Bangladesh

Politics:

• Analysis

  Bangladesh politics: The trial of the birth of a nation

  Trying war crimes in Bangladesh: The trial of the birth of a nation

  This week the chairman of Bangladesh's International Crimes Tribunal resigned. We explain the background to his action, our role in the story, and what it all means for his country's search for justice

  BANGLADESH suffered a violent birth. In the last days of 1971 the country then called East Pakistan was engulfed by torture, rape, mass-killing and other acts of genocide. The main perpetrators were Pakistani troops bent on preventing secession from "West Pakistan". But the army had the support of many of East Pakistan's fundamentalist groups, including Jamaat-e-Islami, which remains Bangladesh's largest Islamic party. Estimates of the death toll vary from around 300,000 to the current government's reckoning of 3m--one in 20 of the population at that time.

  In 2010 Bangladesh established a tribunal to try those accused of war crimes. It is called the International Crimes Tribunal, though it is not an international court in the sense of being founded on international law. Rather it is a national court, based on a Bangladeshi statute passed in 1973 and amended in 2009 and 2012. It was very late to begin the search for justice, for the accused as well as for victims. But war crimes are subject to no statute of limitation.

  The main perpetrators are not in the dock, since they are either dead or living in Pakistan. But some suspects are still leading prominent lives in Bangladesh. Ten people have been arrested and charged with offences ranging from individual acts of rape and murder to the ordering of mass executions. This week the first case--that of Delwar Hossain Sayeedi, a member of parliament in 1996-2008 and a leader of Jamaat--seemed to be moving towards its fatal conclusion. His conviction, and presumed death sentence, was widely expected in mid-December.

  At the last moment, however, the presiding judge, Mohammed Nizamul Huq, resigned as chairman of the tribunal, following questions put to him by The Economist and the publication in Bangladesh of private e-mails which cast doubt upon his role and upon the court proceedings. Recordings of him speaking by telephone were also available on YouTube. The Economist has seen these, and other materials, and has been investigating their accuracy and significance. This week, we publish the results of those investigations.

  The e-mails and phone conversations we have seen raise profound questions about the trial. The material suggests the government tried to put pressure on Mr Nizamul, albeit he seems to have resisted it. It seems to show he worked improperly with a lawyer based in Brussels, and that the lawyer co-operated with the prosecution--raising questions about conflicts of interest. And in Mr Sayeedi's case it points to the possibility that, even before the court had finished hearing testimony from the defence witnesses, Mr Nizamul was already expecting a guilty verdict.

  These concerns are so serious that there is a risk not only of a miscarriage of justice affecting the individual defendants, but also that the wrongs which Bangladesh has already suffered will be aggravated by the flawed process of the tribunal. That would not heal the country's wounds, but deepen them.

  As well as being about the birth of the nation, the war-crimes trial also has enormous significance to today's politics in Bangladesh. In the general election of 2008 the current prime minister, Sheikh Hasina, campaigned on a promise to set up the tribunal. The men in the dock include leaders or former leaders of Jamaat, which is allied with the main opposition group, the Bangladesh Nationalist Party (BNP), led by Sheikh Hasina's bitter foe, Khaleda Zia. Since Mrs Zia cannot win power without support from Jamaat, many people doubt that she would continue with the trials should she become prime minister. She has already condemned them as a "mockery". Backers of the trials therefore wanted them wrapped up before the next general election, which is due around the end of 2013.

  The 1973 act says that "if, in the course of the trial, any one of the members of the Tribunal is, for any reason, unable to attend to any sitting thereof, the trial may continue before the other members." The evidence we have seen, though, suggests that a full reconsideration of proceedings may now be required.

  "Absolutely crazy for a judgment"

  The first part of that evidence raises questions about the government's behaviour. It suggests the tribunal came under political pressure to speed proceedings up, even though Bangladesh guarantees the independence of the judiciary. In a conversation of October 14th, between Mr Nizamul and Ahmed Ziauddin, the Brussels-based lawyer of Bangladeshi origin, the judge refers to the government as "absolutely crazy for a judgment. The government has gone totally mad. They have gone completely mad, I am telling you. They want a judgment by 16th December...it's as simple as that." December 16th, known as Victory Day in Bangladesh, is the anniversary of the surrender by Pakistani forces in the war of independence.

  So determined was the government to hurry matters along that Mr Nizamul and Mr Ziauddin worried that ministers were pushing too hard. "We have to make them understand that it [the verdict] is not a product that you just ask for it and it will be delivered from the machine," Mr Ziauddin said later in that same conversation."But we are not in a position to make them understand. Even then we have to try, we have to speak to them."

  It is one thing to push for an early verdict, another to attempt to intervene in the trial to secure one. That seems to have happened, too. In a conversation the next day, Mr Nizamul described how a member of the government "came to visit me this evening. He asked me to pass this verdict fast. I told him 'how can I do that?'...He said, 'Try as quick as you can.'"

  In a phone interview on 5th December, the judge denied that he had come under political pressure and declared he was master of his own court. "We do proceed according to our own wish," he said. "We are following our own proceeding according to our own system and own choice."

  Elsewhere in the material we were shown, however, it is Mr Nizamul's independence that is in question. He is a Supreme Court judge and remains one after resigning as chairman of the tribunal. (A tribunal has between three and five judges; there is no jury.) Mr Ziauddin, the man he is communicating with, is an expatriate Bangladeshi who is an academic specialising in international law. He is the director of the Bangladesh Centre for Genocide Studies in Belgium. The two men have known each other for 25 years, as they were human-rights campaigners and Mr Ziauddin's late brother had been a student friend of the judge.

  The adviser

  In the material shown to us, Mr Ziauddin emerges as an important figure in the trial--offering advice, urging Mr Nizamul to do this or that, and supplying him with news and drafts of court documents. In general, judges are required to be extremely careful about discussing details of cases with third parties because that could lead to bias or the impression that they have come under the influence of someone who has nothing to do with the proceedings. This requirement is embodied in Bangladesh's constitution, which says "the chief justice and other judges shall be independent in the exercise of their judicial functions." The judges' code of conduct confirms that "an independent judiciary is indispensable to the justice system in Bangladesh."

  Perhaps, however, there are extenuating circumstances in this particular case. Though the tribunal is a domestic court, its officers seem eager to measure up to the standards set by international war-crimes tribunals. The tribunal is short of resources. It might be understandable if Mr Nizamul quietly talked to an international expert in order to improve the quality of the tribunal's work.

  That is what Mr Nizamul argued. The order of December 6th explains that the tribunal is based on "new law", so the judges needed to "take the assistance of researchers from inside and outside the country". It names Mr Ziauddin as just such an expert. "During the proceedings of the trial and order the Chairman also took assistance from him," it says.

  Speaking to The Economist on December 4th, Mr Ziauddin said something similar. "It's up to judges to decide where they are going to get research support or other support they need. They are quite entitled to do it. The more so when they really don't have that research backup [in Bangladesh]. [They ask for help] if they feel if there are people more informed about the issue, especially where [international law] is so new in Bangladesh...I'm not really advising him, but if there is a question then I try to respond."

  Yet the characterisation in the order and from Mr Ziauddin contradicts what the judge told us in an interview on December 5th. On the evening before issuing the order, Mr Nizamul admitted that he and Mr Ziauddin talk but denied that the expatriate had a part in preparing documents. "As judges, we cannot take help from third person and outsiders," he said. Asked whether they sometimes exchange e-mails about the tribunal, he says "No, no, no, regarding tribunal...no talks regarding the judgment or regarding the proceedings, no." Later he said, "A Supreme Court judge, we do not talk even with our wife regarding the tribunal."

  In his interview on the previous day, Mr Ziauddin also took the view that judges must be careful about speaking to third parties during a trial. He told us that he has "No official standing [with the court]. No relationship whatsoever." He can send the judge messages if he wants--but "generally though I don't," he said, "he's a judge after all."

  Of course, judges can take advice. But any adviser is usually given an official role, known to prosecution and defence. Also as a general rule, advisers tend to stick to their areas of expertise--giving advice on knotty points of law, for example.

  Mr Ziauddin does not seem to meet these requirements. Before the tribunal's order on 6th December his role had not been disclosed to the court or the public. And his advice seems to go beyond particular points of law to include, for example, the drafting of charges. The 17 hours of conversations available to The Economist took place between August 28th and October 20th this year--the equivalent of almost 20 minutes every day. The two men also exchanged more than 230 e-mails in the 12 months to September. Many of these contacts suggest that Mr Ziauddin was involved in aspects of the trial that go beyond what would be permitted to a court adviser or anyone else. Each particular accusation might appear to be modest, or might be explained away. Taken together, they suggest a disturbing pattern.

  First, Mr Ziauddin appears to have helped prepare documents for the tribunal, which the judge said would be improper. On May 12th the Brussels-based lawyer sent Mr Nizamul a document called "GhulamAzamChargesFinalDraft"; it was a slightly revised version of a charge sheet he had sent six days earlier. The next day, May 13th, the tribunal issued its indictment against Mr Azam, whom the two men usually refer to as "the big one". It was identical to Mr Ziauddin's document. In interviews with us, both men denied that Mr Ziauddin helped prepare documents for the court.

  Second, their discussions ranged beyond the realm of technical advice. On September 6th Mr Nizamul said: "I am a bit afraid about Shahinur [Shahinur Islam, a tribunal judge]. Because he is too inclined to the international standard. It...was in my mind--and prosecutors also complained to me--that he brought the references of foreign tribunals in every order." Mr Ziauddin replied, "he has to be stopped from doing that or he has to be removed from there...If he does not stop he has to go as well, because it is so harmful to us." Here, Mr Ziauddin talks as if he can recommend the dismissal of judges.

  "Very anxious"

  Again, on November 26th 2011 Mr Nizamul (who is known informally as Nasim) sent Mr Ziauddin an e-mail about an important defence petition. His message reads in full: "Subject: Order. not yet received. very anxious. please send by this night bd [Bangladesh] time, otherwise, i will follow my own one. Nasim." Mr Nizamul's e-mail suggests that he considered Mr Ziauddin's arguments to have primacy over his own.

  Third, material we have seen suggests that Mr Ziauddin was communicating with the prosecution and judge about the same issues at the same time. On November 8th 2011 he e-mailed Mr Nizamul a list of matters raised by a defence petition that the judge recuse himself from the trial. The first five items on the list are materials and documents that, the e-mail says, were to be supplied to Mr Nizamul by Zaed-al-Malum, the chief prosecutor at the tribunal. It was perfectly proper for the judge to receive such materials, which do not appear to concern matters that might be disputed in court. It is also possible that the prosecutor was the person best placed to supply them. Even so, it is curious that, on a matter of procedure, the chief prosecutor is being asked to help by someone who is also advising the judge.

  The connection between judge, prosecution and adviser seemed to have continued. On December 11th 2011 Mr Ziauddin sent an e-mail to two prosecutors, including Mr Malum, apparently giving help with the case against Mr Azam and tips on how to present their arguments. He forwarded this advice to Mr Nizamul the same day. Speaking to us, Mr Ziauddin acknowledged knowing Mr Malum, who is acting for his family in unrelated matters. But he denies improper contact about the cases before the tribunal, and Mr Malum has not replied to our inquiries.

  The material we have seen therefore suggests three things: that Mr Ziauddin had an influence over how the prosecution framed its case and how the court framed its indictment; that Mr Ziauddin told the judge in his December 2011 e-mail about how prosecutors might develop their case; and that after the prosecutors laid their charges, the judge accepted guidance about the formal accusations from Mr Ziauddin directly.

  Lastly, in the case of Mr Sayeedi, an e-mail from Mr Ziauddin to Mr Nizamul refers to a shared Google document called "Sayeedi judgment". This document says "last edit was made on October 14". At this time, Mr Sayeedi's lawyers were still presenting his defence to the court. The document consists of a series of subjects ("list of testimonies", "procedural history"; "challenges", etc). Presumably details were to be filled in later. The final headings, and the only two in capitals, read: "CONVICTION/BASIS" and "SENTENCING".

  Courts often start work on long judgments before the end of a trial and Mr Nizamul could have amended his structure to replace "conviction" with "acquittal". However, on his own showing, that was not what was happening. He denied to us he had been working on the document in October. "Delwar Hussain's judgment has not been even started then," he said.

  Legitimate questions

  The judge called our allegations "absolutely absurd" and "all false". Mr Ziauddin argued there were other explanations for our findings but--after the court order telling The Economist to appear before it--said he would make no further comment. We do not believe he has broken any laws and cannot be held responsible for the actions of others. In addition, our investigations have not covered any aspect of the defence's approach to this tribunal. Nevertheless, we believe that, taken together, the material shown to us raises legitimate questions about due process that the Bangladeshi authorities should now investigate thoroughly. These investigations are the more urgent in the light of Mr Nizamul's resignation.

  December 15, 2012

• Background

  Bangladesh: Political forces at a glance

  Present government: Politics in Bangladesh will continue to be dominated by the two main political parties, the Awami League (AL), led by Sheikh Hasina Wajed, and the Bangladesh Nationalist Party (BNP), headed by Khaleda Zia. The AL won a landslide victory in the December 2008 general election, which followed nearly two years of rule by a military-backed caretaker government. The AL currently controls three-quarters of the seats in parliament, allowing it to govern without the support of any of the other members of the Grand Alliance (the grouping of 14 political parties that it leads). However, Sheikh Hasina has chosen to include members of the alliance in the cabinet. The second-largest member of the Grand Alliance is the Jatiya Party, which is led by a deposed former president, Hossain Mohammad Ershad. This party has suffered several damaging splits since 1997 because of its alternating support for the AL and the BNP.

  Political scene to be dominated by long standing rivals

  The BNP was founded by Lieutenant General Ziaur Rahman in 1978, and has been led by Mrs Zia since General Zia was assassinated in 1981. The party suffered a serious split in 2007 following Mrs Zia's arrest on corruption charges, when one faction grouped behind a long-standing Zia loyalist, Khondoker Delwar Hossain, while another, which favoured a change of leadership, rallied behind Hafiz Uddin Ahmed, one of the BNP's longest-serving lawmakers. In June 2008 the two wings decided to reunite in a bid to put pressure on the caretaker government to release Mrs Zia and to try to ensure that the BNP retained a chance of challenging the AL in the parliamentary election planned for December 2008. During the forecast period (2010-14) the BNP is unlikely to increase its representation from its current meagre tally of 30 seats. The party is expected to boycott parliament intermittently and to organise hartals (mass strikes involving street protests) in its bid to destabilise the government. The  BNP espouses Bangladeshi nationalism with anti-Indian and pro-Islamic nuances.

  Parliamentary forces, May 2010
  (no. of seats in Jatiya Sangsad)
  Grand Alliance (14-party governing coalition)	263
  Awami League	230
  Jatiya Party (Ershad)	27
  Jatiya Samajtantrik Dal (JSD)	3
  Workers Party of Bangladesh	2
  Liberal Democratic Party	1
  Opposition alliance	33
  Bangladesh Nationalist Party (BNP)	30
  Jamaat-e-Islami	2
  Bangladesh Jatiya Party (BJP)	1
  Independents	4
  Total	300
  Source: Election Commission.

  Download text file (csv format)

  Next elections: Bangladesh operates a unique system for preparing for parliamentary elections. At the end of a government's term in office, a caretaker government takes over to administer a general election, which must be held within 90 days of the appointment of the interim administration. The AL-led government is expected to hand over power to a caretaker government in January 2014, and under the constitution the next parliamentary election must be held by April of that year.

  May 17, 2010

• Structure

  Bangladesh: Political structure

  Official name

  People's Republic of Bangladesh

  Form of government

  Bangladesh has been a parliamentary democracy since a constitutional amendment in 1991

  The executive

  The prime minister is chief executive and head of the Council of Ministers (the cabinet), which she selects; the presidency is a largely ceremonial role, although the president appoints members of the cabinet and the judiciary and has the power to dissolve parliament

  National legislature

  A unicameral parliament, consisting of 300 seats occupied by members directly elected from geographical constituencies for five-year terms, plus 45 seats reserved for women elected by members of parliament

  National elections

  The most recent general election was held in December 2008. Governments serve maximum terms of five years. The next general election is due to take place by January 2014

  National government

  An alliance headed by the Awami League (AL) won more than two-thirds of the seats in parliament at the December 2008 election, which was overseen by a non-partisan caretaker government. The AL dominates the alliance, and has a two-thirds majority in parliament in its own right. Four other parties in the alliance also won seats: the Jatiya Party is the AL's largest coalition partner, while the Jatiya Samajtantrik Dal (JSD), the Workers Party of Bangladesh and the Liberal Democratic Party (LDP) complete the government

  Main political organisations

  AL; Jatiya Party; JSD; Workers Party of Bangladesh; LDP; Bangladesh Nationalist Party (BNP); Jamaat-e-Islami; Bangladesh Jatiya Party (BJP)

  President: Zillur Rahman

  Prime minister: Sheikh Hasina Wajed

  Key ministers

  Agriculture: Motia Chowdhury

  Civil aviation & tourism: Faruk Khan

  Commerce: Ghulam Quadar

  Communication: Obaidul Quader

  Education: Nurul Islam Nahid

  Finance: Abdul Maal Abdul Muhith

  Fisheries & livestock: Abdul Latif Biswash

  Food: Abdur Razzakque

  Foreign affairs: Dipu Moni

  Home affairs: Mohiuddin Khan Alamgir

  Industries: Dilip Barua

  Labour & employment: Rajiuddin Raju

  Law, justice & parliamentary affairs: Shafique Ahmed

  Local government & rural development: Syed Ashraful Islam

  Planning: A K Khandaker

  Shipping & inland water transport: Shahjahan Khan

  Textile & jute industry: Abdul Latif Siddiqui

  Water resources: Ramesh Chandra Sen

  Central bank governor

  Atiur Rahman

  December 11, 2012

• Outlook

  Bangladesh: Key developments

  Outlook for 2013-17

  • The Awami League (AL) is expected to complete its five-year governmental term, having won a huge majority at the 2008 general election. The next parliamentary poll must be held by January 2014.
  • There is a risk of political instability should the main opposition Bangladesh Nationalist Party (BNP) boycott the next election. Such a move would undermine the credibility of the resulting government.
  • The fiscal position will remain weak in the forecast period as the authorities step up efforts to implement a wide range of development projects aimed at improving infrastructure and alleviating poverty.
  • The economy is forecast to remain on a sustainable growth path, expanding at an average annual rate of 6.3% in fiscal years 2012/13-2016/17 (July-June). Growth will be supported by strong private consumption and investment.
  • Consumer price inflation is expected to moderate, averaging 6.8% a year in 2013-17, compared with an estimated 8.7% in 2012. However, should inclement weather reduce the size of harvests, prices could rise faster.
  • The current account is expected to post shortfalls in 2013-17 as the trade account continues to record large deficits. However, sustained inflows of workers' remittances will partially offset the weak trade balance.

  Review

  • In November supporters of Bangladesh's largest Islamic party, Jamaat-e-Islami, clashed with police, as they demanded the release of senior Jamaat leaders who face prosecution before the country's war-crimes tribunal.
  • The legal team of Delwar Hossain Sayedee, a senior Jamaat leader who is currently standing trial for alleged war crimes, claimed in November that one of their key witnesses had been abducted earlier in the month.
  • Following an investigation, the authorities have denied that the abduction of the witness in Mr Sayedee's trial took place, and have accused the defence team of fabricating the claim.
  • The IMF has urged the Bangladeshi authorities to stick to a fuel subsidy rationalisation programme to which both sides agreed earlier in 2012 following the government's request to the Fund for a US$987m loan.
  • In one of the worst industrial accidents ever in Bangladesh, at least 110 workers were killed in a fire at a garment factory on November 24th.
  • Inflows of foreign direct investment amounted to US$430m in the first half of 2012, virtually unchanged compared with the year-earlier period.

  December 11, 2012

Economy:

• Background

  Bangladesh: Country fact sheet

  Fact sheet

  Annual data	2011a	Historical averages (%)	2007-11
  Population (m)	150.5	Population growth	1.1
  GDP (US$ bn; market exchange rate)	111.9	Real GDP growth	6.2
  GDP (US$ bn; purchasing power parity)	268b	Real domestic demand growth	5.9
  GDP per head (US$; market exchange rate)	744	Inflation	8.4
  GDP per head (US$; purchasing power parity)	1,778b	Current-account balance (% of GDP)	1.7
  Exchange rate (av) Tk:US$	74.15	FDI inflows (% of GDP)	0.9
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Background: The eastern part of Bengal became part of Pakistan with the end of British rule in India in 1947. In 1970 Sheikh Mujibur Rahman led the Awami League (AL) to an election victory in East Pakistan (the future Bangladesh) and demanded a loose federation with the richer and more powerful West Pakistan. In March 1971 separatist forces declared independence, and a civil war broke out. This was eventually won by the Bengali freedom fighters, with the aid of the Indian military, in December of that year. Bangladesh was ruled by a military-backed caretaker government for almost two years from January 2007, following the cancellation of the parliamentary election in that month as the internal security situation deteriorated. A general election was held in December 2008, returning the country to rule by a democratically elected government.

  Political structure: Bangladesh is a parliamentary democracy with universal suffrage. Governments serve a maximum term of five years. The Jatiya Sangsad (parliament) is a unicameral legislature with 300 directly elected members. Laws are passed by simple majority, but constitutional amendments require a two-thirds majority. The 14th amendment to the constitution, passed in 2004, reserves 45 seats for women. An alliance headed by the AL won more than two-thirds of the seats in the legislature at the 2008 election. The next parliamentary poll must be held by January 2014. The opposition alliance, led by the Bangladesh Nationalist Party, holds only 31 seats.

  Policy issues: Bangladesh has pursued market-oriented policies since the mid-1970s, and this policy stance is expected to be maintained by the current, AL-led government throughout its term of office. The government's main priorities include alleviating poverty, expanding national power-generating capacity and improving price stability. Assistance from bilateral and multilateral donors will be crucial to achieving these policy objectives in the short to medium term.

  Taxation: Owing to the narrow nature of the tax base, revenue is generated largely by customs and excise. Personal income is subject to progressive taxation, and corporation tax varies between 25% and 45%.

  Foreign trade: Merchandise exports increased to US$24.6bn in 2011, from US$19.2bn in 2010. Imports grew at a much faster pace, to reach US$32.6bn, resulting in a trade deficit of US$8bn in 2011.

  Major exports 2011	% of total	Major imports 2011	% of total
  Readymade garments	67.5	Petroleum products	13.5
  Fish & prawns	3.0	Textiles	8.2
  Jute products	2.7	Capital machinery	6.4
  Leather & hides	2.2	Iron & steel	5.7
  Leading markets 2011	% of total	Leading suppliers 2011	% of total
  US	19.7	India	18.2
  Germany	16.1	China	13.5
  UK	9.5	Kuwait	4.9
  France	7.2	Singapore	4.0

  Download the numbers in Excel

  Download text file (csv format)

  December 11, 2012

• Structure

  Bangladesh: Economic structure

  Data and charts: Annual trends charts

  
  

  

  December 11, 2012

• Outlook

  Bangladesh: Country outlook

  Bangladesh: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: The political scene will be dominated in the short term by preparations for the next election, which must be held by January 2014. Political stability could come under severe pressure if the main opposition Bangladesh Nationalist Party (BNP) goes ahead with its threat to boycott the poll. The ultimatum is part of a long-standing disagreement between the BNP and the ruling Awami League (AL) over how the election should be conducted. For the past two decades preparations for parliamentary polls have been overseen by non-partisan caretaker governments. The AL and the BNP formerly agreed that the system was necessary to ensure free and fair elections, after a period of military dictatorships in the 1970s and 1980s. However, following a Supreme Court ruling in 2011 that deemed the arrangement invalid, the AL won parliamentary approval for a constitutional amendment abolishing the system. The BNP is opposed to the ending of the caretaker-government arrangement, believing as it does that any election overseen by the AL administration will be flawed.

  ELECTION WATCH: The next election must be held by January 2014. In a departure from the system employed for previous national polls following an amendment to the constitution in 2011, the government will not hand over power to a caretaker administration at the end of its term but instead will oversee the election itself. The AL is determined to be the first ever party in Bangladesh to win a second consecutive term of office. However, its chances of securing victory depend on whether it makes significant progress on improving power supplies and keeping inflation in check. Power-generating capacity has increased since the AL took office in early 2009, but a significant gap still exists between supply and demand. At the same time, should the BNP boycott the next parliamentary poll, as it has threatened to do, this would raise doubts about the contest's legitimacy and the validity of its outcome. The next presidential election is due in 2014; the president is selected by the country's members of parliament, and the post usually goes to the government's preferred candidate.

  INTERNATIONAL RELATIONS: Bangladesh's foreign policy will remain focused on improving economic and diplomatic ties with India and China. Relations with India have improved dramatically since the AL came to power. India's prime minister, Manmohan Singh, made his first official visit to Bangladesh in 2011 and signed a series of deals on trade and co­operation. But the two neighbours did not reach agreement on the transit of Indian goods through Bangladesh or on water-sharing--issues whose resolution is considered crucial to a closer relationship between the countries in the long term. The AL and the BNP differ slightly on foreign policy: the latter party harbours nationalistic tendencies, giving rise to concerns that a BNP government may not enjoy the same kind of cordial relationship with India's administration as is enjoyed by the AL. But such worries have been partially allayed by meetings held in 2011 and in October this year between the BNP's leader, Khaleda Zia, and Mr Singh.

  POLICY TRENDS: In the early part of the forecast period the authorities will make headway towards the UN's Millennium Development Goals, the deadline for the achievement of which is 2015. It will also achieve progress on meeting the terms of a US$987m IMF loan agreed in early 2012. One of the biggest short-term challenges will be to improve the supply of electricity. The main obstacles in this regard are a shortage of gas (the main fuel used by generating plants in Bangladesh) and the large number of old, inefficient power stations. A number of advances will be made, but electricity supplies are unlikely to improve significantly in the forecast period.

  ECONOMIC GROWTH: The Economist Intelligence Unit expects Bangladesh to remain on a trajectory of strong economic growth in fiscal years 2012/13-2016/17 (July-June), when we forecast that real GDP will expand by 6.3% a year on average. Growth will continue to be supported by steady rises in private consumption and investment. One of the main determinants of private consumption growth in the forecast period will be the performance of the agricultural sector, while another will be remittances from the country's diaspora and from Bangladeshis working abroad.

  INFLATION: Until the authorities release more information regarding the statistical change that has recently been made to the consumer price index (CPI), we will continue to monitor the previous measure, which uses 1995/96 as its base year. Consumer price inflation is expected to moderate to 8.6% on average in 2012, from 10.7% in 2011, amid a softening in global commodity prices and fairly good domestic harvests. Assuming that rainfall is close to normal, annual inflation is forecast to average 6.9% in 2013-17. However, there are significant upside risks to our inflation forecast. Food prices will continue to have a large weighting in the CPI basket, and consumer prices could therefore increase much faster than expected if inclement weather reduces the size of harvests, either domestically or elsewhere in the world. Local food prices will also be influenced by global prices for fossil fuels, and particularly gas, as most farmers in Bangladesh will continue to rely on chemical fertiliser (whose manufacture uses large amounts of natural gas) to maximise their crop yields.

  EXCHANGE RATES: The taka is expected to depreciate against the US dollar in the forecast period, weakening from an estimated average of Tk81.9:US$1 in 2012 to Tk95.2:US$1 by 2017. A deterioration in the current-account position, stemming from strong import growth, is expected to exert downward pressure on the local currency. In April 2012 the IMF approved a US$987m loan to Bangladesh, and this has helped to shore up confidence in the taka, as the resulting increase in foreign-exchange reserves has enhanced the ability of Bangladesh Bank (BB, the central bank) to intervene in the markets to prevent erratic movements in the currency's value. BB moved away from targeting a specific exchange rate at the start of 2012, but it will remain committed to maintaining a managed flexible exchange-rate regime. The central bank is expected to confine its intervention to moves aimed at countering volatility and ensuring that foreign-exchange reserves remain sufficient.

  EXTERNAL SECTOR: The current-account position is expected to remain weak in 2013-17, reflecting a forecast increase in the trade deficit as a result of strong domestic demand and persistent shortfalls on the services and income accounts. As a proportion of nominal GDP the current-account deficit is expected to average 1.8% in 2013-17. Remittance inflows will remain an important feature of the current account, as they will continue to make up the bulk of inbound transfers and will be equivalent to around 10% of nominal GDP.

  December 09, 2012

• Forecast

  Bangladesh: Country forecast summary

  Country forecast overview: Highlights

  • The ruling Awami League (AL) is expected to complete its five-year term of office, having won a huge majority at the 2008 general election. The next parliamentary poll must be held by January 2014. There is a risk of political instability should the main opposition Bangladesh Nationalist Party (BNP) boycott the next election, but the risk has lessened in recent weeks following visits by the BNP leader, Khaleda Zia, to both China and India and her meetings with government ministers of both countries.
  • The opposition will continue to use hartals (mass strikes involving street protests) as a means of expressing its dissatisfaction with the government in the run-up to the next election. An escalation in social unrest (possibly sparked by shortages of food, power or water) is a potential source of political instability in the forecast period. The possibility of a sustained campaign of violence by any of the numerous militant groups in Bangladesh constitutes another such threat.
  • Relations between Bangladesh and India are expected to improve in the next five years, although the Indian government harbours concerns about the implications of greater Chinese investment in Bangladesh's economy. Despite a number of meetings, Bangladesh and India have yet to resolve two long-standing issues, namely water-sharing and the question of the transit of Indian goods through Bangladesh. Finding solutions to these issues is crucial to the long-term development of closer ties.
  • Despite a gradual increase in electricity generation, demand for power will continue to outstrip supply, and load-shedding (planned power rationing) will remain common practice in 2013-17. In general, the government is expected to pursue business-friendly policies during the forecast period.
  • The Economist Intelligence Unit forecasts that the economy will remain on a sustainable growth trajectory, expanding by an average of 6.3% a year in fiscal years 2012/13-2016/17 (July-June). Growth will be supported by increases in private consumption and investment. The economy will continue to be heavily dependent on the agricultural sector (which underpins private consumption) and the textile industry (which accounts for the bulk of exports). Workers' remittances will remain an important engine of private consumption growth and will be equivalent to around 10% of nominal GDP on average in the forecast period.
  • Stronger private consumption and investment growth will boost demand for a range of imports in the forecast period. The widening trade deficit will be the main factor behind persistent shortfalls on the current account.

  Country forecast overview: Key indicators

  Key indicators	2012	2013	2014	2015	2016	2017
  Real GDP growth (%)	6.3	6.1	6.3	6.4	6.5	6.4
  Consumer price inflation (av; %)	8.7	8.6	6.9	6.7	6.0	6.1
  Budget balance (% of GDP)	-5.2	-5.4	-5.4	-5.4	-5.3	-5.0
  Current-account balance (% of GDP)	-0.3	-0.9	-1.6	-1.9	-2.2	-2.3
  Exchange rate Tk:US$ (av)	81.92	83.13	86.20	90.21	93.14	95.24
  Exchange rate Tk:€ (av)	105.17	104.95	107.96	111.63	117.36	119.90

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  December 11, 2012

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Country Briefing

Land area

147,570 sq km

Population

164.4m (mid-2010 IMF estimate)

Main towns

Population in '000 (2006 government estimate)

Dhaka (capital): 11,814

Chittagong: 3,588

Khulna: 1,323

Rajshahi: 737

Climate

Tropical monsoon

Weather in Dhaka (altitude 3 metres)

Hottest month, July, 23-35°C (average daily minimum and maximum); coldest month, January, 11-28°C; driest months, December and January, 5 mm average monthly rainfall; wettest month, July, 567 mm average monthly rainfall

Languages

Bengali; Urdu and Hindi are minority languages, and English is also used

Religion

Muslim (89.7% in 2001 census); Hindu (9.2%); Buddhist (0.7%); Christian (0.3%); others (0.1%)

Measures

Imperial system. Local measures include: 1 tola = 11.66 g; 1 seer = 80 tolas = 932 g; 1 maund = 40 seers = 37.29 kg

Numbers are commonly expressed in crores and lakhs; 1 crore = 10m, written 1,00,00,000; 1 lakh = 100,000, written 1,00,000

Currency

Taka (Tk); Tk1 = 100 paisa. Average exchange rate in 2011: Tk74.2:US$1

Fiscal year

July 1st-June 30th

Time

6 hours ahead of GMT

Public holidays

January 1st (New Year's Day); February 21st (International Mother Language Day); February 5th (Birth of the Prophet); March 26th (Independence Day); April 14th (Bengali New Year); May 1st (Labour Day); May 5th (Buddha Purnima); July 6th (Shab-e Barat); August 15th (National Mourning Day); August 16th (Shab e-Qadr); August 19th-21st (Eid al-Fitr); October 24th (Durga Puja); October 26th (Eid al-Adha); November 7th (National Revolution Day); December 16th (Victory Day); December 25th (Christmas Day); December 31st (Bank Holiday); plus religious holidays that depend on lunar sightings and optional holidays for various religious groups

March 14, 2012