Four pieces of good news: Inequality will undermine the success of becoming rich

It is usually bad news that does not come alone. But sometimes good news, too, may appear one after another, or simultaneously. That is what has happened to Bangladesh in recent weeks, at the outset of the new fiscal year.
The first news is Bangladesh has joined the league of rich nations. This has been conveyed by the UK-based consulting firm PriceWaterhouse Company (PWC). According to the firm Bangladesh now occupies 31st place in world economic ranking. It believes that after 35 years i.e. in 2050 the 23rd place will belong to Bangladesh. At that time the country will come out of the category of Least Developed Country (LDC) joining the ranks of developed countries.
Bangladesh will reach the second stage in economic ranking after 15 years in 2030, moving to 29th place from 31st. During this 15 years Bangladesh will post 5 per cent annual rate of growth. PWC thinks by 2030 the GDP and purchasing power parity (PPP) of Bangladeshis will be US$ 1291 billion  (1 lakh 29 thousand and 100 crore US dollar). In 2050 PPP will stand at US$ 3367 billion (3 lakh 36 thousand and 700 crore US dollar). For a country whose 22 per cent population are still below poverty line to attain the status of rich country is nothing sort of a miracle. But that is what is going to happen, it is being predicted.
According to PWC out of eight emerging countries that hold the prospect of becoming rich Bangladesh is one. The remaining seven countries are Philippines, Columbia, Egypt, Iran, Pakistan, Thailand and Netherlands. The 10 countries that will progress rapidly to rich country status are all developing and seven of them are in South and South-east Asia. PWC has reported that the 32 countries that will become world economic power and will account for 84 percentage of world GDP will include Bangladesh. The new fiscal year in Bangladesh could not expect a more warm greetings than this.
The second good news for Bangladesh is related to the first and belong to the same category. According to a World Bank report Bangladesh has graduated into lower-middle income country from low-income country. In 2014 the per capita income of Bangladesh stood at US$ 1080 which qualifies it to be considered as a lower-middle income country. The country has been treated as a low income country for long 40 years. A country has to have US$ 1046 billion as gross domestic product to be eligible as lower-middle income country. Bangladesh has fulfilled this condition. The country is no more dependent on foreign aid as in the past. At present foreign aid amounts to only 1.8 percentage of GDP. Thirty years ago this percentage was 8.
Bangladesh will enjoy all trade concessions in spite of becoming a lower middle-income country. This facility will be enjoyed till 2021. Till then its status as LDC will remain intact. The reason for this is that there is a difference between attaining the status of lower-middle income country according to World Bank estimate and enjoying the status of LDC which is determined by UN Economic and Social Council (ECOSOC). If a country is LDC it enjoys trade concessions whereas classification of countries on the basis of income determines the eligibility to obtain loan at concessional rate. Bangladesh at present receives loan at concessionary rate but is not eligible to obtain commercial loan at market rate. The availability of commercial loan depends on the ability to repay. According to the World Bank, Bangladesh will be eligible for commercial loan as it makes steady economic progress.
The World Bank makes classifications of countries based on income on July 01 every year. The basis for this is the per capita income of the previous year. Lower-middle income status confers several facilities. Already the cost for opening letter of credit for Bangladeshi businessmen and women has been reduced. At the same time the risk related to sovereign debt will also be slashed down. A country gets three years after graduating from LDC status for making adjustments. Bangladesh will also get this opportunity to make necessary preparation to adapt to changes. The World Bank disclosure has taken into account the political stability and macro economic management. The country should make maximum use of the favourable economic environment that prevails. It should also give importance to fostering greater equality among different classes. Inequality will undermine the success of becoming rich.
The World Bank's disclosure has been followed by another prestigious upgradation in ranking by the Organisation for Economic Co-operation and Development (OECD). The OECD has upgraded the Bangladesh's country risk from 6 to 5. The risk classification refers to a country's ability to transfer currency for foreign payments. The ability is determined by three main factors: political, economic and fiscal factors. The risk classification is used to define the minimum premium for credit risk in each country. The major reason for upgradation from country category 6 to 5 is the robust growth and resilience of Bangladesh economy accompanied by high and stable economic growth for well over a decade despite political upheaval and weak external demand.
The three good news mentioned above have been strongly supported by another disclosure by the Bangladesh Bank. It is reported that the country's remittance earning for the first time has crossed US$ 15 billion mark with an annual 7.5 per cent increase. The remittance inflow showed increasing trend in the outflow of migrant workers as a result of the government initiatives to resume and increase manpower export to major Middle Eastern countries, mainly Saudi Arabia and the United Arab Emirates.
Bangladesh Bank hopes that the remittance would increase further in the near future with a surge in the number of workers going overseas. Attention has to be given to the productive use of the hard earned money of wage earners. Remittance should make proper contribution to economic growth which so far has not been the case.
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