IMF study gives high marks to its crisis support

International Monetary Fund support of 15 emerging market countries
in the global financial crisis helped them weather the worst of the
turmoil, according to an internal IMF study published Sunday. A mix
of increased resources, policy flexibility, and more focused
conditionality on financing had allowed the IMF to provide improved
support, the 186- nation institution said. In the report "Review of
Recent Crisis Programs, " the IMF said the fund-supported programs
were delivering the kind of policy response and financing needed to
help cushion the blow from the worst financial crisis since the 1930
s Great Depression. "What this study tells us is that, with IMF
support, many of the severe disruptions characteristic of past crises
have so far been either avoided or sharply reduced," IMF managing
director Dominique Strauss-Kahn said in a statement. Strauss-Kahn
underscored that serious challenges remained, particularly in
restoring sustained economic growth and higher employment, but he
also said there were " encouraging signs of stabilization." "The
governments and peoples of the countries concerned deserve the credit
for these efforts," he said. Still, the study cautioned that daunting
challenges remain as the global economy stabilizes from the worst
global recession since World War II, including the timely unwinding
of fiscal and monetary stimulus and fixing bank balance sheets. The
economists compared the typical economic and financial effects of
past crises and analyzed why those outcomes had been avoided so far
in most cases in Armenia, Belarus, Bosnia & Herzegovina, Costa Rica,
El Salvador, Georgia, Guatemala, Hungary, Iceland, Latvia, Mongolia,
Pakistan, Romania, Serbia, and Ukraine. Key factors for the improved
results included the fund's rapid mobilization of large financing
packages for countries hit by the global financial turbulence of late
2008 that followed the collapse of Wall Street investment bank in
mid- September. Almost all the financing packages provided access
beyond the normal limits to fund resources, with more front-loaded
disbursements. In a number of European programs, private sector
involvement was sought. "Importantly, official financing has been
used more to meet actual funding constraints of the private and
public sectors, less to replenish central banks reserves," the IMF
said.

Australia flags rate rise

Australia's central bank chief on Monday said economic stimulus was
set to be eased back as the country hits "recovery phase" after
shrugging off the worst global economic crisis in decades. Reserve
Bank of Australia (RBA) governor Glenn Stevens said interest rates
would be lifted off 49- year lows to keep a lid on inflation as the
domestic economy rises from its "mild downturn". "I think it is
reasonable to conclude, against the benchmarks of historical and
international experience, that Australia has done quite well on this
occasion," he told a Senate committee hearing. Australia moved a 70
billion dollar (61 billion US) stimulus package and slashed rates to
3.0 percent as the world economy dived, helping it avoid recession
and post world-beating growth of 0.6 percent in the June quarter.
"In due course, both fiscal and monetary support will need to be
unwound as private demand increases," Stevens said. "In the case of
the fiscal measures, this was built into their design. The peak effect
of these measures on the rate of growth of demand has probably
already passed." The central bank chief said strong demand from Asia,
particularly China, for Australia's vast resources had lifted the
economy and brightened prospects for the future.

British PM's party to tell bankers to curb bonuses

Britain's beleaguered ruling Labour Party promised tough new action
on bankers' bonuses Monday, as it fights for its life ahead of
general elections next year. Prime Minister Gordon Brown was forced
to spend the first day of his party's annual conference on Sunday
fending off questions about his health. Business minister Peter
Mandelson blasted the BBC for asking Brown if he was dependent on
anti-depressant drugs, saying the rumours circulating on the Internet
were "completely groundless". Mandelson, Brown's de facto deputy,
said it was "absolutely ridiculous" to suggest the prime minister
had a problem with pill use, and blamed politically motivated bloggers
for raising the possibility. With an election to take place by June,
Labour is so far behind the opposition Conservatives in opinion
polls after 12 years in power that it has little choice but to
portray itself as the underdog.

Gulf sovereign funds lost $350 b in global crisis, says UN

Sovereign wealth funds (SWFs) of four oil- exporting Gulf states lost
around 350 billion dollars last year due to the global financial
crisis, according to a UN report. However, the funds -- those of Saudi
Arabia, Kuwait, Qatar and Abu Dhabi -- almost maintained their total
asset value at the end of 2008 after governments injected into them
huge returns from oil income, the United Nations Conference on Trade
and Development ( UNCTAD) said in a report. The World Investment
Report 2009 , released last week, said that assets held by the four
Gulf funds dropped to 1.115 trillion dollars last year from 1.165
trillion dollars at the end of 2007 and that government injections of
300 billion dollars helped narrow their losses. Abu Dhabi Investment
Authority (ADIA) was the most affected, as it shed around 183
billion dollars from the 453 billion dollars it held in 2007. But
the government pumped 57 billion dollars into the fund, helping it
end last year at 329 billion dollars. Kuwait Investment Authority
(KIA), which owns stakes in Daimler and Citigroup, lost 94 billion
dollars from 262 billion dollars it held at the end of 2007. The
Kuwaiti government, however, injected 59 billion dollars, helping
the fund to stand at 228 billion dollars at the end of last year.
Qatar Investment Authority (QIA) lost 27 billion dollars and ended
at 66 billion dollars in 2008 , while Saudi assets, run by the Saudi
Arabian Monetary Agency (SAMA), valued at 501 billion dollars at
end-2008 , shed around 46 billion dollars, the report said. Gulf
SWFs have never disclosed the size of their assets nor losses. The
UNCTAD report said that in recent years Gulf SWFs have become more
proactive investors, entering riskier investments and targeting
strategic holdings in international companies. "The recent collapse
of real estate and equity markets has generated large losses for
SWFs, but it also offers investment opportunities," UNCTAD said. As
a result, some Gulf SWFs have become more cautious in investing
abroad and turned to investments in domestic economies. The four Gulf
states pump more than 13 million barrels of oil per day, just under
half of total Opec production of around 29 million bpd.

China to launch Nasdaq-style board in late October

China will launch its long-awaited Nasdaq-style ChiNext board in
Shenzhen at the end of October, state media reported Monday. A new
round of firms seeking to list on the board will publish their
prospectuses for initial public offerings after the week-long
National Day holiday, which ends on October 8 , the official
Securities Times reported. These firms, along with 19 companies that
have already released their prospectuses, will make their debut on
the board in the last 10 days of October, the newspaper said, citing
an unnamed "authoritative" source. Regulators hope the new market
will help fuel start-ups and other companies with high-growth
potential in the world's third-largest economy, following the example
of Wall Street's Nasdaq. But there have also been worries that the new
board, which attracted strong interest from investors, may be
diverting funds from the main boards and drag down stock prices. The
first batch of 10 firms, which set their IPO prices and took
subscriptions last week, aim to raise up to 6.68 billion yuan (977.5
million dollars) -- more than double the 3.16 billion previously
planned.

Former Lankan privatisation chief reinstated

Sri Lanka on Monday re-instated the island's controversial former
privatisation chief despite police investigations against him for
causing huge losses for the state, the government said. President
Mahinda Rajapakse restored Punchi Banda Jayasundara as head of the
treasury, the government information department said. He was
stripped of the post a year ago over the sale of bunkering facilities
at Colombo port.

Yen hits eight-month dollar peak

The yen struck an eight-month high point against the dollar on Monday
as exporters repatriated overseas earnings and Japan insisted that it
would not intervene to weaken its currency. The dollar sank as low as
88.25 yen, the weakest since late January. In late morning London
trade it stood at 89.49 yen, down from 89.60 in New York on Friday.
The European single currency fell to 130.90 yen from 131.64 , and
to 1.4627 dollars from 1.4686 , as also traders digested the
re-election of Angela Merkel as German chancellor. The pound
continued to suffer after Bank of England governor Mervyn King had
said last week that the currency's weakness was " helpful" for
rebalancing the British economy. Sterling sank on Monday as low as
1.0752 against the euro, a level last seen in December. Markets were
looking ahead to US data including personal income and spending
figures on Thursday as well as a key monthly jobs report on Friday.
On Monday, Japanese Finance Minister Hirohisa Fujii reiterated that
the new government was not considering a foray into the market to
sell the yen and help exporters. "The recent dollar trend (against
the yen) is not abnormal," he said. It would be a "mistake" to
artificially weaken the yen to defend exporters, he added, restating
the new government's view that a stronger yen would boost consumption
at home thanks to cheaper imports. His remarks gave dealers "the
green light" to sell the dollar for yen, Mizuho Corporate Bank
senior dealer Yuichiro Harada told Dow Jones Newswires.

Singapore visitor arrivals fall in August

Singapore's visitor arrivals in August fell 0.7 percent from a year
ago, its smallest decline since the start of 2009 , the government
said Monday. The Singapore Tourism Board (STB) said 844 ,000 visitors
made trips to the city-state in August compared with 850 ,000 a year
ago. Airfare promotions and marketing activities by the board to
coincide with Malaysia's national day public holiday and Hong Kong's
summer holidays boosted arrivals from the two markets, the STB said
in a statement. Arrivals from Malaysia were up 40 percent annually
to 62 ,000 while 36 ,000 travellers arrived from Hong Kong, up 35
percent, the STB said. Singapore has said it expects to receive about
9. 0-9.5 million travellers this year, generating an expected
12.0-12.5 billion Singapore dollars (8. 5-8.9 billion US) in
revenue. It received 10.1 million visitors last year, missing its
target of 10.8 million as travel slowed in the second half due to
the global slump.

Oil below $65

Oil prices fell on Monday, falling under 65 dollars in London, amid
weak energy demand in the United States, the world's biggest oil-
consuming nation, analysts said. Brent North Sea crude for delivery in
November dropped 55 cents at 64.56 dollars a barrel. New York's
main contract, light sweet crude for November delivery, shed 58
cents to 65.44 dollars a barrel. Concerns over weak US energy demand
are resurfacing after data released Friday showed orders for
American durable goods fell 2.4 percent in August against market
expectations for a rise of 0.4 percent. Durable goods are those
likely to last three years or more, such as cars and appliances, and
represent a key segment of the manufacturing sector. "International
economic news was generally on the disappointing side of market
expectations, leaving metal and oil markets lacking impetus,"
analysts from the Commonwealth Bank of Australia said in a note to
clients. "The US economic data failed to allay concerns that US oil
demand remains tepid," they added. Oil prices had closed higher on
Friday on rekindled tensions over Iran's nuclear programme, traders
said. World leaders last week demanded that nuclear inspectors from
the International Atomic Energy Agency (IAEA) be granted access to a
previously secret plant in crude producer Iran and threatened to
impose tough new sanctions on Tehran. Looking ahead, the oil market
was expected to closely digest US non-farm payroll figures and the
American unemployment rate for September due for release on Friday.
The monthly payrolls report is seen as one of the best indicators of
economic momentum in the world's biggest economy.

Irish recession boosts EU vote's Yes camp: Analysts

The deep recession plaguing Ireland is a boon for the Yes camp in the
country's second referendum on the EU's Lisbon Treaty, analysts say.
Experts say voters are seeing the European Union as a potential
saviour which can pull the once-booming Ireland out of the financial
crisis. On June 12 last year, 53 percent voted against the reform
treaty, but "voting 'no' is a luxury we don't have any more," said
Michael Marsh, Professor of Comparative Political Behaviour at
Trinity College in Dublin. Back then, experts did not predict a
reverse of the "Celtic Tiger" economy's formidable growth. Ireland's
gross domestic product is set to slump by a record eight percent,
while unemployment could top 15 percent -- triple the rate when the
first referendum was held. "We need all the help we can get", Marsh
told AFP, ahead of the second referendum to be held on Friday. "This
is not the time to be cutting ourselves off the international
organisations." Peadar O'Broin, a researcher at the Institute of
International and European Affairs in Dublin, said: "People have seen
the economic security from which Ireland benefits as a member of the
EU -- particularly eurozone membership -- through the now infamous
comparison between Ireland and Iceland." The Nordic country, outside
the 27- country bloc, has seen its economy collapse and has applied
for membership, seeing the EU as a safe haven from the financial
storm. "The economic downturn has made people more aware of the
importance of Europe," said Alan Barrett, a research professor at the
Economic and Social Research Institute in Dublin, citing " awareness
of the support the European Central Bank has given during the banking
crisis". Without the ECB, "not only would our financial system have
collapsed but it would have been impossible to repair it", Finance
Minister Brian Lenihan said. The Yes camp is stressing that without
the 120 billion euros (176 billion dollars) recently injected by
the ECB, Irish banks would probably have had to close. "The harsh
fact was that a 'no' vote would shatter international confidence in
the country's ability to confront the financial crisis," Lenihan
added. Paul Duffy, president of the American Chamber of Commerce
Ireland, which numbers some 600 businesses, also warned against a
"no" vote. "We have no doubt that a second rejection of the Lisbon
Treaty would inflict a severe injury on the prospects for future
foreign direct investment in Ireland," he said.

In BANGLADESH budget monitoring meetings begin October 4

The Finance Ministry is set to begin a series of monitoring meetings
to review the progress in implementing the national budget for
2009-10 financial year. The first meeting will be with the energy
division on October 4 as the government has prioritised the power
and energy sector projects to meet the growing needs for electricity
and gas. The meetings will be continued till October 13 when the
finance ministry will discuss and review the progress of the budget
implementation with all ministries and divisions. This is the first
time that the ministry has taken such initiatives to oversee the
implementation process in such a way. The ministry will focus on
development programmes at the meetings, as the experience in
implementing such programmes was not satisfactory, an official said.
In the past a big portion of the allocated fund for development
projects remained unused mainly because of the slow implementation
process. The current budget has allocated a big amount of Tk 30 ,500
crore for the development programmes. Following the budget
announcement in June, economists suggested the government to take
special steps to ensure timely implementation of its development
projects under the Annual Development Programme (ADP). They also
cautioned that the success of the fiscal targets could not be achieved
without implementing the ADP. Finance Minister AMA Muhith also
admitted that the major challenge would be the implementation of the
budget. The minister in his budget speech, however, said that the
government will initiate special measures to ensure timely
implementation of the budget, especially the ADP. The monitoring
meetings are the major part of the initiatives. The finance ministry
has prepared a priority list of over 200 programmes and advised the
ministries concerned to submit quarterly reports on the progress of
the programmes. The ministry will also have a mid-term meeting in
December when it will review the progress and suggest further
measures to accelerate the process.

BANGLADESHI prime minister urges more foreign investment

Putting bounteous business bonanza on stake, Prime Minister Sheikh
Hasina invited foreign investors to make investment in Bangladesh in
potential sectors like banking, energy, infrastructure, agriculture,
agro-based industries and so. She made the call at a business meet
dubbed ' Investment Summit Bangladesh 2009 ' at Hotel Grand Hyatt in
this US city on Sunday afternoon as part of the PM's busy schedules on
the sidelines of the UN General Assembly session she addressed on
September 26. Businessmen from the Pan Asian-American Chamber of
Commerce were present at the meeting where they exchanged views with
the Prime Minister about the investment-friendly environment
prevailing now in Bangladesh. Prime Minister's son, Sajib Wajed Joy,
was also present at the summit meet on investment where rewarding
business offers from the head of government were aplenty. "In today's
globalised world, the farsighted and wise are taking immediate
advantage of opportunities for expanding their businesses. Surely,
such opportunities exist today for investors in Bangladesh," she told
the gathering. Indeed, she said, immense opportunities do exist for
new investments in capital market, banking, energy, infrastructure,
agriculture, agro-based industries, textiles, outsourcing, manpower,
pharmaceuticals, healthcare, biotechnology, light engineering,
shipbuilding, tourism, information technology, education, among
others. Sheikh Hasina mentioned that her government wants to turn
Bangladesh into a middle-income country by 2021 for which foreign
investment is a significant component. To attract the foreign
investors, fortunately, several conditions already exist in
Bangladesh's favour-a homogenous secular society, progressive
democracy, market-oriented economy, low-cost labour, entrepreneurial
ethos of the workforce, strategic geographic location accessible to
international land and air routes and a large domestic consumer
market of 160 million, the Prime Minister told her business
audience. "Complementing these favorable factors is our government's
incentives of zero duty for export-oriented industry, liberal tax
holidays, easy repatriation of profit, and even capital, in the
event of closures." The Prime Minister noted that such factors
prompted Goldman Sachs to include Bangladesh in its Next 11-- after
Brazil, Russian Federation, India and China--as one holding huge
potential. The government has initiated efforts for making the Board
of Investment effective and efficient.

Profits roll in for AKTEL-Md Hasan

AKTEL, the market's third largest mobile operator, has returned to
profitability in the second quarter of 2009 , after a gap of two
years, putting its financial position second to the largest operator,
Grameenphone. The company's profit after tax and minority interest
(PATAMI) was Tk 618 million at the end of June 2009 , which was a
deficiency of Tk 214 million in June 2008 , according to the
financial report of Axiata, the Malaysia-based controlling company
of AKTEL. In the six operator mobile market, Grameenphone (GP), which
is controlled by Norway-based Telenor, was the only profitable
operator till March 2009. GP's operating profit stood at Tk 569.63
crore at the end of June 2009. Cost management and lowering
subscriber acquisition costs mainly helped AKTEL return to breakeven.
Initially, the company made profits until June 2007 , after which it
faced massive financial losses for two years because it had to
compensate the telecom regulator with Tk 145 crore for involvement in
illegal call termination through VoIP (voice over internet protocol)
technology. AKTEL's EBITDA (earnings before interest, taxes and
depreciation) improved by 44 percent to Tk 3 ,539 million in June
2009 , up from Tk 2 ,459 million a year ago. "The EBITDA improved
significantly mainly from lower subscriber acquisition and related
costs, and reduced interconnect tariff for calls between operators
by the telecom regulator," says the Axiata report. Mobile phone
operators in Bangladesh used to pay Tk 800 as connection taxes on
behalf of new customers. However, from July last year, some
operators, including AKTEL, decided not to bear the tax anymore to
minimise losses. The telecom regulator at the end of 2008 also cut
interconnection tariff between mobile to landline or mobile-to-mobile
from Tk 0.40 to Tk 0.25. Axiata Group Berhad (formerly known as TM
International) is controlling interests in Malaysia, Indonesia, Sri
Lanka, Bangladesh and Cambodia with significant strategic stakes in
India and Singapore. Presently, Axiata controls 70 percent shares of
AKTEL, while the Japanese NTT DoCoMo is controlling the remaining 30
percent.

IN BANGLADESH GRAMEEN PHONE launches IPO-Sarwar A Chowdhury

Leading mobile phone operator Grameenphone is set to open its initial
public offering (IPO) subscription to the public next week to raise
Tk 486.08 crore. Subscription will begin next Sunday and close on
Thursday (October 8). However the opportunity will remain open to
non-resident Bangladeshis up to October 18. Raihan Shamsi, chief
corporate affairs officer of Grameenphone, said: "We are optimistic
about the launch of the GP IPO next week. Our IPO subscription
period for investors will begin nationwide on October 4 and run till
October 10 for resident Bangladeshis and October 18 for the
non-resident Bangladeshis." "We are honoured to be a part of the
largest IPO in the history of the Bangladesh capital market and would
like to thank SEC, DSE and CSE for their on-going commitment and
support to our transaction throughout the process," he said. Despite
concerns over liquidity outflows from the market during subscription
period, market insiders anticipate no such impacts. "Those who intend
to bid for Grameenphone shares have already withdrawn money from the
market by selling stocks from their portfolios," Sheikh Mortuza
Ahmed, head of merchant banking division of Prime Bank, told The
Daily Star yesterday. It means, he said, the market has already
absorbed the first shock and it did not observe any major fall.
Grameenphone, which received the final approval from the Securities
and Exchange Commission (SEC) on August 20 , will float 69 , 439 ,400
ordinary shares worth Tk 10 each, in addition to a Tk 60 premium
per share. As the market lot has been fixed at 200 shares, a
prospective investor will have to deposit Tk 14 ,000 to any of the
15 selected banks and the state-run Investment Corporation of
Bangladesh for Grameenphone shares. Cititgroup Global Markets
Bangladesh Private Ltd is the issue manager of the IPO, the largest
of its kind in the history of the Bangladeshi market. The market has
been waiting for the Grameenphone IPO for a long time now, but it
was delayed several times. Although Grameenphone finalised its plan to
raise $300 million from the capital market in July 2008 , it cut
the IPO and pre-IPO size to $125 million, as the company's valuation
dropped to $3.2 billion from a previous $3.75 billion and the
foreign institutional investors did not participate in pre-IPO
bidding due to the global economic slowdown. The pre-IPO or private
placement was later completed with local participation in December
last year. The final prospectus was submitted in January this year.
But the Dhaka Stock Exchange in March this year decided not to list
the securities with a face value of Tk 1 and urged Grameenphone to
increase its share price to Tk 10. Later, with direction from SEC,
Grameenphone increased share prices to Tk 10.

Open sky for CHITTAGONG airport likely-SOHEL PAVEZ

The government considers opening up Chittagong Shah Amanat
International Airport to international flights, aiming to make it a
regional hub in future. "Adoption of an open sky policy for the
Chittagong airport is now under our active consideration. We want
that it turns a major aviation hub in South Asia," Hedayetullah Al
Mamoon, civil aviation and tourism secretary, told The Daily Star
yesterday. He said a feasibility study is underway to evaluate the
policy. He expects that such a policy will have a positive impact on
trade and commerce at the port city besides attracting foreign
tourists to visit the world's longest unbroken sea beach in Cox's
Bazar. The airport in Chittagong, which was modernised earlier this
decade at a cost of more than Tk 500 crore, has a capacity to handle
as many as 3 million passengers and nearly 6 ,000 tonnes of cargo a
year, as its runway allows wide bodied aircraft to land. But much of
its potential remains untapped due to scanty air movement at the port
city. Analysts linked the under-utilisation of the airport to a lack
of infrastructure and poor air traffic, which discourages airlines to
fly. They said problems with Departure Control System (DCS),
refuelling, cargo handling and flight catering remain. Domestic
carriers -- Biman, GMG, United -- and two foreign airlines --Air
Arabia and Oman Air -- are presently operating flights from the
airport. Thai Airways once began flights from the port city but
discontinued operations in 2008. Officials of the Civil Aviation
Authority, Bangladesh (CAAB) however said it will improve facilities
to lure more airlines to use the port. "We will remove all the
shortcomings at the airport to attract airlines. We are also
receiving positive responses from airlines to operate from there,"
said CAAB Chairman Air Commodore Sakeb Iqbal Khan Majlis, citing the
interests of carriers like Dubai based budget airline Fly Dubai to
operate flights from the Chittagong airport. He said opening up the
airport for all carriers will not only help reduce pressures on Zia
International Airport in Dhaka but also increase Chittagong airport's
viability. "It will attract more airlines to use the airport, as
there will be no restrictions on flight operations once the open sky
policy came into force," he said. Majlis said CAAB will draft an open
sky policy for Chittagong, if the results of the feasibility study are
positive. "Opening up the Chittagong skies will help increase
government revenue earnings because of an increased movement of
carriers," he said. This policy for the Chittagong airport will be
effective after a final approval from the cabinet, Majlis added. Kazi
Wahidul Alam, editor of aviation and tourism fortnightly 'The
Bangladesh Monitor', hailed the plan, but said the port suffers from
inadequate infrastructure to lure carriers. "It is a good move, but
the government needs to develop infrastructure facilities to attract
carriers," he said. Traffic from Chittagong remains at low levels and
efforts should be made to develop markets to lure airlines, said
Alam. "If there are facilities, people will come to avail services."