[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Dollar, energy crises, NPL hold back growth

Businesspeople and economists said on Sunday that extortion, non-performing loans, the gas crisis, and dollar shortages were holding back the country’s private sector growth. They...

www.newagebd.net

Dollar, energy crises, NPL hold back growth​

Staff Correspondent | Published: 00:12, Feb 19,2024

Businesspeople and economists said on Sunday that extortion, non-performing loans, the gas crisis, and dollar shortages were holding back the country’s private sector growth.

They also urged the government for sustainable policy reforms and a long-term roadmap for achieving the country’s target of a trillion-dollar economy.

The Dhaka Chamber of Commerce and Industry organised the seminar on ‘Bi-annual economic state and future outlook of Bangladesh’s economy: private sector perspective’ at its auditorium in the capital.

DCCI former president Shams Mahmud, also Shasha Denims Limited managing director, said that the government had to ensure energy at an affordable price and uninterrupted gas supply to the industries to boost private sector investment in the country.

‘After LDC graduation, we must look into establishing import substitute industries to be self-sufficient,’ he said, proposing a rationalised taxation system and continued special support for cottage, micro, small, and medium enterprises.

He said that the dollar crisis had created an adverse impact on the country’s private sector for doing business.

Policy Research Institute senior economist Ashikur Rahman said that macroeconomic instability was not good for the private sector.

‘NPL always has a negative impact on businesses. So it is time to take a serious decision against NPL,’ he said, adding that the country’s tax-to-GDP ratio, which is hovering around 10 per cent, is not up to the expected level.

He also said that the government should take the initiative to check the decline of the country’s foreign currency reserve and ensure that inflation comes down.

Bangladesh Institute of Development Studies research director Mohammad Yunus said that sometimes extortion at the retail market becomes one of the main reasons behind rising inflation.

He asked why the business had to pay extra money to do business in the market.

DCCI president Ashraf Ahmed requested that the government lower corporate tax, complete the automation of the taxation system, increase the tax net, and reform supplementary duty and value-added tax to promote private sector growth.

‘As NPL has an impact on increasing some intermediary costs for the private sector, I suggest reducing NPL. Reducing the cost of doing business, uninterrupted energy supply at an affordable price, and logistic sector development will help the private sector re-investments,’ he added.

He also urged the government to reduce the cost of doing business, ease doing business, improve regulatory efficiency, install appropriate infrastructure, ensure energy security, improve logistics, and ensure access to finance for the private sector for the long-term growth target of achieving a trillion-dollar smart economy.

He noted that the private sector investment target was 27.4 per cent of GDP in FY2024, while it was 21.8 per cent in FY2023.

‘Required policies considering the LDC graduation will expedite private sector investment,’ the DCCI president added.

Speaking as chief guest, the economic affairs adviser to the prime minister, Mashiur Rahman, said that the country’s economy had experienced fundamental changes during the past decade, and the private sector had also flourished remarkably.

‘Policies should be formed considering the problems and prospects of the private sector,’ he added.

He stressed export diversification and value addition to export products and acknowledged that reforms were needed in the taxation system as there are still some problems and challenges.

‘We should also tap into the huge potential of the blue economy,’ Mashiur added.

Bangladesh Bank chief economist Md Habibur Rahman said that due to global geopolitical instability, the price of essentials had increased, and the central bank had already taken the necessary measures to tackle the situation.

‘Bangladesh Bank will introduce a Clawing Peg system to keep the exchange rate under control. The central bank has underscored a roadmap to bring NPL in the industrial sector down to 8 per cent within the next 2 years,’ he said.

He also said that the Bangladesh Bank would maintain contractionary monetary policy until inflation came down to 6 per cent.​

 

[Saif]

Foreign Loan: Repayment crosses $4b for first time

Foreign loan repayment, which was hovering around $3 billion since fiscal 2012-13, crossed the $4 billion-mark for the first time last fiscal year on the back of high interest payments and short-term loans in the power and energy sector.

www.thedailystar.net

Foreign Loan: Repayment crosses $4b for first time​

Amount expected to soar in coming years

Foreign loan repayment, which was hovering around $3 billion since fiscal 2012-13, crossed the $4 billion-mark for the first time last fiscal year on the back of high interest payments and short-term loans in the power and energy sector.

In fiscal 2022-23, foreign loan repayment stood at $4.78 billion, up 32.8 percent year-on-year, according to the Economic Relations Division.

The repayment increased $1.18 billion from fiscal 2021-22. In previous years, the repayments increased between $100-$400 million.

Going forward, the repayments are expected to increase further because of exchange rate volatility and the possibility of LIBOR/SOFR and EURIBOR rates ticking up, the ERD said in its latest report.

Of the repayment amount last fiscal year, $2.67 billion was thanks to the government's loans and $2.11 billion was for the state-owned enterprises' borrowing.

Both the segment's loans increased by 32 percent, but the state-owned enterprises' increase is substantial as its total outstanding debt is only $8 billion. The government's total outstanding foreign loan is $62.4 billion.

As of June last year, the total public sector outstanding debt is $70.8 billion.

The state-owned enterprises took short-term loans in this fiscal year, whose interest rate is more than long-term loans, said finance ministry officials. As a result, the repayment amount went up.

"Even two years ago, the interest rate was below 1 percent on such loans. Now, it is more than 8 percent," they said.

Of the repayment amount, the interest payment was $1.3 billion, up 99.23 percent year-on-year, the ERD report showed.

The highest loan was repaid against short-term loans taken to import crude oil: $1.12 billion, which is an increase of 40 percent from the previous fiscal year.

The power sector's loan repayment increased by 27 percent to $679 million.

The government has paid $85 million for loans taken to purchase aircraft earlier, up 49 percent year-on-year increase.

However, the ratio of the government's external debt stock is 15.59 percent of the GDP while the threshold is 40 percent, indicating the foreign loan position is in the safe territory, the ERD report said.

The ratio of debt service to revenue and grant will cross 100 percent this fiscal year, said Zahid Hussain, former lead economist of the World Bank's Dhaka office, citing a recent report of the International Monetary Fund.

"It does not mean that there is no concern."

There are two main concerns now in the current context of historically low revenue collection and ongoing dollar crisis.

"The loan repayment pressure is still heavy and we can't see the pathway to get rid of the situation," he said, while calling for increasing the revenue collection and the foreign currency reserves.

Besides, the government should try to get low-cost foreign loans in the future, Hussain added.

The ERD report -- titled "Flow of External Resources" -- said few loans have recently been mobilised at variable interest rates.

"The interest rate risk is high when the variable interest rate-dominated debt portfolio exists," it added.

Though the report acknowledged the interest-related risks, it said all the other indicators are below the level of threshold.

"According to the present classification by the World Bank, Bangladesh is categorised as a 'less indebted' country."

Though the Bangladesh Bank has taken several initiatives, the foreign currency reserve has been declining in the last one and a half years.

As of February 14, foreign currency reserves stood at $19.9 billion.​

 

[Saif]

PM for doing business with India using taka, rupee

Prime Minister Sheikh Hasina today stressed the need for expanding business between Bangladesh and India using their own currencies

www.thedailystar.net

PM for doing business with India using taka, rupee​

Photo: BSS

Prime Minister Sheikh Hasina today stressed the need for expanding business between Bangladesh and India using their own currencies.

"We can do our business through exchanges of Bangladeshi Taka and Indian Rupee. It has already started, but we have to expand it further so that we can increase our businesses," she said while Indian External Affairs Minister S Jaishankar paid a courtesy call on her.​

​

The meeting was held on the sidelines of the Munich Security Conference (MSC) 2024 at Hotel Bayerischer Hof this morning.
Foreign Minister Hasan Mahmud briefed journalists about the outcome of the meeting upon its completion.

Hasan said the prime minister and Jaishankar attached importance to doing business between the two friendly countries through their own currencies to reduce dependency on other currencies like the US dollar.

He said Bangladesh and India have excellent bilateral relations and it has elevated to another height under the leadership of the prime ministers of the two countries.

"The relations between the countries are getting stronger day by day," he said, adding that the two leaders discussed the issues during the meeting.

Quoting Jaishankar, Hasan said, "Our relations will further be closer in the days ahead."

Bangladesh Ambassador to Germany Md Mosharraf Hossain Bhuiyan and PM's Deputy Press Secretary Md Noorelahi Mina were present during the briefing.

Hasina arrived in Munich on February 15 on a three-day official visit to join the Munich Security Conference 2024.

Upon completion of the tour, she will leave tomorrow night and is scheduled to reach Dhaka on February 19.​

 

[Saif]

Titu seeks Japan’s cooperation to make ‘One Village, One Product’ successful

State Minister for Commerce Ahasanul Islam Titu has sought Japan’s cooperation to make the “One Village, One Product” programme a success. “The prime minister has declared ‘Handicrafts’ as the product of the year. The government is working to increase employment

thefinancialexpress.com.bd

Titu seeks Japan’s cooperation to make ‘One Village, One Product’ successful
UNB
Published :
Feb 19, 2024 21:00
Updated :
Feb 19, 2024 21:14

State Minister for Commerce Ahasanul Islam Titu has sought Japan’s cooperation to make the “One Village, One Product” programme a success.

“The prime minister has declared ‘Handicrafts’ as the product of the year. The government is working to increase employment and export goods through the ‘One Village, One Product’ programme. We look forward to Japan’s cooperation and experience to make this programme a success,” he said, according to a press release.

The state minister said this when Japanese Ambassador to Bangladesh Iwama Kiminori paid a courtesy call on him at the former’s office on Monday.

At the time, the Japanese ambassador appreciated the programme, assured cooperation, and said Japan wants to strengthen relations with Bangladesh.

“Japan is keen to work as a partner in Bangladesh’s development journey. We hope that Bangladesh will participate in the ‘World Expo 2025’ to be held in Japan next year,” he said.

Titu mentioned the friendly relations between Bangladesh and Japan and said, “We hope to extend all cooperation to expand trade and commerce between the two countries.”​

 

[Lulldapull]

I meet Bangladeshi here in Japan every now n then and they pretty shy and keep to themselves. They talk to the Nepali community here a lot more than they talk to us the handful of Turkish/ Irani/ Pakistani here.

 

[Saif]

I meet Bangladeshi here in Japan every now n then and they pretty shy and keep to themselves. They talk to the Nepali community here a lot more than they talk to us the handful of Turkish/ Irani/ Pakistani here.

In that case, they are Awami supporters. When I was in America, I used to feel comfortable with mixing Muslims from all over the world(including Indian Muslims).

 

[Lulldapull]

W

In that case, they are Awami supporters. When I was in America, I used to feel comfortable with mixing Muslims from all over the world(including Indian Muslims).

Whats Awami?

 

[Saif]

W

Whats Awami?

Awami means Awami League.