[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Per capita income increased to US$2784 in FY 2023-24: BBS

The per capita income of Bangladesh stands at US$2784 in the current fiscal year, slightly higher than the previous fiscal year. Bangladesh Bureau of Statistics (BBS) released the periodic data on Monday. The end of the current fiscal year is just a few days away. The BBS prepared this projection

thefinancialexpress.com.bd

Per capita income increased to US$2784 in FY 2023-24: BBS
UNB
Published :
May 21, 2024 19:52
Updated :
May 21, 2024 21:35

The per capita income of Bangladesh stands at US$2784 in the current fiscal year, slightly higher than the previous fiscal year.

Bangladesh Bureau of Statistics (BBS) released the periodic data on Monday. The end of the current fiscal year is just a few days away. The BBS prepared this projection from an existing trend of the economic situation.

BBS says that by the end of FY 2023-24, the provisional GDP growth will stand at 5.82 per cent, which was 5.78 per cent in the previous FY2022-23.

At present the per capita income in terms of taka is Tk 0.361 million, which in the last financial year was Tk 0.273 million. The amount of per capita income in the local currency increased due to the devaluation of taka.​

 

[Saif]

Why is it taking so long to stabilise the economy?

Bangladesh’s macroeconomic imbalances have emerged from inflationary pressure; the balance of payments pressure; and fiscal pressure

www.thedailystar.net

Why is it taking so long to stabilise the economy?

VISUAL: SHAIKH SULTANA JAHAN BADHON

Bangladesh's economy showed remarkable signs of swift recovery from the adverse effects of Covid-19, but this progress was cut short by the advent of serious macroeconomic imbalances in April 2022. These imbalances are reflected in high inflation, depleting foreign exchange reserves, pressure on the exchange rate, shrinking capital inflows, and pressure on the budget. To address the stabilisation issues, the government entered a four-year programme with the International Monetary Fund (IMF). Implementation of the second year of the programme is currently underway.

To read the rest of the news, please click on the link above.​

 

[Saif]

How sharp depreciation of taka affects Bangladesh’s GDP per capita

The rapid depreciation of the taka against the US dollar has had a noticeable impact on the country's economic growth, as evidenced by the recent GDP data published by the Bangladesh Bureau of Statistics (BBS)

www.thedailystar.net

How sharp depreciation of taka affects Bangladesh's GDP per capita

The rapid depreciation of the taka against the US dollar has had a noticeable impact on the country's economic growth, as evidenced by the recent GDP data published by the Bangladesh Bureau of Statistics (BBS).

Per capita GDP in taka terms has shown a steady growth from the fiscal year of 2020-21 to 2023-24, rising from Tk 208,751 to Tk 294,191. It was Tk 262,868, meaning it rose 12 percent in the current financial year.

Per capita GDP in dollar terms, however, has not followed the same trend.

In 2021-22, per capita GDP in dollars rose to $2,687 from $2,462 in FY21. However, it fell to $2,643 in FY23 before slightly recovering to $2,675 in the current financial year, up 1.2 percent year-on-year.

To read the rest of the news, please click on the link above.​

 

[Saif]

Forex reserves rise by $180 million in a week

Reserves hit $18.61 billion on May 21, up from $18.43 billion on May 15

www.thedailystar.net

Forex reserves rise by $180 million in a week
Reserves hit $18.61 billion on May 21, up from $18.43 billion on May 15

Bangladesh's foreign currency reserves have risen to $18.61 billion on May 21, an increase of $180 million from a week ago, central bank figures showed.

It was $18.43 billion on May 15, according to a central bank calculation based on the International Monetary Fund's Balance of Payment Manual 6.

The Bangladesh Bank began calculating forex reserves in line with the new method in July last year as per suggestions of the lender, which approved a $4.7 billion loan in January that year.

Tuesday's reserves were far lower than the $41 billion the country reported in August 2021. Since then, import payments have risen faster than remittance earnings and exports, bringing the reserves to the current level.

To read the rest of the news, please click on the link above.​

 

[Saif]

Budget For Fy25: 53pc rise in allocation for debt servicing

The government’s allocation to repay foreign debts may reach Tk 57,000 crore in the next budget, a 53 percent rise from the current year, putting further pressure on the country’s dwindling foreign currency reserves.

www.thedailystar.net

Budget For Fy25: 53pc rise in allocation for debt servicing
Spiralling amount will put strain on reserves, say experts

The government's allocation to repay foreign debts may reach Tk 57,000 crore in the next budget, a 53 percent rise from the current year, putting further pressure on the country's dwindling foreign currency reserves.

The interest payments for increasing levels of foreign loans in recent years and the tumbling value of the taka against the US dollar have forced the government to set aside more for debt servicing.

Allocation for foreign debt repayment has been Tk 37,076 crore in the current fiscal year, according to the finance ministry.

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[Saif]

Budget for FY25: Scope likely for legalising black money

The government is thinking about allowing again undisclosed money to be legalised and laundered money to be brought back home through formal channels in the next budget.

www.thedailystar.net

Budget for FY25: Scope likely for legalising black money
Govt also mulling ways to bring laundered money home

Illustration: Collected

The government is thinking about allowing again undisclosed money to be legalised and laundered money to be brought back home through formal channels in the next budget.

A finance ministry official said the National Board of Revenue and Bangladesh Bank are trying to find out ways this could be done.

The official said they were considering to impose a 15 percent tax on legalising black money.

Similar steps had been taken in the past, but the result was not as expected, the official added.

To read the rest of the news, please click on the link above.​

 

[Saif]

Most economic indicators on the downtrend

Discover how economic indicators like inflation, dollar crisis, and foreign exchange reserves are worsening, putting pressure on Bangladesh's economy and banking sector.

en.prothomalo.com

Most economic indicators on the downtrend
Shanaullah SakibDhaka
Published: 27 May 2024, 11: 54

Most of the economic indicators--inflation, dollar crisis, foreign exchange reserves have worsened, resulting in mounting pressure on the overall economy.

The cost of doing business has gone up as Bangladesh Bank has increased the interest rate.

The banking sector has become fragile as money is being taken from banks in names, real and false.

Panic has spread due to the initiative for the forceful bank mergers. At least three banks are struggling to return depositors' money, according to the central bank and officials in the sectors concerned.

Although the Covid pandemic hit the economy, the economic indicators were better at the time.

The economic indicators started to worsen mid-2022.

Bangladesh Bank at the time said the crisis would end by December. Later, the crisis intensified. Now the central bank assures businessmen that the crisis will go by December this year.

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[Saif]

Why are IMF policies failing to stabilise our economy?

Why does macroeconomic instability continue to plague Bangladesh even after partnering with the IMF?

www.thedailystar.net

Why are IMF policies failing to stabilise our economy?

During its latest partnership with the International Monetary Fund (IMF), Bangladesh has been experiencing high inflation for the past 22 months, its economic crisis worsening gradually. Financial account deficits have surpassed $9.26 billion. With outstanding payments across various sectors like electricity, aviation, fuel imports, and various digital sectors, the net reserves have plummeted to just $13.8 billion, a situation reminiscent of nine years ago. The continuous dollar crunch and dollar payment crisis have persisted for the past 22 months, further strangling the country's business and employment sectors due to LC's substandard control.

Meanwhile, the government is also suffering from a local currency crisis. Being unable to make due payments in taka, it decided to issue special bonds worth nearly Tk 26,000 crore. Nearly half of the new foreign loans are being used to pay the interest and principal on unscrupulous loans taken in the past. The country has witnessed the highest depreciation in the value of taka during this time. So, the question arises: Why does macroeconomic instability continue to plague Bangladesh even after partnering with the IMF?

To read the rest of the news, please click on the link above.​

 

[Saif]

Bangladesh could be a regional trade hub

Bangladesh could become a regional hub for trade and investment in the wake of ongoing geopolitical tensions and growing focus on the Indo-Pacific region, according to Paul J Thoppil, Canada’s trade representative for the Indo-Pacific.

www.thedailystar.net

Bangladesh could be a regional trade hub
Says Canadian trade representative

Paul J Thoppil

Bangladesh could become a regional hub for trade and investment in the wake of ongoing geopolitical tensions and growing focus on the Indo-Pacific region, according to Paul J Thoppil, Canada's trade representative for the Indo-Pacific.

However, the country would need to sign Foreign Investment Protection Agreements (FIPAs) in order to encourage foreign direct investment (FDI) to this end, he said.

A FIPA is an international treaty between two countries that imposes rules on how foreign investors from either side can be treated while doing business with the other, thereby protecting their interests.
Most countries have taken advantage of the huge low-cost labour force in China, Thoppil said.

"But given geopolitical tensions, a lot of foreign multinationals are considering adopting a combined China Plus One policy," he added.

China Plus One refers to a global business strategy where companies avoid investing only in China and opt for a more diverse portfolio featuring a variety of ASEAN countries.

Bangladesh has the opportunity to benefit from this strategy amid the changing global supply chain thanks to its low-cost and educated labour force, Thoppil said.

"I would like Bangladesh to leverage this attribute as demonstrated in the country's garments sector to increase trade and investment with Canada and other parts of the North American market," he added.
Thoppil made these comments in an exclusive interview with The Daily Star on May 21 during a three-day visit to Dhaka, where he held meetings with top government officials to promote bilateral trade and investment.

He said he observed vibrancy in the economy, confidence in the private sector, good infrastructure and a youthful population.

In fact, Bangladesh's economic progress in the past two decades has been so fast that it was not well observed by the outside world, he said.

"I think we should send the Canadian private sector a signal that Bangladesh is a fantastic place for investment as it could be a hub for exports to India, China and neighbouring countries," he said.

To read the rest of the news, please click on the link above.​

 

[Saif]

Taxes on basic consumer commodities being halved

Taxes on numerous basic consumer commodities are getting cut to half as the government is set to bank on fiscal measures to combat high food inflation, sources say. Existing tax on procurement of rice, wheat, potatoes, onions, garlic, green peas, gram, lentils, garlic, turmeric, dry chili, p

thefinancialexpress.com.bd

Taxes on basic consumer commodities being halved
Inexorable inflation control dominates new budget's fiscal measures
DOULOT AKTER MALA

Taxes on numerous basic consumer commodities are getting cut to half as the government is set to bank on fiscal measures to combat high food inflation, sources say.

Existing tax on procurement of rice, wheat, potatoes, onions, garlic, green peas, gram, lentils, garlic, turmeric, dry chili, pulses, maize, coarse flour, flour, salt, edible oils, sugar, black pepper, cinnamon, nuts, clove, cassia leave, dates, cardamom, and all types of fruits would be cut to 1.0 per cent from the existing 2.0 per cent in the budget for the next fiscal, to be placed in parliament on June 6.

Also, procurement of jute, cotton, yarn, computer and computer parts would enjoy tax cuts in FY 2024-25.

Official sources have said the tax-cut decision has been made following instructions of the prime minister to combat food inflation through fiscal measure in the upcoming budget.

According to Bangladesh Bureau of Statistics (BBS), cost of food in Bangladesh increased 10.22 percent in April 2024 over the same month in the previous year.

Food inflation in the country averaged 6.83 per cent in 2024 over the past year, reaching an all-time high of 12.56 percent in October 2023, against a record low of 3.77 percent in February 2016.

Currently, banks or financial institutions deduct the tax on those commodities procured through letter of credit (LC) or other modes of financing agreement on paid or loan amount.

Former lead economist at World Bank, Bangladesh, Dr Zahid Hussain, however, finds the effort to tame food inflation through tax cuts not justified.

He rather suggests trying subsidizing food prices through increasing allocations, if the government could control 'market power'.

On tax cut he says, "The government has to address the need for mobilizing domestic revenue for social-safety net, higher allocation to education and health."

Meanwhile, blanket tax holiday for megaprojects and other physical infrastructures may also end in the current fiscal year.

To read the rest of the news, please click on the link above.
​

 

[Saif]

Dollar crisis deepens economic woes in Bangladesh

The persistent dollar crisis in Bangladesh has exacerbated various economic issues, including inflation, rising business costs, an energy crisis, and mounting government foreign debt payments...

www.newagebd.net

Dollar crisis deepens economic woes in Bangladesh
Mostafizur Rahman 29 May, 2024, 23:59

A file photo shows a man counting US dollar notes at a currency exchange house in the capital Dhaka. | New Age photo

The persistent dollar crisis in Bangladesh has exacerbated various economic issues, including inflation, rising business costs, an energy crisis, and mounting government foreign debt payments.

Bankers say that commercial banks in the country are having difficulty opening Letters of Credit because their holdings of foreign currency are evaporating rapidly.

In April, foreign currency reserves held by commercial banks fell to a 14-month low of $5,047 million, down from $5,439 million in March and $5,559 million in December 2023. This is the lowest level since January 2023, when reserves were $4,849 million.

Against the backdrop, banks received little support from the central bank, whose own foreign reserves are also dwindling, making it harder for banks to open LCs for importing essential products.

Many import payments have been delayed or renegotiated due to the dollar shortage, leaving banks desperate to acquire the necessary foreign currencies.

The country's foreign currency reserves, according to International Monetary Fund guidelines, dropped to $18.2 billion in May 2024 from $48 billion in August 2021.

To mitigate the depletion, the government has secured a $4.7 billion loan deal from the IMF.

On May 8, the central bank devalued the local currency from Tk 110 to Tk 117 per US dollar.

However, many banks are selling dollars at Tk 120–123 for opening LCs. This devaluation follows a series of declines from Tk 94.7 in July 2022 and Tk 84.8 in July 2021.

Bangladesh, like many other countries, has foreign debt denominated in US dollars. As the taka depreciates, it will take more taka to repay the same amount of foreign debt in dollars.

It can lead to higher debt repayment obligations for the government and businesses, putting further strain on their finances, economists said.

Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said that the persistent dollar crisis has forced banks to decline opening LCs.

As a result, the import of raw materials has been delayed or obstructed, significantly reducing business production.

He added that hampered imports have led to reduced production and increased product prices due to supply constraints.

To read the rest of the news, please click on the link above.​

 

[Saif]

Budget deficit to remain high in next fiscal year also

Budget deficit in the next fiscal year is likely to be Tk 2.50 trillion as the government frames a slightly expansionary budget amid ongoing elevated inflationary pressure, officials said, although inflation control remains its high priority. The government is likely to frame a Tk 7.969-tril

thefinancialexpress.com.bd

Budget deficit to remain high in next fiscal year also
Taming inflation, higher expenditure contradictory, say economists
FHM HUMAYAN KABIR

Budget deficit in the next fiscal year is likely to be Tk 2.50 trillion as the government frames a slightly expansionary budget amid ongoing elevated inflationary pressure, officials said, although inflation control remains its high priority.

The government is likely to frame a Tk 7.969-trillion national budget for the fiscal 2024-25 with one-third of the outlay constituting a gap between income and expenditure targets.

Economists find such massive deficit amid the ongoing economic slowdown contradictory to government priority of inflation control in the upcoming fiscal year.

Bangladesh passes through a higher trajectory of inflation for over a year, which is still close to double-digit figure on a point-to-point basis.

In the last month of April, the inflation rate was recorded at 9.74 per cent in the Bangladesh Bureau of Statistics (BBS) data.

Ministry of Finance (MoF) officials say since the country's better economic growth will have to be kept continuing, they opted for a higher-expenditure target than the one in the current FY2024.

"We know that we need borrowing to bankroll the deficit budget, but we have planned to keep the economy growing," a senior official told the FE correspondent.

"At the same time, we are going to lay top priority on controlling inflation in the next national budget," he added.

According to the MoF officials, the government is likely to set a target of pegging inflation within 6.5 per cent in FY2025.

They hope to keep the budget deficit within 5.0 per cent of the targeted GDP or gross domestic product.

Meanwhile, the government kept the budget deficit at Tk 2.61 trillion, or 5.2 per cent of the GDP, in the outgoing budget worth Tk 7.62 trillion.

Noted economist Dr Debapriya Bhattacharya told the FE that the contractionary monetary policy and higher budget deficit do not fit in this moment properly.

"When you will prepare a budget with higher deficit, then you will definitely go for borrowing. You may go to local banks or to the foreign lenders to bankroll the deficit budget. If you go for local borrowing, there will be a crowding-out effect," he says about the budget arithmetic.

And then the credit flow to the investors will be lower and investment will be slower further.

To read the rest of the news, please click on the link above.​