.7 298.2 192.1 266.7 349.0 350.0 AS PERCENT OF ESTIMATED SURPLUS /b Dinajpur 39.8 37.9 56.6 39.3 27.8 34.8 31.0 -- Rangpur 25.5 16.7 22.7 8.5 7.8 23.8 20.7 -- Bogra 28.1 14.9 23.9 8.0 11.5 13.7 17.5 -- ratuakhali 23.0 8.9 29.8 5.0 6.5 3.1 0.1 -- Jamalpur /a NA 15.2 46.9 13.1 5.1 7.0 3.7 -- Mymensingh 13.4 6.8 20.4 6.1 3.7 2.2 1.9 -- Tangail NA 10.2 26.6 4.6 1.2 1.2 17.5 -- Sylhet NA 11.4 25.6 12.9 7.1 1.9 9.5 -- -- = not available. /a Jamalpur was a subdivision of Mymensingh until December 26, 1978. /b Surplus estimated relative to consumption standard of 16 oz. per day per capita. Districts shown are those with estimated surpluses exceeding 50,000 tons in most recent years. NA indicates a year in which estimated surplus fell below 50,000 tons. Note: 1.0 ton rice equivalent 1.0 ton wheat - 1.5 ton paddy. Source: Ministry of Food. -259- Table 7.20 PERCENTAGE DISTRIBUTION OF FOODGRAIN PRODUCTION AND PROCUREMENT BY DISTRICT, 1975/80-1985/86 (percent of country total) --------------------ANNUAL DATA---------------------- 75/80 80/85 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 PRODUCTION ------- ------- ------- ------- ------- ------- ------- Rajshahi 27.3 29.3 28.6 29.1 28.4 30.3 30.3 30.9 Dinajpur 5.1 5.5 5.8 5.3 5.0 5.6 5.6 5.3 Rangpur 9.0 9.5 9.6 9.6 9.7 9.3 9.3 10.0 Bogra 3.9 4.6 4.4 4.4 4.3 4.9 4.9 5.4 RajshahL 6.0 6.2 5.7 6.1 5.7 6.6 6.6 6.6 Pabna 3.2 3.6 3.0 3.8 3.7 3.8 3.8 3.6 Khulna 19.6 18.0 18.8 17.5 17.4 18.0 18.0 19.1 Kushtia 2.1 2.2 2.3 2.1 2.0 2.3 2.3 2.5 Jessore 4.7 4.1 4.1 4.2 4.0 4.1 4.1 4.4 Khulna 4.4 4.1 4.3 3.9 4.0 4.0 4.0 4.5 Barisal 5.4 4.8 5.2 4.2 4.7 4.7 4.7 4.7 Patuakhali 3.0 2.9 2.9 2.7 2.7 3.0 3.0 3.0 Dhaka 26.1 26.7 25.4 27.5 28.2 26.2 26.2 25.6 Jamalpur /a 3.2 3.3 3.2 3.3 3.5 3.3 3.3 3.5 Mymensingh 13.0 10.5 10.5 10.9 10.8 10.1 10.1 10.2 Tangail 3.2 3.6 3.3 3.7 4.0 3.6 3.6 3.3 Dhaka 5.7 5.7 5.6 5.9 6.0 5.5 5.5 4.8 Faridpur 3.6 3.6 2.9 3.7 4.0 3.8 3.8 3.8 Chittagong 27.0 26.0 27.2 25.8 25.9 25.5 25.5 24.4 Sylhet 7.7 7.9 8.7 8.1 7.6 7.6 7.6 7.1 Comilla 7.4 7.5 7.4 7.6 7.7 7.5 7.5 7.1 Noakhali 5.5 4.5 4.8 4.1 4.5 4.5 4.5 4.4 Chittagong 5.7 5.4 5.6 5.3 5.4 5.4 5.4 5.1 Chittagong Hill Tracts 0.8 0.7 0.8 0.7 0.7 0.7 0.7 0.7 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 PROCUREMENT Rajshahi 50.6 65.8 47.4 58.4 63.2 85.2 74.7 82.1 Dinajpur 19.1 27.4 18.7 29.2 28.5 37.3 23.4 28.3 Rangpur 9.3 14.8 8.1 8.3 13.7 25.1 18.7 17.9 Bogra 6.4 9.7 5.0 4.6 10.7 13.4 14.8 16.8 Raishahi 13.6 9.9 12.1 14.0 7.5 5.3 10.5 13.1 Pabna 2.2 4.0 3.5 2.4 2.8 4.0 7.2 6.0 Khulna 15.9 6.8 10.6 2.6 6.3 5.2 9.4 7.5 Kushtia 1.4 0.9 1.0 0.4 0.2 0.5 2.3 1.9 Jessore 2.0 2.1 0.8 0.0 1.4 1.9 6.2 2.0 Rhulna 2.8 1.0 2.5 0.7 0.5 0.4 0.7 0.5 Barisal 3.7 1.0 2.7 0.2 1.0 0.9 0.2 1.2 Patuakhali 6.0 1.9 3.6 1.3 3.1 1.5 0.0 1.9 Dhaka 15.7 14.5 19.8 21.5 16.3 6.1 8.5 6.0 Jamalpur /a 0.7 2.4 3.4 2.6 2.8 1.9 1.2 0.2 Mymensingh 12.4 7.0 9.8 9.7 9.3 3.1 2.8 1.1 Tangail 0.6 1.7 2.2 1.9 1.1 0.5 2.7 2.2 Dhaka 1.6 3.0 3.8 7.2 2.7 0.5 0.5 0.6 Farldpur 0.5 0.8 0.5 1.8 0.3 0.1 1.3 1.8 Chittagong 17.8 13.0 22.2 17.6 14.2 3.4 7.4 4.4 Sylhet 7.6 5.5 9.1 9.1 6.3 1.2 1.9 0.6 Comilla 4.1 3.7 4.1 4.5 4.3 1.1 4.6 2.6 Noakhali 2.6 1.5 4.5 0.4 1.8 0.6 0.3 0.3 Chittagong 2.8 1.0 2.9 1.1 0.9 0.1 0.0 0.4 Chittagong Hill Tracts 0.6 1.2 1.6 2.5 1.0 0.4 0.7 0.5 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 ------------------------------------------------------------------------------------------~------- /a Jamalpur was a subdivision of Mymensingh until December 26, 1978. Note: Data include rice and wheat only. Source: Bangladesh Bureau of Statistics, Ministry of Food, and World Food Programme, Dhaka. -260- Table 7.21 PUBLIC PROCUREMENT OF AUS AND AMAN RICE AND PADDY BY DISTRICT, 1975/80-1985186 (metric tons, rice equivalent) 5-YEAR AVERAGES --------------------ANNUAL DATA---------------------- 75/80 80/85 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 AUS ------- ------- ------- ------- ------- Rajshahi 5769 8365 19708 12137 912 8926 144 0 Dinajpur 3350 7023 16613 11147 886 6375 94 0 Rangpur 429 535 1304 312 1 1056 0 0 Bogra 931 136 41 90 8 541 0 0 Rajshahi 861 499 1741 581 17 105 50 0 Pabna 198 173 9 7 0 849 0 0 Khulna 2025 3497 16799 422 6 260 0 0 Kushtia 574 915 4316 257 0 0 0 0 Jessore 1225 548 2381 100 0 260 0 0 Khulna 110 604 2957 65 0 0 0 0 Barisal 56 998 4983 0 6 0 0 0 Patuakhali 60 432 2162 0 0 0 0 0 Dhaka 281 4179 16666 2496 68 1665 0 0 Jamalpur /a 27 524 2416 33 0 169 0 0 Mymensingh 238 2258 8987 816 f-6 1419 0 0 Tangail 9 37 116 4 0 66 0 0 Dhaka 1 1094 3852 1603 2 11 0 0 Faridpur 7 267 1295 40 0 0 0 0 Chittagong 5014 7913 33680 4348 3 105 1430 0 Sylhet 3875 3192 13504 1364 0 95 998 0 Comilla 22 480 1785 616 0 1 0 0 Noakhali 140 2938 14050 627 3 9 0 0 Chittagong 713 497 2146 341 0 0 0 0 Chittagong Hill Tracts 264 805 2195 1400 0 0 432 0 Total 13089 23955 86853 19403 989 10956 1574 0 AMAN Rajshahi 163001 114620 262658 107091 60308 71393 71651 122341 Dinajpur 65914 61747 122766 61160 36537 43668 44602 62419 Rangpur 32799 20354 44341 20869 15847 11275 9436 27105 Bogra 16773 7517 16391 3129 4422 8219 5424 17105 Rajshahi 43972 23369 72266 21499 3398 7512 12170 14277 Pabna 3543 1634 6894 434 104 719 19 1435 Khulna 57178 19865 77248 5945 8361 7374 397 10896 Kushtia 2089 229 1006 5 53 58 25 111 Jessore 3791 761 3639 15 65 40 46 532 Khulna 10906 4675 20684 1447 258 950 35 91 Barisal 14745 4580 17666 612 1966 2414 240 3811 Patuakhali 25648 9620 34253 3866 6019 3912 51 6351 Dhaka 41529 16478 66785 1414 11162 1646 1385 1822 Jamalpur /a 1336 3425 14194 863 1502 522 44 556 Mymensingh 28260 10565 41480 492 9022 773 1057 616 Tangail 952 651 3102 4 61 27 63 21 Dhaka 1829 1575 7309 21 249 170 124 0 Faridpur 1152 263 700 34 328 154 97 629 Chittagong 43965 23197 94606 2021 13549 3367 2440 3496 Sylhet 14993 7105 29535 346 5365 246 33 284 Comilla 7278 2251 8585 18 2092 359 200 42 Noakhali 10604 6929 29069 8 3405 1562 601 1074 Chittagong 9261 3708 17065 66 1222 130 57 656 Chittagong Hill Tracts 1829 3204 10352 1583 1465 1070 1549 1440 Total 305673 174160 501297 116471 93380 83780 75873 138555 ---------------------------------------------------------------------------------------------------- /a Jamalpur was a subdivision of Mymenshingh until December 26, 1978. Note: 1.0 ton rice equivalent - 1.0 ton wheat - 1.5 ton paddy. Source: Ministry of Food. -261- Table 7.22 PUBLIC PROCUREMENT OF BORO AND IRRI RICE AND PADDY AND WHEAT, 1975/80-1985/86 (metric tons, rice equivalent) 5-YEAR AVERAGES --------------------ANNUAL DATA---------------------- 75/80 80/85 1980/81 1981/82 1982/83 1983184 1984/85 1985/86 BORO AND IRRI ------- ------- ------- ------- ------- ------- ------- ------- Rajshahi 5782 47997 69766 47081 44704 37185 41249 70850 Dinajpur 411 12512 12875 12817 11070 13998 11800 19813 Rangpur 27C 5841 8800 899 5185 10084 4235 11372 Bogra 603 11733 8760 9882 13664 7603 18755 22785 Rajshahi 3982 12912 30147 17372 10729 2203 4110 13446 Pabna 508 4985 9184 6048 4047 3297 2349 3434 Khulna 789 2160 8428 809 636 7 921 20 Kushtia 83 429 1670 335 55 0 85 0 Jessore 98 23 88 0 0 0 26 6 Khulna 40 770 2090 474 575 7 705 0 Barisal 564 887 4322 0 6 0 105 20 Patuakhali 4 52 258 0 0 0 .. 0 Dhaka 16505 37244 91700 57681 17950 9744 9144 4850 Jamalpur /a 520 4775 10535 6197 5228 1831 82 45 Mymensingh 13722 18829 47533 26379 7832 6170 6233 2755 Tangail 570 4318 12255 5479 1110 725 2020 1426 Dhaka 1660 8965 19778 19578 3779 1018 672 449 Faridpur 33 357 1599 48 1 0 137 175 Chittagong 15845 29066 82883 43809 9829 3740 5069 3691 Sylhet 10997 17151 47566 25419 6486 2434 3848 1886 Comilla 2387 6810 18884 11161 2499 1066 440 930 Noakhali 299 588 2616 0 18 3 302 0 Chittagong 1680 2743 10258 2889 418 125 25 711 Chittagong Hill Tracts 482 1774 3556 4340 408 112 454 164 Total 38922 116654 252777 149317 74119 50676 56383 79411 WHEAT Rajshahl 22037 82113 129877 7871 15418 109756 147642 87182 Dinajpur 4508 21445 38201 2002 6269 35468 25287 14464 Rangpur 3248 26373 27870 2529 5252 44547 51668 22629 Bogra 6234 14604 25287 475 240 19440 27579 17363 Rajshahi 4161 9211 18639 2328 272 4387 20427 17176 Pabna 3887 10047 19880 537 1221 5914 22681 15550 Khulna 5710 9378 5560 465 3015 6270 31582 14463 y.ushtia 2540 2656 3287 465 232 1370 7928 6313 Jessore 2904 6179 2022 0 2598 4848 21427 6313 Khulna 257 445 183 0 181 52 1811 1578 Barisal 9 98 68 0 4 0 416 257 Patuakhali 0 0 0 0 0 0 .. 2 Dhaka 4494 10456 25984 2666 1203 3323 19105 13597 Jamalpur la 576 3199 7931 557 730 2582 4193 160 Mymensingh 180 1075 1590 1380 14 15 2374 299 Tangail 708 3101 7396 157 29 567 7357 6263 Dhaka 2480 1802 7296 409 248 18 1040 1708 Faridpur 551 1280 1771 163 182 141 4141 5167 Chittagong 6604 7871 14385 2227 3956 1931 16858 8017 Sylhet 158 810 1715 105 313 324 1595 71 Cowilla 6419 6918 12468 1615 3643 1603 15263 7937 Noakhali 21 123 109 507 0 0 0 9 Chittagong 0 19 92 0 0 4 0 0 Chittagong Hill Tracts 4 0 1 0 0 0 0 0 Total 38845 109819 175806 13229 23592 121280 215187 123259 ----------------------------------------------------------- --------------------------------------- /a Jamalpur was a subdivision of Mymensingh until December 26, 1978. Note: 1.0 ton rice equivalent - 1.0 ton wheat - 1.5 ton paddy. Source: Ministry of Food. -262- Table 8.1 BANGLADESH BUREAU OF STATISTICS INDUSTRIAL PRODUCTION INDICES,. 1980/81-1985/86 [1973174 - 100] -------Weights (X)------- [Mfg Index] [Ind Index] 1980/81 1981/82 1982/83 1983/04 1984/83 1985/86 ------------ ----------- ------- ------- ------- ------- ------- ------- Food Products 10.45 10.17 141 174 168 142 106 103 Fish processing 0.40 0.39 82 93 80 36 147 233 Flour milling 0.43 0.42 37 57 54 40 87 86 Bakeries 0.59 0.57 191 211 199 .. 47 170 Sugar I molasses 4.95 4.82 160 222 195 168 97 91 Edible olls & fats 0.49 0.48 149 177 190 131 49 96 Vegetable ghee 1.04 1.01 93 129 160 117 105 107 Tea 2.55 2.48 137 130 128 136 143 133 Beverages 0.89 0.87 168 187 143 241 202 199 Distilling & spirits 0.47 0.46 197 230 182 340 181 169 Non-alcoholic beverages 0.42 0.41 135 140 98 131 172 233 Tobacco Products 13.65 13.28 125 133 118 124 121 121 Textiles 47.39 46.11 114 109 115 111 111 100 Cotton textiles 22.57 21.96 115 105 114 114 117 110 Jute manufacturing 24.27 23.61 114 114 114 109 105 91 Rayon & other synthetic textiles 0.55 0.54 71 41 165 87 161 117 Paper and Paper Products 0.95 0.92 124 136 100 114 160 170 Paper 0.52 0.51 142 137 112 118 265 180 Newsprint 0.29 0.28 115 146 100 113 174 180 Particle board & hardboard 0.14 0.14 78 108 53 99 111 115 Chemicals and Chemical Products 10.46 10.18 166 182 175 237 264 282 Chemical fertilizers 4.87 4.74 146 143 13'/ 234 280 329 Basic industrial chemicals 0.17 0.17 93 71 81 95 103 118 Paints, varnishes, lacquers 0.22 0.21 116 118 107 140 157 142 MedLcines & pharmaceutLcals 2.84 2.76 191 244 203 270 284 265 Disinfectants & insecticides 0.28 0.27 375 266 156 389 474 306 Matches 2.08 2.02 162 191 198 209 211 219 Petroleum Products 1.42 1.38 333 313 247 256 265 252 Non-Metallic Minerals 0.74 0.72 534 518 492 452 410 462 Glass 0.16 0.16 114 165 180 220 226 139 Cement 0.58 0.56 650 615 579 514 460 551 Iron and Steel 12.09 11.76 195 167 65 128 154 164 Non-Electric Machinery 0.46 0.45 361 304 1990 720 1062 409 Electric Machinery 0.89 0.87 298 322 295 349 507 655 Electric motors 0.12 0.12 74 62 110 213 181 107 Electric fans 0.37 0.36 247 291 290 320 388 409 Lamps & bulbs 0.02 0.02 311 379 390 457 557 565 Comiminications equipment 0.27 0.26 528 523 405 499 869 1348 Cables & wires 0.11 0.11 142 205 223 271 365 394 Transport Equipment 0.28 0.27 125 115 48 86 74 82 Shipbuilding 0.04 0.04 177 178 132 110 126 81 Motor vehicles 0.15 0.15 98 71 12 62 58 88 Bicycles & rickshaws 0.09 0.09 147 160 74 117 81 73 Other 0.33 0.32 68 58 81 80 63 123 Jute baling & pressing 0.30 0.29 67 58 84 85 66 131 Rubber products 0.01 0.01 62 55 49 167 109 107 Ice making 0.02 0.02 81 72 27 2 13 11 Index of Manufacturing Production /a 100.00 97.29 143 143 136 142 147 143 Public sector 77.50 75.40 NA NA NA NA NA NA Private sector 22.50 21.89 NA NA NA NA NA NA Index of Mining Production /b 0.29 144 177 186 220 245 265 Index of Electricity Production /b 2.42 210 240 271 296 360 377 Index of Industrial Production 100.00 145 146 139 146 152 149 ---------------------------------------------------------------------------------------------------------------------- /a Weights shown in second column apply to the overall index of industrial production. /b Entirely in the public sector. Note: The index of manufacturing production covers approximately 93X of value added in large and medium-scale manufacturing. Exciuded are, among others, the manufacturing of footwear, leather, furniture and non-ferrous metal products, prlnting and publishing, as well as all small and cottage industries (which include spinning, dyeing and handloom weaving). Source: Bangladesh Bureau of Statistics. -263- Table 8.2 JUTE AND COTTON MILLING STATISTICS, 1980/81-1985/86 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 BJMC JUTE MILL STATISTICS ------- ------- ------- ------- ------- Number of mills 77 77 40 36 34 33 Labor force, permanent and "badlis" 194106 200704 135148 125916 124395 93623 Number of looms (annual average) Installed 25791 25791 18289 16303 16295 15808 Operating 23759 23441 16648 15343 15507 14495 Hessian production ('000 meters) 711061 681543 598527 569418 497584 352016 (metric tons) 205413 197466 166198 160362 140363 102012 Sacking production ('000 meters) 669848 744768 368916 257929 307276 289963 (metric tons) 309681 329277 157833 103042 127503 128080 Carpet backing (CBC) production 71278 56274 69054 66342 53314 43699 Other production 3751 3788 6330 81R4 6123 1289 Total production (metric tons) 590123 586805 399415 337930 327303 275080 Raw jute consumption Thousands of bales 3.35 3.29 2.29 1.88 1.85 1.5 Bales per ton of production 5.67 5.60 5.74 5.58 5.66 5.59 COTTON MANUFACTURING CAPACITY AND PRODUCTION /a Number of mills 56 56 31 32 35 35 Installed capacity Spindles 1057460 1032238 606331 623060 661108 712552 Looms 7592 6848 3187 3108 3111 3118 Capacity in operation Spindles 863112 786119 521474 512640 520760 474185 Looms 5203 4531 2272 2319 2400 22:9 Yarn Production Metric tons 46245 43223 29002 29424 29028 25202 32-count equivalent 55228 49849 35994 36120 35513 Cloth Production '000 meters 78613 66291 35593 34520 37274 33990 '54-pick equivalent 81239 71705 39839 37887 39809 Raw Cotton Consumption (metric tons) 46409 44521 30811 29288 32286 25506 /a Data shown for 1982/83 and beyond are not directly comparable with those for earlier years, as BTMC disinvested itself of a number of its mills during 1982/83 and 1983/84. Notes: - Capacity data are annual averages. - At the end of June 1982, BTMC had 66 enterprises under its control: 31 spinning mills, 22 composite spinning & weaving mills, 4 specialized mills, 1 engineering unit, 8 composite mills still under construction, and 8 enterprises without any physical assets. - At the end of June 1983, BTMC had 47 enterprises under its control: 19 spinning mills, 12 composite spinning & weaving mills, 4 specialized mills, 1 engineeering unit, 6 textile mills still under construction (and 5 enterprises without any physical assets); 1 composite mill was under going BMR and 1 of the mills under construction was in trial production. Source: Bangladesh Textile Mills Corporation, Bangladesh Jute Mills Corporation. -264- Table 8.3 SUGAR AND PULP AND PAPER MILL STATISTICS, 1980/81-1985186 DIVISION Start-up Capacity /a -----------Production in Metric Tons----------- District Date Installed Achievable/b 1980/81 1981/82 1982183 1983/84 1984/85 1985/86 Mill SUGAR DEAXA 35562 33530 24913 35096 31887 24913 14999 16164 Dhaka Deshbandhu Sugar Mills /c 1934 2032 2032 363 573 368 194 40 0 Faridpur Faridpur Sugar Mills 1977 10161 10161 9197 13382 12980 11851 6293 5780 Jamalpur Zeal Bangla Sugar Mills 19'9 10161 10161 10080 13156 11262 8203 6420 7917 Mymensingh Kaliachapra Sugar Mills 1971 10161 10161 5272 7984 7277 4665 2245 2467 National Sugar Mills {c 1933 3048 1016 0 0 0 0 0 0 KEULNA 37594 35562 24075 54023 43560 41839 22431 17731 Jessore Mobarakgonj Sugar Mills 1969 10161 10161 11216 16237 14787 13582 7672 3610 Kushtia Kushtia Sugar Mills 1966 15241 15241 1539 19921 16345 15063 8394 7871 Carew & Co. Ltd. /c 1938 12193 10161 11320 17865 12428 13195 6366 6250 RAJSHAHI 128531 124467 65743 113051 105907 84601 50519 48603 Bogra Jaipurhat Sugar Mills 1963 20321 20321 7880 22011 21224 i5880 9096 5938 Dinajpur Panchagarh Sugar Mills 1969 10161 10161 6819 0926 10379 9257 6897 6160 Thakurgaon Sugar Mills 1959 15241 15241 11114 16692 10310 8826 5018 4173 Setabganj Svgar Mills /c 1933/1982 12701 12701 0 0 5115 5185 2421 2710 Natore Natore Sugar Mills 1984 15241 15241 0 0 0 0 819 5437 Rajshahi Raishahi Sugar Mills 1966 15241 15241 6027 22212 20020 15717 9099 6510 North Bengal S. Mills /d 1933 14225 12193 12995 16843 20113 16564 9719 10175 Rangpur Shampur Sugar Mills 1968 10161 10161 9830 12826 8836 6432 4020 3702 Rangpur Sugar Mills 1958 15241 13209 11078 13541 9910 6740 3401 3798 Total 201687 192543 145213 202169 181354 151353 87950 82498 Memo Items: - -- - --- -- - Cane crushed, total ('000 metric tons) 1827 2473 2217 1900 1177 1018 Sugar recovery in X of cane crushed 8.1 8.3 8.3 8.1 7.6 8.1 Molasses produced ('000 metric tons) 68 92 81 70 44 38 Bagasse produced ('000 metric tons) 679 915 821 701 424 NA PULP & PAPER Karnaphuli Paper Mills (paper) 24302 24744 21340 18451 28876 31131 Khulna Newsprint Mills (Newsprint) 30412 38652 26550 28670 45972 48414 (Mechanical printing paper) 3748 5351 4652 9094 4880 6686 North Bengal Paper Mills (paper) 7517 7628 4795 9506 9974 10906 Sylhet Pulp & Paper Mills (pulp) 14023 9131 12128 10822 12190 14054 Tetal 80002 85506 69465 76543 101892 111191 /a Based on 120 days of crushLng. /b In 1982/83: based on technical feasibilLty. /c Nationalized in 1972. /d Nationalized in 1965. Shut dovn in 1975; rehabilitated and reopened up 1982/83. Note: All mills established after 1947 were in tha publlc sector. Sources: Bangladesh Sugar and Food IndustrLes Corporatlon, Bangladesh Chemical Industries Corporation and Bangladesh Bureau of Statistics. -265- Tabla 8.4 PRODUCTION OF SELECTED INDUSTRIAL PRODUCTS BY PUBLIC SECTOR CORPORATIONS / a (units as shown) ---MULTI-YEAR AVEAES--- ---------------------ANNUAL DATA-------------------- 72175 75180 50/85 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 ------- ------- ------- ------- ------- ------- ------- ------- .------- Jute Textiles '000 metric tons 510.4 499.6 575.8 590.0 586.8 569.9 600.9 521.4 458.7 Hessian 188.0 167.8 212.7 205.4 197.4 228.2 238.9 208.4 162.5 Sacking 242.8 238.4 277.7 309.6 329.3 241.6 256.8 223.5 224.4 Carpet Backing 51.7 67.7 79.2 71.3 56.3 94.0 96.4 81.3 67 Others 27.9 25.7 6.2 3.7 3.8 6.1 8.8 8.2 4.8 Cotton Textiles Cloth mlll. yds 65.6 79.0 75.8 86.0 72.5 65.5 66.2 68.4 64.6 Yarn mill. lbs 92.5 89.6 98.9 102.0 95.3 99.7 102.0 106.1 94.7 Paper and Board Newspritt '000 tons 30.0 24.9 32.3 30.4 38.6 26.3 28.2 46 48.4 Paper 25.7 27.8 29.7 32.7 31.7 25.7 27.3 38.1 42.1 Rayon Yarn 2.2 1.5 1.4 1.5 0.9 1.6 1.2 1.5 0.8 Hardboard mill. sq.ft. 12.3 17.0 16.1 19.9 11.1 16.4 14.4 17.2 17.4 Particle Board '000 tons 3.0 2.0 1.8 1.2 2.5 0.5 2.4 2.3 2.4 Steel Ingots '000 metric tons 64.3 103.6 101.0 139.3 108.6 47.4 72.2 101.4 95.5 Engineering Products 0.0 0.0 0.0 Diesel Engines '000 1.3 1.4 4.4 8.5 1.8 4.7 4.7 7.9 4.5 Pumps 1.1 4.0 17.7 16.1 19.2 25.7 21.2 15.2 6.8 Commercial and Heavy Vehilels 1.3 1.2 1.7 2.4 1.6 0.4 1.9 1 1 Radios 13.8 102.2 164.3 198.0 185.8 112.0 102.8 213.9 162.4 Television sets 0.5 4.9 24.8 26.7 27.8 33.6 50.0 57.0 69.8 Petroleum Products '000 tons 650.7 947.4 1089.3 1207.7 1135.0 919.0 1004.2 978.3 949.4 Fertilizers Urea 191.9 224.7 422.6 336.4 340.0 365.1 716.4 729.8 835 TSP 0.0 44.5 68.6 70.1 57.0 69.8 79.9 56.7 100.8 Ammonium Sulphate 6.6 6.8 10.6 9.1 11.4 12.1 10.8 9.5 10 Glass Sheets mill. feet 6.7 6.6 10.2 6.7 9.4 13.1 12.8 12.9 7.9 Matche* mill. gross boxes 8.4 7.6 11.0 10.1 11.8 11.8 12.1 13.1 13.6 Food lAnd Allied Product Soyabean Oll '000 tons 5.2 10.7 17.8 15.2 18.1 20.9 16.6 9 8.2 Fish Processing mill. lbs 3.0 5.8 2.6 2.5 2.5 2.4 1.1 0.9 7.1 Soft Beverages '000 cases 294.0 297.2 487.4 386.0 401.0 568.0 731.0 995 1345 Cigarettes million 13627.7 11897.4 14627.0 14906.0 13778.0 15778.0 14843.0 14393 14365 Biscuits and Bread '000 tons 4.9 4.9 6.9 8.4 9.2 8.7 .. 2 3 Sugar 66.8 126.2 151.7 142.9 199.0 174.8 148.8 87.1 82.5 Molasses 35.5 56.8 70.5 66.4 91.3 79.2 69.7 41.5 38.3 Salt '000 mtr. tons 417.7 695.4 308.6 269.0 570.0 241.0 654.6 643.6 ... Cement '000 metr. tons 45.4 250.5 316.4 344.8 326.2 306.7 268.3 240.2 292.1 LLmestone '000 tons 87.0 53.1 40.0 37.9 43.9 31.6 41.9 39.8 22.1 Sulphuric Acid '000 tons 6.2 5.9 3.5 3.8 2.1 3.1 4.3 4.4 6 Caustic Soda 3.7 4.9 5.8 5.9 6.0 5.6 6.0 6.7 6.9 Hydrochloric Acid 1.0 1.7 1.7 2.5 1.0 1.2 1.4 1.4 1.6 Chlorine 2.6 3.4 3.9 4.0 4.1 3.8 4.1 4.5 4.6 Natural Gas mill. cubic feet 9041.3 30250.4 63055.0 49936.0 64781.0 72104.0 83090.0 94580 106652 Electricity mlll. kWh 1139.4 1686.3 3101.8 2661.8 3034.6 3432.9 3966.2 4592 4776 /a Includes private sector production of tea, cLgarettes, end matches. Sources: Ministry of Industry, corporations, Planning ComLisLon, and Bangladesh Bureau of Statistics. -266- Table 8.5 NATURAL GAS STATISTICS (million SCF) 1960 1965 1970 1975 1980 1981 1982 1983 1984 1985 1986 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- PRODUCTION BY CALENDAR YEAR (1st half) Sylhet 0 3203 3865 4898 7091 7122 7062 5193 3854 2961 2106 Chhatak 281 547 799 1037 2070 1980 1660 1990 1744 314 0 Titas 0 0 8685 15383 32253 37037 45032 53411 60260 48659 24859 Habigani 0 0 5567 2233 5638 10221 14438 15504 17656 26191 16197 Kailashtila 0 0 0 0 0 0 0 1028 3786 5360 2052 Bakhrabad 0 0 0 0 0 0 0 0 2501 11819 8494 Kamta 0 0 0 0 0 0 0 0 474 5389 2410 Total 281 3750 18916 23551 47052 56360 68192 77127 90275 100693 56118 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 PRODUCTION BY FISCAL YEAR Sylhet 7008 7045 7118 6935 3825 3081 3793 Chhatak 1935 2081 1643 1971 1778 1584 0 Rashidpur 0 0 0 0 0 0 0 Titas 31580 33408 42643 48472 57823 57367 45429 Kallastila 0 0 0 0 2898 5008 4265 Habiganj 4975 7417 13410 14717 16761 18126 32734 Bakhrabad 0 0 0 0 1712 6694 15290 Semutang 0 0 0 0 0 0 0 Kutubdia /b 0 0 0 0 0 0 0 Begumganj 0 0 0 0 0 0 0 Feni 0 0 0 0 0 0 0 Beanibazar 0 0 0 0 0 0 0 Kamta 0 0 0 0 0 5340 5141 Total 45497 49950 64813 72095 84797 97200 106652 CONSUMPTION BY SECTOR Power 18515 22246 27706 30372 38901 39778 Fertilizers 17610 26111 25193 31830 30888 35262 Industrial 7774 8734 9485 10418 13507 16815 Commercial 1493 1844 2188 2091 2233 2487 Households 3475 4377 5363 5796 6346 6796 Total 48867 63312 69935 80507 90958 101138 ------------------------------------------------------------------------------------------------------------------------------ MEMORANDUM ITEMS: Year Methane Caloriflc Condensate Estimated Reserves (TCF] of Dis- Content Value Recovery Field covery [vol X] fbtu/scf] (bbls/MMCF) Lov Likely /a High Sylhet 1955 96.26 1052 3.40 0.26 0.29-0.43 0.44 Chhatak 1959 99.00 1007 trace 0.01 0.04 0.07 Rashidpur 1960 98.02 1014 0.30 0.49 1.06 2.01 Titas 1962 96.27 1036 1.50 0.83 2.25 4.35 Kallastila 1962 95.70 1050 10.00-13.00 0.38 0.60 0.95 Hablganj 1963 95.70 1020 0.03-0.9 0.72 1.28 3.70 Bakhrabad 1968 97.80 1022 2.00 1.48 2.78-3.70 7.96 Semutang 1968 94.30 trace 0.01 0.03 0.06 Kutubdia /b 1977 96.94 1043 trace 1.00 Begumganj /c 1980 94.41 1064 0.29 0.062 0.125 Feni /d 1981 92.25 0.067 0.177 Beanibagar /e 1982 97.00 20.00 1.10 Kamta 1982 94.66 0.16 0.013 0.094 Total /f /g 6.42 10.83-11.8 22.04 bbls = barrels. btu - British Thermal Units - 0.252 kilocalories. scf - (standard) cubic foot. MMCF - million (standard) cubic feet. TCF - trillion (standard) cubic feet. /a Based on probabilities of 1.0 for proved reserves, 0.5 for probable reserves, and 0.25 for possible reserves. lb Offshore field. /c Proven for Estimated Reserves (Low and Likely). /d Probable for Estimated Reserves (Low and Likely). /e Prellminary estimate for Likely Estimated Reserves. /f Total for Low Estimated Reserves Includes likely reserves for Kutubdia and Beanibazar fields. /g Total for Hlgh Estimated Reserves includes likely reserves for Kutubdia, Begumganj, Feni, Beanibazar and Kamta fields. Sources: Petrobangla; IBRD. -267- Table 8.6 PETROLEUM BALANCES, 1975/80-1985/86 (thousand metric tons) 5-YEAR AVERAGES ANNUAL DATA ---------------- --------------------------------------------------------- 75180 80/85 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 ----- ----- ------- ------- ------- ------- ------- ------- CHITTAGONG REFINERY OPERATIONS Crude oil received 1080.2 1071.0 1263.9 1170.5 924.0 1003.9 990.6 1005.8 Crude oil processed 1070.5 1070.5 1070.5 1070.5 1070.5 1070.5 975.4 971.1 Gross Production 1031.6 1031.6 1031.6 1031.6 1031.6 1031.6 974.7 970.3 Net Production 1018.8 1036.8 1214.0 1138.5 894.8 993.9 942.9 949.5 Liquefied Petroleum Gas (LPG) 0.7 5.7 4.8 4.7 4.4 6.2 8.1 8.8 Distillate Products Motor spirits, Naphtha, etc. /a 133.8 135.5 150.1 150.3 115.2 133.6 132.2 138.6 Kerosene, Diesel, etc. /b 421.3 462.3 479.9 458.0 393.0 504.1 473.5 438.2 Furnace or Fuel Oil lc 430.1 329.4 463.5 391.5 283.4 256.1 252.1 2r8.9 Jute Batching Oil (JBO) 31.4 29.7 37.2 29.6 29.6 27.9 31.0 25.1 Bitumen Plant Feedstock 0.0 73.0 77.3 102.8 68.0 64.8 51.9 68.8 Solvents /d 1.5 1.3 1.1 1.6 1.2 1.2 1.3 1.1 Sales 1019.1 1051.2 1264.2 1024.6 939.2 1047.9 953.9 949.0 Domestic 920.0 905.3 1041.4 844.2 803.4 946.9 864.7 861.9 Exports 99.0 145.8 222.7I 180.4 135.8 101.1 89,2 87.1 PETROLEUM PRODUCT IMPORTS AND EXPORTS le [80/84] Imports 381 331 524 583 219 451 620 786 Diesel Furnace or Fuel Oil Exports 101 160 223 180 125 114 90 80 Naphtha 66 96 116 107 59 101 89 80 Furnace or Fuel Oil 35 56 106 69 50 0 0 0 Bitumen 0 8 0 4 16 13 1 0 PETROLEUM PRODUCT DEMAND Liquefied Petroleum Gas (LPG) 0.7 5.4 4.5 5.0 4.3 6.2 6.6 8.9 Distillate Products Motor spirits, Naphtha, etc. /a 59.3 51.8 56.6 54.4 44.3 48.3 56.8 61.4 Kerosene, Diesel, etc. /b 738.1 945.5 946.9 1002.7 853.0 913.5 1011.2 1124.3 Furnace or Fuel Oil /c 418.4 361.9 411.3 361.3 292.9 384.5 359.5 382.8 Total Fuels 1216.5 1364.6 1419.2 1423.4 1194.5 1352.5 1434.1 1577.4 Jute Batching Oil (JBO) 31.1 30.8 35.2 32.3 29.1 27.6 29.8 26.0 Lubricants 18.3 13.4 14.5 14.1 12.3 12.7 13.8 20.9 Bitumen 0.0 20.5 19.9 34.7 6.4 14.0 27.8 32.6 Others 0.0 2.2 2.5 1.8 0.7 4.5 1.1 1.5 Total Non-Fuels 49.4 67.0 72.1 83.0 48.5 58.7 72.5 81.0 Total 1266.0 1431.6 1491.3 1506.3 1242.9 1411.3 1506.6 1658.4 ----------------------------------------------------------- ------------------------------------------------------------ REFINERY OPERATIONS MEMORANDUM ITEMS Number of days in operation 308 304 320 318 270 315 295 NA Average production, net, per day (metric 3.3 3.5 3.8 3.7 3.4 3.2 3.2 NA Apparent loss rate (Z) 4.8 3.1 -13.4 -6.4 16.4 7.2 11.9 NA Products stocks (end of year) /f 28.9 43.0 16.3 132.9 36.4 29.3 NA /a Includes High Octane Blending Component. /b Includes jet fuel. /c High and low sulfur. /d Includes mineral turpentine and special boiling point solvents. /e Payments basis. /f Includes refinery fuel. Sources: Eastern Refinery, Ltd., Bangladesh Petroleum Corporation. -268- Table 8.7 ELECTRICITY PRODUCTION AND CONSUMPTION [GWB EXCEPT AS NOTED) FIVE-YEAR AVERAGES --------------------ANNUAL DATA---------------------- 75/80 80/85 1980/81 1981/'2 1982/83 1983/84 1984/85 1985/86 ------- ------- ------- ------- ------- ------- ------- ------- Installed capacity [MW] 765.7 970.3 813.2 857.0 919.2 1121.0 1141.0 1141.0 Gross Generation 1892.6 3537.8 2661.8 3036.4 3432.7 3966.2 4592.0 4775.6 Net Generation 1793.1 3384.5 2539.8 2896.1 3294.2 3803.2 4389.3 4557.7 Final consumption 1194.1 2307.1 1594.5 2028.3 2398.6 2709.4 2804.7 3277.4 Billed consumption ['000 Taka] 417.7 2948.8 1635.9 2041.1 3231.7 3719.5 4115.6 5717.5 CONSUMPTION BY SECTOR Domestic 183.2 449.4 292.1 339.1 438.6 520.2 657.2 715.8 Commercial 152.2 267.4 329.2 270.8 235.9 251.4 249.9 278.1 Industrial 769.7 1430.7 1021.7 1339.1 1473.7 1712.0 1606.7 1562.5 Agriculture 31.8 42.9 38.0 29.6 37.4 53.4 56.2 51.1 Others 50.5 146.4 58.5 49.7 212.9 140.5 270.6 699.3 Total 1187.4 2372.9 1739.5 2208.3 2398.6 2677.6 2840.6 3306.8 Losses (Utility only)/a 706.0 1191.5 922.3 1008.1 1034.1 1288.6 1704.4 1493.4 as X of gross generation 37.2 33.5 34.6 33.2 30.1 32.5 37.1 31.1 --------------------------------------------.-------------------------------------------------------------- /a Includes station auxiliary use. Source: Bangladesh Power Development Board. -269- Table 8.8 PETROLEUM PRODUCT DEMAND BY SECTOR AND PRODUCT, 1985/86 ('000 metric tons) Sector Motor Gasoline Kerosene Jet Petrol DLesel Oil Fuel Oil Total Percent (MS, HOBC) (SKO) (JP-1) ----- -------------- -------- ---------- ---------- -------- ----- ------- (i) Agriculture .. .. .. 200 .. 200 12.7 (ii) Electricity Power .. 23 .. 98 257 378 24.0 (iii) Household .. 362 .. .. .. 362 23.0 (iv) Industry .. .. .. 10 119 129 8.2 (v) Transport 61 .. 76 356 1 494 31.3 Air .. .. 76 .. .. 76 4.8 Rail .. .. .. 46 1 47 3.0 Road 61 .. .. 212 .. 273 17.3 Water .. .. .. 98 .. 98 6.2 (vi) Bunkers (Foreign) .. .. .. 5 7 12 0.8 Total 61 385 76 669 384 1575 '100.0 ------------------------------------------------------------------------------------------------------------ Source: Bangladesh Petroleum Corporation. -270- Table 8.9 RAILWAY STATISTICS, 1972/75-1984/85 ---MULTI-YEAR AVERAGES--- ----------------ANNUAL DATA---------------- 72/75 75/80 80/85 1980/81 1981/82 1982/83 1983/84 1984/85 Route length [km] /a 2874 2876 2888 2884 2884 2887 2892 2892 Broad gauge 964 966 976 974 974 974 978 978 Meter gauge 1910 1910 1912 1910 1910 1914 1914 1914 Narrow gauge 0 0 0 0 0 0 0 0 Locomotives, total 503 423 386 410 417 410 386 306 Diesel, total 171 178 276 240 253 302 299 2b4 Broad gauge 34 34 69 52 64 76 76 75 Meter gauge 138 143 208 188 189 226 223 213 Steam, total /b 331 247 109 170 164 108 87 18 Broad gauge 115 81 32 54 50 22 18 18 Meter gauge 216 165 77 116 114 86 69 0 Freight Wagons 50199 52142 53373 52800 53912 54148 53258 52748 Broad gauge 4221 4450 4182 4149 4302 4292 4086 4080 Meter gauge 11715 12204 12598 12568 12705 12684 12597 12434 Total units 15936 16754 16779 16717 17007 16976 16683 16514 Total 4-wheeler units 18327 18734 19814 19366 19898 20196 19892 19720 Freight Carried ['000 metric tons] 2877 3299 3029 2984 3230 2998 2939 2995 Rice 127 275 243 191 273 249 241 262 Paddy 67 196 130 141 236 94 104 75 Wheat 599 515 658 478 573 860 704 674 Raw jute 353 300 222 215 216 224 228 226 Jute goods 18 28 26 26 30 22 18 30 Sugarcane 141 385 320 360 364 299 365 215 Sugar 63 70 54 31 50 78 55 56 Salt 88 117 94 102 70 65 119 113 Fertilizer 64 297 349 338 367 323 296 419 Cement 89 109 126 155 86 83 175 130 Coal 119 157 57 85 81 49 40 29 Petroleum products /c 119 147 132 184 179 116 99 84 Total ton-km 631105 787758 809314 786655 844488 813876 778635 822917 Fuel Consumption [metric tons] Coal 16961 19313 23668 23400 16278 16331 16886 Diesel oil 12810 40982 35356 40395 39503 44656 44998 Furnace oil 24772 22646 49418 37026 18679 5919 2191 /a Total track mileage in 1978/79 was 4503 km. lb Including 6 narrow gauge steam locomotives. /c Excluding fuel for tne railways and for the military. Source: Bangladesh Railways; Bangladesh Bureau of Statistics. -27 1- Table 8.10 TRANSPORT STATISTICS, 1974/75-1984/85 (Unit) 1974/75 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 ------- ------- ------- ------- ------- ------- ------- ------- INLAND WATER TRANSPORT BIWTC Fleet Total ( No.) 705 633 591 591 586 555 544 533 Self-propelled barges 11 9 6 6 6 6 3 8 Inland & river barges /b 412 313 287 287 255 229 232 246 Inland tugs 33 28 28 29 29 29 27 25 Mainland tugs 18 26 24 23 23 23 21 19 Coasters /c 25 24 23 23 23 25 21 20 Country Boats Cargo ( No.) 87 92 92 94 96 98 100 102 Passenger 161 170 171 177 180 183 186 189 ROAD TRANSPORT STATISTICS Road Mileage, total /a (miles) 2695 2927 3002 3536 4095 4618 4969 6495 high (miles) 2343 2533 2608 2662 2686 2968 3188 3515 low (miles) 352 394 394 874 1409 1650 1781 2980 Buses operating, private ( No.) 5223 5195 5747 6362 6383 7330 7528 7731 Trucks operating, private ( No.) 9457 11089 11473 11413 13263 14236 14620 15014 Bullock carts (est.) ('000) 87 135 137 138 139 141 142 144 ---------------------------------------------------------------------------------------------------------------- la Data cover only roads constructed and maintained by the Roads and Highways Department. 'High" roads are rosds with cement, concrete, bituminous concrete or bituminous surface; "low" roads are roads with stone, gravel, brick, or earth surface, but which are properly aligned and have drainage structures. /b Including jute boats and flats. /c Can travel up the main river routes. Source: Bangladesh Bureau of Statistics. -272- Table 9.1 CONSUMER PRICE INIDICES, 1980/81-1985/86 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 DHAKA MIDDLE INCOME [1973/74 - 100] Food 244.69 288.15 312.77 350.47 387.89 429.46 Fuel & Lighting 293.08 376.71 461.27 466.39 502.64 539.30 Housing 348.64 374.66 402.19 416.81 453.74 506.62 Clothing 176.78 194.87 200.46 224.98 255.15 274.23 Miscellaneous 232.89 264.59 299.09 335.36 392.25 419.38 Overall 254.97 296.50 325.94 357.47 396.58 436.03 Percent increase 12.5 16.3 9.9 9.7 10.9 10.0 DHAKA GOVERNMENT EMPLOYEES [1969/70 - 100] Food 603.64 697.43 725.47 824.25 933.53 1024.32 Fuel & Lighting 657.47 817.75 883.19 894.14 1057.34 1210.31 Housing 879.59 933.17 1040.85 1057.00 1113.86 1268.60 Clothing 653.56 724.55 792.56 837.05 925.93 967.90 Miscellaneous 531.46 578.27 634.93 712.58 795.78 817.96 Overall 628.28 708.84 757.96 832.94 931.47 1014.33 Percent increase 12.0 12.8 6.9 9.9 11.8 8.9 CHITTAGONG INDUSTRIAL WORKERS [1969/70 100] Food 563.12 646.36 679.33 801.25 907.99 980.11 Clothing 574.83 687.01 766.32 929.86 1037.50 1082.19 Housing 783.94 897.52 1023.79 947.63 1066.91 1264.60 Miscellaneous 501.56 533.67 553.73 606.47 695.44 718.19 Overall 578.55 662.25 707.56 807.03 913.98 989.60 Percent increase 7.3 14.5 6.8 14.1 13.3 8.3 KRHULNA INDUSTRIAL WORKERS [1969/70 100] Food 524.81 617.30 640.63 712.87 789.09 878.96 Clothing 535.06 582.48 626.05 736.45 867.51 942.56 Housing 720.40 781.28 734.74 781.90 862.94 1057.42 Miscellaneous 467.51 511.76 526.05 562.34 600.82 689.23 Overall 538.16 617.88 635.88 706.01 784.37 882.33 Percent increase 8.1 14.8 2.9 11.0 11.1 12.5 NARAYANGANJ INDUSTRIAL WORKERS [1969/70 = 100] Food 562.41 653.52 681.79 774.72 862.97 930.58 Clothing 653.95 816.38 769.49 809.38 913.53 1035.11 Housing 774.52 932.00 955.46 891.11 1078.96 1257.59 Miscellaneous 515.27 585.85 593.29 604.44 674.08 725.19 Overall 587.29 689.37 707.13 770.96 868.73 950.45 Percent increase 9.0 17.4 2.6 9.0 12.7 9.4 RURAL CONSUMER PRICE INDICES FOR SELECTED DISTRICTS [1973/74 - 100] Dhaka 218.0 261.0 282.0 315.0 356.0 369.0 Chittagong 217.0 265.0 286.0 344.0 380.0 391.0 Rajshahi 219.0 267.0 274.0 295.0 340.0 364.0 Khulna 204.0 252.0 260.0 284.0 320.0 333.0 Sylhet 224.0 275.0 290.0 329.0 354.0 375.0 Rangpur 203.0 250.0 276.0 305.0 368.0 381.0 Bangladesh [rural] 214.0 262.0 278.0 312.0 353.0 369.0 -------------------------------------------------------------------------------------------------------- MEMORANDUM ITEMS: INDICES WITH 1980/85 AVERAGE - 100 Dhaka Middle Income 78.1 90.9 99.9 109.6 121.5 133.6 Dhaka Government Employees 81.4 91.8 98.2 107.9 120.7 131.4 Chittagong Industrial Workers 78.8 90.2 96.4 110.0 124.5 134.9 Khulna Industrial Workers 82.0 94.1 96.9 107.5 119.5 134.4 Narayanganj Industrial Workers 82.5 96.8 99.3 108.3 122.0 133.5 Rural !angladesh 75.4 92.3 97.9 109.9 124.6 129.9 -------------------------------------------------------------------------------------------------------- Notes: Dhaka middle income index refers to families with 1973/74 incomes of Tk 300 to Tk 999. Dhaka government employees index refers to non-gazetted employees with monthly salaries of Tk 100 to Tk 400 in 1969/70. Source: Bangladesh Bureau of Statistics. Table 9.2 NATURAL GAS AND PETROLEUM PRODUCT PRICES, 1980-1986 Effective Dates NATURAL GAS ---------------------------------------------------------------------------------------------------------------------- TITAS SYSTEM June 7, June 7, July 1, June 30, June 27, June 30, June 27, TK/ICF 1980 1981 1982 1983 1984 1985 1986 ------- ------- ------- -------- -------- -------- -------- BULK USERS Cost of GCs/1C? (es-fleld), 5.98 7.53 9.50 10.00 11.45 13.80 16.85 inc1uding ecLse duty /a 4.50 6.00 9.00 9.50 9.50 12.80 15.72 OTHE USERS Cost of Gas/NC? (ex-fleld), 6.48 15.48 18.00 22.65 22.65 28.77 40.05 Lncluding excLae duty /a 5.00 14.00 17.50 21.65 21.65 27.77 37.15 END USERS PRICES/MCF INCLUDING EXCISE DUTIES Bulk Cunsmurs Power Generation 7.75 9.30 10.50 11.50 13.05 15.66 19.09 Fertilizer Production 7.75 9.30 10.50 11.50 14.05 15.66 19.09 Industrial Consuamrs 18.00 27.75 31.00 36.00 36.00 43.20 52.14 Comercial Consu ers 19.00 28.00 31.00 36.00 45.20 54.24 65.39 Household Consumers Metered 18.00 20.00 27.00 34.00 34.00 40.80 44.88 Unmetered/month - Stove (one burner) 22.00 25.00 35.00 45.00 45.00 60.00 66.00 - Stove (two burners) 40.00 45.00 65.00 80.00 80.00 100.00 110.00 - Additional burner (each) 14.00 16.00 27.00 34.00 34.00 41.00 45.00 L - Oven (each) 34.00 38.00 58.00 74.00 74.00 89.00 97.00 - Additional oven (each) 17.00 19.00 29.00 37.00 37.00 45.00 49.00 - Grill (each) 34.00 38.00 58.00 74.00 74.00 89.00 97.00 - Additional grill (each) 17.00 19.00 29.00 37.00 37.00 45.00 49.00 - Water heater up to 20 gal 68.00 76.00 117.00 147.00 147.00 177.00 194.00 - Water heater above 20 gal 84.00 93.00 146.00 184.00 184.00 221.00 242.00 - Dryer (each) 101.00 112.00 175.00 220.00 220.00 265.00 291.00 - Refrigerator (each) 84.00 93.00 117.00 147.00 147.00 177.00 194.00 - Gas light, garden/external use 45.00 - Gas light, internal use 23.00 Minimum Charges/Month Domestic (unnetered) 18.00 20.00 27.00 34.00 34.00 41.00 63.00 Comxercial 95.00 140.00 155.00 180.00 180.00 272.00 327.00 PETROLEUM PRODUCTS /b July 1980 May 1981 September 1981 July 1982 March 1983 July 1984 June 1986 TAKA/IMPERIAL GALLON Ex-Ref Ex-depot Ex-Ref Ex-depot Ex-Ref Ex-depot Ex-Ref Ex-depot Ex-Ref Ex-depot Ex-depot Ex-Ref Ex-depot Premium Gasoline (vith JOBC) 42.07 48.66 45.85 52.52 48.14 54.86 62.58 69.30 68.84 75.56 76.15 54.42 61.51 Regular Gasoline (MS) 40.40 46.37 42.16 48.36 44.27 50.52 57.55 63.80 60.43 66.68 67.19 52.32 58.55 Jet Fuel (JP-1) 26.72 28.31 29.43 31.25 30.90 32.75 40.17 42.02 40.17 42.02 42.64 36.14 39.14 Kerosene (SKO) 16.09 17.65 20.73 22.50 21.69 23.63 30.71 32.81 30.71 32.81 32.82 27.91 30.50 Diesel Oil (HSD) 20.23 22.50 20.02 22.50 20.98 23.63 30.00 32.81 30.00 32.81 32.82 27.91 30.50 Fuel Oil (FOHS) 11.81 13.00 15.12 16.68 15.88 17.51 22.71 24.54 22.71 24.54 24.55 19.28 21.37 Liquefied Petroleum Gas (LPG) 50.00 54.36 50.00 54.31 50.00 54.36 50.00 54.36 95.00 105.00 105.00 49.50 113.50 -------------------------------------------------------------------------------------------------------------------------- ------------------------ /a Price was raised to Tk 75/cylinder with effect from 12 August 1982. /b Ex-refinery and ex-depot at Chittagong. In July, 1984 prices were flxed Ln liters with minor adjustments in ex-depot prices as shown. Ex-refinery prices were not changed. Source: Titas Gas Company and Bangladesh Petroleum Corporation. -274- Table 9.3 ELECTICITY TARIFFS OF THE BANGLADESH POWER DEVELOPMENT BOARD (September 1985) Consumer Group Minimum Charge Unit Rates /a - -- -- -- -- -- - -- - -- -- -- -- -- - -- - -- -- -- -- -- -- -- -- -- -- -- -- -- ,- -- -- -- -- --- Low and Medium Voltage Domestic /b - Monthly consumption up to 100 units 100 paisa/KWh - Monthly consumption 101 to 400 units 110 paisa/KWh - Monthly consumption over 400 units 275 paisa/KWh Irrigation Pumping Annual Charges: - Tk 250 per HP/year 135 paisa/KWh - Tk 1,000 (single phase) - Tk 3,000 (triple phase) Industrial (up to 50 KW) - Without time-of-day meter 190-200 paisa/KWh - With time-of-day meter - Off-peak hours 120 paisa/KWh - Peak hours 390 paisa/KWh Ceremonial/Temporary Uses - Tk 200 (single phase) 450 paisa/KWh - Tk 1,000 (triple phase) Commercial - Tk 45 per KW of - Monthly consumption 220 paisa/KWh Contracted load. up to 100 units - Monthly consumption 295 paisa/KWh over 100 units High-Tension, Bulk Consumers above 50 KW Tk 3,500 per month - Without time-of-day (other than jute mills) meter 195 paisa/KWh (Industrial) - With time-of-day meter - Off-peak hours 190 paisa/KVAH - Peak hours 380 paisa/KVAH Jute Mills above 50 KW Tk 3,500 per month 165 paisaiKWh Extra-High Voltage 5 MVA or above Tk 65 per KW - Without time-of-day (other than REB) per month meter 175 paisa/KVAH - With time-of-day meter - Off-peak hours 165 paisa/KVAH - Peak hours 495 paisa/KVAH REB/Pallibidyut Samity Tk 50 per KW 95 paisa/KWh per month Low and Medium Voltage/High Voltage Bulk Supply for Street Light and Water Pumps Not applicable 170 paisa/KWh 100 paisa = 1 Taka /a In addition, Government Electricity Duty of 5 paisa per KWh applies. /b For hospitals, educational and charitable institutions, and religious establishments, the unLt rate is 70 paisa/KWh for monthly consumption up to 1,000 units and 200 paisa/KWh for monthly consumption over 1,000 units, with a minimum charge of Tk 15 for single phase and Tk 90 for triple phase. Source: Bangladesh Power Development Board. -275- Table 9.4 WHOLESALE PRICES OF CONSUMER GOODS IN URBAN AREAS, 1980/81-1985/86 (Taka per unit shown) Traditional Items Units 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 Masur maund 380.15 455.14 400.83 419.42 396.42 585.03 Khesari maund 251.62 230.90 213.48 301.09 239.45 245.81 Potatoes, local (best quality) maund 112.28 103.11 79.02 122.99 124.36 142.23 Rohu fish (large cut pieces) maund 1118.96 1272.78 1435.26 1905.13 Chicken eggs, fresh 100 91.20 109.00 121.69 144.46 177.93 Chillies, dry (superior quality) maund 1050.78 987.66 512.70 1152.06 1441.36 619.69 Turmeric (Haldi, best quality) maund 456.30 476.17 554.08 1325.84 1574.16 1441.00 Mustard oil, local (best quality) maund 1092.02 995.35 1004.69 1394.27 1463.53 1320.57 Ghee (cow) maund 3026.92 3326.90 4218.38 5107.47 Coconut oil, imported (sup. quality) maund 1082.56 1117.48 1006.50 1485.57 1884.91 1430.11 Vegetable oil (Pakvan) 35 lbs. 378.06 391.32 452.45 569.02 754.08 697.26 Tobacco leaf (Motihari, sup. quality) maund 91'.15 839.87 783.58 994.86 1111.54 1079.12 Betelnut (Tanti, whole, dry, sup. quality) maund 1226.49 1200.59 973.45 1230.83 1801.39 2038.51 Betel leaf (medium size) 6400 291.38 395.81 478.49 461.55 544.76 529.69 1irewood, Gazari 100 maunds 3025.56 2908.09 3698.21 5341.73 Kerosene, white 4 gallons 140.25 135.72 136.65 136.13 Cigarettes (Capstan) 250 95.52 108.18 125.72 123.30 128.86 159.99 Matches (box of 40) gross 28.90 34.36 43.09 38.75 40.80 64.52 Paper, 10 lbs. foolscap ream 90.11 95.56 109.54 115.40 120.82 117.39 Cycle tyre, imported (Master Service) dozen 783.89 736.85 1140.61 1473.69 1722.05 2027.50 Cycle tubes (Deshi) dozen 268.26 262.20 256.93 257.03 345.91 413.78 Longcloth (medium quality) 40 yards 554.56 637.03 731.75 712.07 Metric Units Masur kg 14.19 16.99 14.96 15.66 14.80 15.67 Khesari kg 9.39 8.62 7.97 11.24 8.94 6.59 Potatoes, local (best quality) kg 4.19 3.85 2.95 4.59 4.64 3.81 Rohu fish (large cut pieces) kg 0.00 0.00 41.77 47.51 53.57 51.04 Chicken eggs, fresh hundred 91.20 0.00 109.00 121.69 144.46 177.93 Chillies, dry (superior quality) kg 39.22 36.87 19.14 43.00 53.80 16.60 Turmeric (Haldi, best quality) kg 17.03 17.77 20.68 49.49 58.76 38.61 Mustard oil, local (best quality) kg 40.76 37.15 37.50 52.04 54.63 35.38 Ghee (cow) kg 0.00 0.00 112.98 124.18 157.46 136.84 Coconut oil, imported (sup. quality) kg 40.41 41.71 37.57 55.45 70.36 39.66 Vegetable oil (Pakvan) kg 23.81 24.65 28.50 35.84 47.50 43.92 Tobacco leaf (Motihari, sup. quality) kg 33.97 31.35 29.25 37.13 41.49 28.91 Betelnut (Tanti, whole, dry, sup. quality) kg 45.78 44.81 36.33 45.94 67.24 54.62 Betel leaf (medium size) thousand 45.53 61.85 74.76 72.12 85.12 82.76 Firewood, Gazari metric ton 0.00 0.00 1129.32 1085.47 1380.39 1431.10 Kerosene, white liter 0.00 0.00 7.71 7.46 7.51 7.48 Cigarettes (Capstan) thousand 382.08 432.72 502.88 493.20 515.44 639.96 Matches (box of 40) thousand 200.69 238.61 299.24 269.10 283.33 448.10 Paper, 10 lbs. foolscap thousand 180.22 191.12 219.08 230.80 241.64 234.78 Cycle tyre, imported (Master Service) each 65.32 61.40 95.05 122.81 143.50 168.96 Cycle tubes (Deshi) each 22.36 21.85 21.41 21.42 28.83 34.48 Longeloth (medium quality) meter 0.00 0.00 15.16 17.42 20.01 19.47 ------------------------------------------------------------------------------------------------------------ Note: All prices shown represent simple averages of weekly average prices during the fiscal year for the urban centers covered. Source: Bangladesh Bureau of Statistics. -276- Table 9.5 PUBLIC FOODGRAIN RATION QUOTAS AND ISSUE AND SALES PRICES, 1965-1986 [Tk/maund] [Maund = 37.326 kg] Adult Cereal Quotas Rice Wheat tseers/veekl ------------------ -------------------- [seer - 2.057 lbs.] Rice/ Wholesale Retail Wholesale Retail -- ------------------------ Wheat Effective Date Issue Sale Issue Sale Total Rice Wheat Ratio Nov. 1, 1965 /a 25.40 26.40 17.62 18.80 Jan. 1, 1970 29.62 30.80 19.62 20.80 Jan. 11, 1971 29.00 30.00 Jan. 15, 1973 28.82 March 19, 1973 3.0 0.8 2.25 0.33 July 1, 1973 38.82 40.00 28.82 30.00 Sep. 3, 1973 38.00 28.00 May 27, 1974 58.00 60.00 48.00 50.00 February 24, 1975 2.5 0.5 2.0 0.25 September 6, 1975 2.5 1.5 1.0 1.50 Dec. 20, 1975 68.00 70.00 53.20 55.00 Feb. 7, 1976 87.00 90.00 67.00 70.00 August 31, 1976 3.0 2.0 1.0 2.00 October 16, 1976 4.0 2.5 1.5 1.67 March 5, 1977 3.0 2.0 1.0 2.00 December 3, 1977 3.0 1.5 1.5 1.00 Dec. 31, 1977 97.00 100.00 77.00 80.00 May 19, 1979 117.00 120.00 87.00 90.00 May 3, 1980 137.00 140.00 107.00 110.00 3.0 1.0 2.0 0.50 Nov. 13, 1980 t36.00 140.00 106.00 110.00 January 3, 1981 2.5 0.75 1.75 0.43 Apr. 11, 1981 /b 151.20 155.20 112.00 116.00 Dec. 12, 1981 /c 171.00 175.00 120.00 124.00 2.0 0.50 1.50 0.33 July 3, 1982 /d 191.00 195.00 130.00 134.00 July 18, 1983 /h 2.0 0.50 1.50 0.33 Jan. 3, 1983 /e 209.00 215.00 139.00 145.00 Dec. 31, 1984 If 262.00 268.00 167.00 172.90 Dec. 1, 1985 269.00 275.00 175.00 181.00 June 15, 1986 283.00 289.00 186.00 192.00 Dec. 29, 1986 /g 1.5 0 1.5 /a For wheat, since April 15, 1961. /b Since April 11, 1981, ex-godown/ex-mill issue prices payable by ration dealers have been differentiated slightly in accordance with the distance of the dealers' shops from the nearest MOF warehouse or mill, while retail prices have been maintained at a uniform level throughout the statutory rationing areas. As of January 3, 1983, the actual issue prices vary by up to Taka 0.50 per maund for rice, paddy and wheat. /c For wheat, effective December 12, 1981, the issue price for wheat sold to flour mills and large employers was set at Tk 129 per maund. /d For wheat, effective July 3, 1982, the issue price for wheat sold to flour mills and large employers was set at Tk 139 per maund. le For wheat, effective January 3, 1983, the issue price for wheat sold to flour mills and large employers was set at Tk 150 per maund. /f For wheat, effective April 1, 1985. /g Applicable for statutory rationing areas. /h Effective on July 18, 1983, ration quotas are set in kllograms. Notes: The wholesale issue price is the ex-godown/ex-mill price charged to ration dealers (and includes the cost of gunnies), while the retail sales price is the price charged to ration card holders buying their permissible quota at ration shops. The difference between wholesale issue price and retail sales price, thus, represents the official margin for the ration shop dealers. Source: Ministry of Food. -277- T;ble 9 16 DAILY WAGES FOR UNSKILLED LABOR, 1978/79-1985/86 (Tk/day) 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 AGRICULTURE [WITHOUT FOOD] current 10.88 12.46 13.98 15.48 17.05 19.58 24.54 29.53 1973/74 prices 6.48 6.20 6.53 5.90 6.13 6.28 6.95 8.00 Index, 1973/74 = 100 97 93 98 88 92 94 104 120 FISHERY current 9.88 15.34 18.34 21.56 21.48 19.80 22.51 25.42 1973/74 prices 5.88 7.63 8.57 8.23 7.73 6.35 6.38 6.89 Index, 1973/74 = 100 0 112 164 157 148 121 122 132 SMALL SCALE RURAL INDUSTRY current 9.63 11.94 13.90 15.59 16.38 24.25 28.8e 31.45 1973/74 prices 5.73 5.94 6.49 5.95 5.89 7.77 8.18 8.52 Index, 1973/74 - 100 139 118 129 118 117 154 163 170 COTTON TEXTILE WORKERS current 11.64 14.77 16.9 17.96 19.88 21.63 24.04 28.68 1973/74 prices 6.25 6.37 6.65 5.95 5.62 5.85 5.01 5.44 Index, 1973/74 - 100 113 115 12n 107 102 106 91 99 JUTE TEXTILE WORKERS current 10.14 13.36 16.49 17.57 19.35 20.22 20.81 28.29 1973/74 prices 5.45 5.76 6.49 5.82 5.47 5.46 4.34 5.37 Index, 1973/74 - 100 72 76 85 77 72 72 57 71 MATCH INDUSTRY WORKERS current 11 12.58 13.8 16.4 18.82 20.12 20.57 22.01 1973/74 prices 5.91 5.42 5.43 5.43 5.43 5.44 4.29 4.18 Index, 1973/74 - 100 92 85 85 85 85 85 67 65 ENGINEERING INDUSTRY WORKERS current 11.71 13.33 15.39 18.22 20.33 22.78 26.00 36.43 1973/74 prices 6.3 5.75 6.06 6.03 5.74 6.16 5.42 6.91 Index, 1973/74 - 100 101 92 97 97 92 99 87 111 VEGETABLE OIL INDUSTRY WORKERS current 10.13 12.39 13.72 15.4 16.05 16.47 18.14 20.93 1973/74 prices 5.45 5.34 5.4 5.1 4.53 4.45 3.78 3.97 Index, 1973/74 - 100 99 97 98 92 82 81 69 72 CONSTRUCTION WORKERS current 14.34 17.21 19.29 21.74 23.3 24.56 26.36 33.32 1973/74 prices 7.7 7.42 7.59 7.2 6.58 6.64 5.49 6.32 Index, 1973/74 100 109 105 107 101 93 94 77 89 WAGE INDICES BY SECTOR NOMINAL General 346.25 432.90 492.09 566.16 598.11 684.53 734.07 895.20 Manufacturing 318.01 389.04 452.27 515.25 558.02 720.57 775.88 957.60 Construction 413.84 491.69 544.60 616.30 677.20 754.59 774.86 937.97 Agriculture 370.63 443.31 482.01 566.88 558.35 572.45 641.64 766.95 Fisheries 311.01 451.43 529.28 617.15 638.93 654.43 702.12 855.85 REAL [1969/70 - 100) General 75.74 82.45 86.62 86.35 87.50 89.91 85.79 95.07 Manufacturing 69.56 74.10 79.61 78.56 81.63 94.65 90.67 101.63 Construction 90.46 93.63 95.86 93.98 99.07 99.11 90.55 99.69 Agriculture 78.37 80.80 78.04 81.38 81.68 68.92 76.27 87.79 Fisheries 65.80 82.28 85.69 88.59 93.47 78.79 79.16 85.48 Source: Bangladesh Bureau of Statistics. -278- Table 9.7 WAGE DIFFERENTIALS, 1978/79-1985/86 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 ------- ------- ------- ------- ------- ------- ------- ------- UNSKILLED INDUSTRIAL WORKERS : UNSKILLED AGRICULTURAL WORKERS Agriculture 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Fishing 0.91 1.23 1.31 1.40 1.26 1.10 0.92 0.86 S.S. Industry 0.88 0.96 0.99 1.01 0.96 1.23 1.18 1.07 Cotton Textile 1.09 1.19 1.21 1.16 1.17 1.04 0.90 0.97 Jute Textile 0.99 1.07 1.18 1.14 1.13 1.01 0.86 0,96 Matches 0.93 1.00 0.99 1.06 1.11 1.01 0.84 0.75 Engineering 0.99 1.07 1.10 1.18 1.20 1.09 1.13 1.23 Vegetable Oil 0.91 0.99 0.99 0.99 0.94 0.90 0.75 0.71 Construction 1.26 1.39 1.38 1.41 1.36 1.25 1.07 1.13 SKILLED WORKER UNSKILLED WORKER INDUSTRY Cotton textiles 1.28 1.27 1.31 1.35 1.33 1.30 1.31 1.40 Jute textile 1.35 1.27 1.20 1.24 1.29 1.28 1.30 1.36 Matches 1.26 1.22 1.23 1.34 1.43 1.35 1.35 1.39 Engineering 1.81 1.87 1.80 1.83 1.80 1.73 1.68 1.37 Vegetable oils 1.24 1.26 1.26 1.20 1.26 1.28 1.36 1.45 All Industries 1.40 1.38 1.36 1.40 CONSTRUCTION 1.98 1.94 1.98 1.99 2.04 1.81 1.38 1.90 AGRICULTURE 1.18 1.17 1.17 1.23 1.30 1.38 1.40 1.52 FISHERY 1.34 1.30 1.26 1.28 1.31 1.45 1.64 1.69 ------------------------------ -------------------------------------------------------------------- Source: Bangladesh Bureau of Statistics. -279- Table 9.8 AGRICULTURAL WAGE RATES, 1980/81-1985186 (Tk/day, without food) Division/District 1980181 1981/82 1982/83 1983/84 1984/85 1985/86 -i---------------- ----- I- ------- ------- ------- ------- ------- Rajshahi 12.23 13.88 14.82 15.70 21.97 26.22 Dinajpur 10.50 11.83 14.00 14.33 22.50 25.00 Rangpur 14.80 15.17 14.33 16.83 24.00 26.25 Bogra 10.00 12.08 15.00 15.00 19.33 25.00 Rajshahi 14.00 15.67 14.92 14.42 19.00 24.83 Pabna 11.83 14.67 15.83 17.92 25.00 30.00 Xhulna 13.57 13.93 14.73 18.37 22.47 28.04 Kushtia 11.17 10.92 11.58 18.67 19.17 28.33 Jessore 12.50 12.92 13.58 16.58 19.50 24.16 Khulna 15.00 15.17 15.58 15.58 22.00 30.00 Barisal 15.42 15.83 16.00 19.00 23.75 27.72 Patuakhali 13.75 14.83 16.92 22.00 27.92 30.00 Dhaka 13.80 15.11 16.58 19.27 21.68 k7.45 Mymensingh /a 11.87 14.17 14.71 17.38 20.96 28.96 (Mymensingh) 12.50 13.50 15.00 18.75 20.67 33.33 (Kishoreganj) 11.33 14.83 14.42 16.00 21.25 24.58 Tangall 14.50 15.00 15.00 21.33 25.00 27.33 Dhaka 16.25 21.25 23.50 25.75 25.00 29.09 Faridpur 12.58 14.08 15.00 14.50 16.50 22.91 Chittagong 16.43 13.60 22.08 24.98 31.68 36.43 Sylhe. 15.00 15.42 20.00 23.92 29.50 30.16 Comilla 15.00 17.08 18.75 25.42 30.08 32.27 Noakhali 16.42 19.42 22.75 24.75 33.33 37.50 Chittagong 18.50 20.25 24.25 21.25 33.83 42.08 Chittagong HLll Tracts 17.25 20.83 24.75 29.58 31.67 40.16 Country Average 14.01 15.38 17.05 19.58 24.45 29.53 REAL WAGE RATES (Tk/day, without food, 1973/74 prices) Rajshahi 5.83 5.34 5.39 5.25 6.25 7.11 Dinajpur 5.17 4.73 5.07 4.70 6.11 6.78 Rangpur 6.93 6.07 5.19 5.52 6.52 7.11 Bogra 4.57 4.52 5.47 5.08 5.69 6.78 Rajshahi 7.08 5.87 5.44 4.89 5.59 6.73 Pabna 5.40 5.49 5.77 6.07 7.35 8.13 Khulna 6.65 5.62 5.66 6.47 7.02 7.60 Kushtia 5.47 4.81 4.45 6.57 5.99 7.68 Jessore 6.13 5.13 5.22 5.84 6.09 6.55 Khulna 7.35 6.02 5.99 5.49 6.88 8.13 Barisal 7.56 6.28 6.15 6.69 7.42 7.51 Patuakhali 6.74 5.88 6.51 7.75 8.73 8.13 Dhaka 6.46 6.12 6A)7 6.37 6.12 7.44 Mymensingh /a 5.73 5.17 5.S2 5.95 5.81 7.85 Tangail 6.65 5.75 5.32 6.77 7.02 7.41 Dhaka 7.45 8.14 8.33 8.17 7.02 7.88 Faridpur 6.00 5.40 5.32 4.60 4.63 6.21 Chittagong 7.44 6.81 7.67 7.46 8.70 9.87 Sylhet 6.69 5.61 6.90 7.27 8.33 8.17 Comilla 6.69 6.36 6.46 7.73 8.50 8.75 Noakhali 7.33 6.60 7.84 7.52 9.42 10.16 Chittagong 8.52 7.64 8.48 6.18 8.90 11.40 Chittagong Hill Tracts 7.95 7.85 8.65 8.60 8.33 10.88 Country Average 6.53 5.90 6.13 6.34 6.93 8.00 /a Including Jamalpur. 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Box 41095 CraighaUi Johannesburg 2024 IBRD 20471 S9° 90° 91° 92° BANGLADESH INDIA AVERAGE DAILY WAGE RATE OF UNSKILLED LABOR (WITHOUT FOOD) BY DISTRICT FISCAL YEAR 1986 2 j 2-1986 Wages in Taka 6 High Wage Districts f,-Average Annual Increase / Decrease (%)0 Medium Wage Districts (FY79-FY86) Low Wage Districts 267 *Growih rates (r) were computed using the E) National Capital 26° least-squares method and a DINAJPUR semi-logarithmic functional specification of 0 Divisian Headquarters the form: District Boundaries (1976 version)** /27'\ } ~ . 'In X, = a + bt + E ..- D ,on Boundaries RANGPUR' where X, = real wage in year t - International Boundaries _t =time I2 2~b In n(I+r) 7 * A 3 **Old district boundaries were used because historical data for the new districts were locking. Current boundories are shown in inset map. 25' 250 < T ~~~BOGRA ' )' 'MYE¢iGr K2 500'MY US G / RAJSHAHI e SYLHET ) -24° r3 -16 .tR}'s ND RaAshahi ANGA 2DHAKA IN D 24 INDIA \, :79 ,91, t 230 OV1A11 . 230 o Kh Ina 37 - 5\ }\-1~~~itagn ,,o0to 40 , 8, ' _ e 7 A XKlmees 916 hit tag It t a Boundaries IINDIA INDI f~I~ >~i 2100 40BURMA -21' 21V Kilometers 900 910 9? SEPTEMBER 1987 The World Bank Headquarters European Office Tokyo Office 1818 H Street, N.W. 66, avenue d'I6na Kokusai Building Washington, D.C. 20433, U.S.A. 75116 Paris, France 1-1 Marunouchi 3-chome Telephone: (202) 477-1234 Telephone: (1) 47.23.54.21 Chiyoda-ku, Tokyo 100, Japan Telex: WUI 64145 WORLDBANK Telex: 842-620628 Telephone: (03) 214-5001 RCA 248423 WORLDBK Telex: 781-26838 Cable Address: INTBAFRAD WASHINGTONDC