[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Govt for offshore banking to tackle dollar shortage

The government on Wednesday approved the ‘Offshore Banking, Bill 2024’ aimed at increasing the inflow of foreign currency against the...

www.newagebd.net

Govt for offshore banking to tackle dollar shortage​

Shakhawat Hossain | Published: 00:14, Feb 29,2024

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The government on Wednesday approved the ‘Offshore Banking, Bill 2024’ aimed at increasing the inflow of foreign currency against the backdrop of the prolonged financial crises affecting the majority of people in the country.

The proposed law, approved by the weekly cabinet meeting, will allow offshore units of banks to open accounts for non-resident Bangladeshis and entities having investments in the country.

The accounts can be opened in five foreign currencies – US dollar, Euro, British Pound, Japanese Yen and Chinese Renminbi – cabinet secretary Mahbub Hossain said in a briefing at the secretariat following the meeting.
The cabinet meeting also decided not to hold any iftar parties by the government during the upcoming Ramadan to avert food waste, said the cabinet secretary.

Prime Minister Sheikh Hasina chaired the cabinet meeting at her Tejgaon office.

While approving the proposed ‘Offshore Banking Act 2024’ in principle, the cabinet noted that it would strengthen offshore banking activities in the country, said the cabinet secretary.

Former Bangladesh Bank governor Salehuddin Ahmed said enforcement of the act is more important than formulating it.

Offshore banking had been operating for a long time without giving any major benefit to the economy because of the monitoring weakness of the central bank, he said.

He noted that BB should record offshore banking transactions strictly.

The cabinet secretary said that any relative of a Bangladeshi living abroad could open an account and manage the account as a supporter.

Prepared by the Financial Institutions Division under the Ministry of Finance, the proposed act exempts income tax and other direct or indirect taxes on profits and interest earned from offshore banking businesses.

The cabinet secretary said that the passage of the act would help the government solve the dollar shortage while referring to the successful operation of offshore banking in many countries.

Answering a question, the cabinet secretary said the offshore banking units of the scheduled banks should offer attractive interest rates to attract deposits.

Former BB deputy governor SM Moniruzzaman said the proposed act would allow the central bank to increase its monitoring of offshore banking.

Since offshore banking activities were regulated by directives given from time to time in the past, it was always a difficult task for monitoring agencies to keep a tab on this and take action when needed.

The approval of the proposed law came amid a serious dollar crisis, which saw the country’s forex reserves come down to around $20 billion from $48 billion in August 2021.

BB has imposed restrictions on imports and is also taking loans from the International Monetary Fund to assist with the balance of payments under stress to meet the import bills for energy items.

An instrument under the Universal Pension Scheme was introduced in the past year to attract expatriate Bangladeshis to increase the inflow of foreign currency.

However, less than five per cent of the overall 19,158 subscribers subscribed to the particular instrument in the first six months.

The cabinet secretary said that the PM gave the directive to not hold any iftar parties at the government level to avert waste.

He also said that the government would discourage private groups from doing the same.

Answering a question, he said that the PM suggested the distribution of food to the poor by rich people instead of arranging iftar parties.

The government adopted a policy of maintaining austerity measures in FY23 to tackle the ongoing financial crisis that has pushed inflation close to double digits for the past two years.

As part of austerity measures, the government announced a suspension of funds for public housing.

The finance division announced to suspend the procurement of new vehicles, vessels, and aircraft under the operating budget with a provision for replacing 10-year-old vehicles with consent from the finance ministry.

The government has also suspended foreign tours by government officials, except for special requirements.​

 

[Saif]

Graduating LDCs having minimal extension of trade benefits

Little comes out of hard bargains so far about deals on major areas like agriculture, fisheries subsidies, e-commerce moratorium and reform in dispute-settlement mechanism as the WTO ministerial nears its close. The ongoing ministerial conference of the World Trade Organization (WTO) is getting in

thefinancialexpress.com.bd

Graduating LDCs having minimal extension of trade benefits​

Breakthrough in critical issues is yet to be reached as WTO meet nears close​

ASJADUL KIBRIA, FROM ABU DHABI
Published :​

Feb 29, 2024 00:21

Updated :​

Feb 29, 2024 00:21

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Little comes out of hard bargains so far about deals on major areas like agriculture, fisheries subsidies, e-commerce moratorium and reform in dispute-settlement mechanism as the WTO ministerial nears its close.

The ongoing ministerial conference of the World Trade Organization (WTO) is getting into the finale today (Thursday) in this Arab city.

There is also a move not to extend the four-day 13th Ministerial Conference (MC13) although extension is not unusual as is evident from some previous ministerial meets when member-countries failed to break the deadlock in final-day negotiations.

On Wednesday, the third-day of the conference, delegates and negotiators were busy doing hectic conversations and discussions to minimise their differences over global trade regime. There had been no visible progress until the filing of the report at 6:00pm in Abu Dhabi.

Though India and some other members are pushing for a permanent solution to public stockholding (PSH) for food security along with some other demands, indication is rife that MC13 may not reach any conclusion on the much-sought-after permanent solution.

In that eventuality, the so-called peace clause will continue, which means an interim arrangement giving flexibility to procurement of grains from farmers at minimum support prices, and building a stockpile will be there.

In the MC12, the first part of the fisheries-subsidy agreement banned the subsidisation of illegal fishing. In MC13, the second part intends to expand the ban on subsidies that contribute to overfishing and fishing-sector overcapacity at large.

Regarding the e-commerce moratorium, European Union (EU) officials reassert their position to continue the cessation on grounds that by imposing customs duties on electronic transmission, digital innovation and activities will be disrupted.

Meantime, hectic efforts of the Least Developed Countries (LDCs) to get extensions of various trade benefits and international-support measures for the graduating LDCs, including Bangladesh, have been subdued by now.

This is reflected in the revised draft 'ministerial decision on WTO smooth transition support measures in favour of countries graduated from the LDC category.' The revised communication was submitted by Djibouti on behalf of the LDC Group before the start of the 13th minister conference here on Monday.

The first message of the revised draft is that graduating LDCs will be eligible to get three years as an extra time after their graduation to adjust with the WTO rules and provisions regarding the dispute-resolution system.

"A Member that graduates from the LDC category shall continue to benefit from the application of the Special Procedures Involving LDCs set out in Article 24 of the Dispute Settlement Understanding for a period of three years after the date on which the decision of the UN General Assembly to graduate that Member from the LDC category becomes effective," reads the revised text.

In the first draft, six years of additional time was proposed.

The Article 24 requires WTO members to give special consideration to LDC members in deciding whether to invoke and pursue dispute-settlement procedures. Those members may request the WTO Director-General or Chairman of the DSB to provide good offices, conciliation, or mediation to help resolve disputes.

Similarly, graduating LDCs will also be eligible for LDC-specific technical assistance and capacity building provided by the WTO for three years after the graduation. In the first draft, the time was six years.

Moreover, graduating LDCs are unlikely to get even three years' flexibility regarding implementing the relevant obligations regarding Agreement on Subsidies and Countervailing Measures (ASCM).

The revised text, however, requests the Sub-Committee on LDCs to continue work on the matter and make recommendations, if any, by December 2024.

An insider says that the WTO members will follow 'due restraint' approach during the three-year period for the graduating LDCs who will not comply with various WTO rules applicable to non-LDCs. In other words, they will not bring any graduating LDC to the dispute-settlement mechanism seeking remedy.

Prof Musatfizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), told FE that the possible outcome of the conference is still unclear.

"It appears that multilateralism will prevail, multilateral trade measures and benefits will also be there," he added. "But, the implementation of these measures and realisations of these benefits will require more bilateral efforts."

In this connection, he mentions that Bangladesh has already taken some steps to move ahead securing its business interests.

State Minister for Commerce Ahasanul Islam Titu, who heads the Bangladesh delegation to the MC13, has already met with a number of trading partners bilaterally on the sidelines of the conference.

Regarding the extension of market access for graduating LDCs, Prof Mustafiz says it is likely that the ministerial decision will follow the stance taken by the European Union (EU) and the United Kingdom (UK).

The EU and the UK have already agreed to continue the existing market- access facilities for three years to any graduated LDC. It means, Bangladesh will enjoy the benefit up to 2029, after having graduated in 2026.​

 

[Saif]

https://www.thedailystar.net/business/economy/news/forex-reserves-rise-377m-week-3555716

Forex reserves rise $377m in a week​

Bangladesh's foreign currency reserves rose $377 million in a week to about $20.57 billion, central bank figures showed.

The Bangladesh Bank data was based on calculations made in line with the formula of the International Monetary Fund (IMF).

The forex reserve stood at $20.19 billion a week earlier.

The gross reserves have increased over the past two weeks after the central bank initiated currency swaps with commercial banks.

The move was designed to enable the BB to meet the net reserve condition set by the IMF as part of its $4.7 billion loan programme.

Under the currency swap deal, commercial banks can take local currency from the central bank in exchange for US dollars for a tenure ranging from seven days to 90 days.

The BB has secured over $400 million from nearly 12 banks under the currency swap mechanism since its introduction, said a senior official of the central bank seeking anonymity.

The central bank has sold US dollars from its reserves only to settle the import bills of state-run enterprises.

In the post-pandemic period in 2021, the country's import payments started to rise faster than remittance inflow and exports earnings, prompting a shortage of US dollars in banks.

The forex crisis intensified in the middle of 2022 due to the price hike of essential goods and commodities on the global market because of supply chain disruptions caused by the lingering impacts of the pandemic and the outbreak of the Russia-Ukraine war.

In order to help banks settle record import bills,the central bank pumped more than $28 billion into the banking sector from its reserves, which caused the reserves to halve in just two years.

Owing to the sharp fall in the reserves, Bangladesh failed to meet the IMF minimum net international reserve target of $17.78 billion as of December 31.

Industry people, however, think the forex crisis will ease soon as merchandise exports rebounded strongly in January after manufacturers shipped goods worth $5.72 billion, a single-month record. Similarly, remittance flow rose to a seven-month high in January.

Suppliers are also hoping to retain the momentum in the coming months.​

 

[Saif]

Govt wants upward trend of economic indicators: Finance Minister

Finance Minister Abul Hassan Mahmood Ali today (Thursday) said that the government wants to see the economic indicators of the country going upward despite various challenges alongside some discomforts owing to inflation. "Discomforts are there to some extent for inflation. But we want to see

thefinancialexpress.com.bd

Govt wants upward trend of economic indicators: Finance Minister​

BSS

Published :​

Feb 22, 2024 18:02

Updated :​

Feb 22, 2024 21:00

Finance Minister Abul Hassan Mahmood Ali today (Thursday) said that the government wants to see the economic indicators of the country going upward despite various challenges alongside some discomforts owing to inflation.

"Discomforts are there to some extent for inflation. But we want to see the overall economic indicators going upward," he said.

The finance minister was replying to a series of questions from reporters after Chief of Mission of IOM Bangladesh Abdusattar ESOEV met him at his ERD office in the capital's Sher-e-Bangla Nagar today.

He usually said it is not always possible to make good progress overnight; rather, it takes a certain time.

Ali said that it is also not always possible to make significant progress in all the major macroeconomic indicators within a single day, adding, "But, the important thing is that we'll have to carefully watch how the economy is moving."

Asked whether the growing foreign loans are putting pressure on the economy, he said pressure is there to some extent, but it is not massive. "We're dying for this... the situation is not like that."


Replying to a question on the outcome of his meeting with the relevant stakeholders, including ministers and state ministers of concerned ministries, to keep the prices of essentials under control and also to keep the major macroeconomic indicators within the desired range, Ali said progress is definitely there in some cases while others are awaiting progress. "It's not possible to pull something down by force."

He told another questioner that L/Cs' are being opened ahead of the holy month of Ramadan to keep the stock and supply of essential items normal, adding, "L/Cs are being opened. Please have some patience..."

About his participation in the 47th session of the Governing Council of IFAD held in Rome recently, the finance minister said that Bangladesh is the largest partner of IFAD and the development partner has so far invested $2 billion in Bangladesh.

"The high ups of IFAD are very optimistic that their partnership with Bangladesh is growing. As far now, they (IFAD) have provided support worth $2 billion to Bangladesh, and it will increase further," he added.

Ali said that the investment of IFAD, mainly in the agricultural sector of Bangladesh, has been yielding good results.

Citing an example of IFAD's support to Bangladesh in various sectors, the Finance Minister said IFAD is helping in breeding Rui Minnow fish on the River Halda in Chattogram by preventing pollution in that river through involving the local community, and it is also yielding good results.

About the outcome of his meeting with the IOM Mission Chief, Ali said the IOM has shared their current operations and thoughts.​

 

[Saif]

Bangladesh to get duty benefit for 3 years after LDC graduation

Bangladesh will continue to get duty benefit for three more years after the graduation to a developing nation from the least developed country (LDC) in 2026 thanks to the decision taken at the 13th Ministerial Conference of the World Trade Organisation (WTO).

www.thedailystar.net

Bangladesh to get duty benefit for 3 years after LDC graduation​

The WTO’s 13th Ministerial Conference ended with no decision on some major issues such as public food stockpiling, fisheries subsidies although the discussion was extended for one more day up to March 1.

Bangladesh will continue to get duty benefit for three more years after the graduation to a developing nation from the least developed country (LDC) in 2026 thanks to the decision taken at the 13th Ministerial Conference of the World Trade Organisation (WTO).

In the 13th WTO Ministerial Conference, held at Abu Dhabi, between February 26 and March 1, the ministers of member countries agreed to continue the trade benefits to a graduated LDC after its graduation.

So, Bangladesh as a graduating LDC will continue to enjoy the low or zero duty benefit for its export products to developing and developed economies until 2029, according to the draft declaration of the WTO conference that ended yesterday.

The declaration said a member that graduates from the LDC category shall continue to benefit from the application of the Special Procedures Involving LDCs set out in Article 24 of the Dispute Settlement Understanding for a period of three years after the date on which the decision of the UN General Assembly to graduate that member from the LDC category becomes effective.

A member that graduates from the LDC category shall continue to be eligible for LDC-specific technical assistance and capacity building provided under WTO's technical assistance and training plan for a period of three years after the date on which the decision of the UN General Assembly to graduate that member from the LDC category becomes effective.

"The participation of existing LDCs shall be prioritized in activities under this plan," said the declaration.

The WTO's committees will review this decision by December 2024 and the General Council shall report to the Fourteenth Ministerial Conference on progress, the WTO said.

The continuation of the duty benefit for the graduated LDCs under the proposed method of the WTO may not maintain the current duty structure but considering different perspectives like economic status and products of the eligible countries.

The WTO members also agreed to further extend the moratorium on import duties on e-commerce trade for two more years.

The WTO's 13th Ministerial Conference ended with no decision on some major issues such as public food stockpiling, fisheries subsidies although the discussion was extended for one more day up to March 1.​

 

[Saif]

Remittance hits eight-month high

In February, migrants sent home $2.16 billion, up 39% year-on-year

www.thedailystar.net

Remittance hits eight-month high​

In February, migrants sent home $2.16 billion, up 39% year-on-year

Migrant workers sent home $2.16 billion in February, posting a 39 percent year-on-year jump, according to Bangladesh Bank (BB) data.

February's figure was the highest in eight months since July last year.​

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The country recorded $2.19 billion of remittance inflow in June last year, BB data showed.

A record number of Bangladeshi migrants -- 13.05 lakh, went abroad for jobs in 2023, up from 11.35 lakh of the previous year.

This year's February had 29 days due to leap year, which was another reason for the rise in the remittance inflow.
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[Saif]

Inflation and not so SMART interest rates

The failure to tame inflation not only imposes a steep tax on the poor and the middle class, it also erodes economic competitiveness.

www.thedailystar.net

Inflation and not so SMART interest rates​

FILE VISUAL: REHNUMA PROSHOON

SMART refers to the Six-Month Moving Average Rate of Treasury Bill, the instrument Bangladesh Bank (BB) uses to make interest rates flexible within bounds. Unfortunately, it is not working as it has reduced neither inflation nor foreign exchange shortages.


But let us start with some good news on the economy. In January, remittance inflow was $2.1 billion, a marked increase, while export earnings amounted to $5.7 billion. Robust inflow of medium- and long-term loans (including from the IMF) led to an infusion of over $2.5 billion to gross reserves over the past two months. The current account deficit was drastically reduced to a small surplus, though with steep costs, while revenue collection increased by 14.74 percent in January.​

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That said, the economy's immediate challenges remain concerning. Moreover, a key element of the government's response, its monetary policy, has not been able to stabilise the balance of payments and foreign exchange markets. Plus, the failure to tame inflation not only imposes a steep tax on the poor and the middle class, it also erodes economic competitiveness.


The challenges come from three directions. First, the balance of payments pressures and the dollar shortage continue due to the unanticipated emergence of financial account deficits. While Bangladesh has traditionally maintained a healthy surplus (inflow of funds) for its financial account—$15.5 billion in FY2022—it saw a deficit of $2.1 billion in FY2023. In the first six months of the current fiscal year, this deficit widened to nearly $5.4 billion, that is, about $7.5 billion less than the $2.1 billion surplus the IMF's programme projects for June 2024. This has happened mainly because foreign short-term lending and trade credit have dried up. The widening of the deficit also signals foreign banks' lack of confidence in Bangladesh's economy.

Second, although the trade deficit has declined sharply, this has resulted from cutting imports of intermediate goods, capital goods, and raw materials down by 20-25 percent in the first half of the current fiscal year. The reduction in imports has not been made to happen through exchange rate adjustment, but through the rationing of foreign exchange. Banks, not prices, have determined in an ad hoc manner who will receive credit and foreign currency.


Third, inflation rates have increased from six percent two years ago to 9.86 percent by the end of January 2024. Inflation has spiked in Bangladesh since 2022 for two reasons. First, international energy prices roughly doubled and edible oil prices markedly increased in 2022. Second, the 30 percent depreciation of the exchange rate for the US dollar over the past two years meant that taka import prices continued to rise even when dollar prices fell.

In recent months, international prices of LNG and oil have fallen between 40-70 percent. Also, according to Bangladesh Bank's Monetary Policy Statement (January-June 2024), depreciation tapered off to only 1.49 percent in July-December 2023. As such, external factors could not be driving the ongoing inflation.

So, what is causing inflation to worsen? Much is said about the role of syndicates and intermediaries in this regard. There is, however, little evidence about the active role of syndicates in fixing prices. Economics suggests that this is difficult to do unless a small, tightly knit group has highly centralised control over the supply of specific items such as edible oil. Still, the government should be vigilant indeed. However, blaming minor traders and stockkeepers for higher prices would be a travesty, not to mention economically risky. These small players play a vital role in the supply chain by bringing the harvest and supplies from the farms or factories to consumers. If their activities and supplies are disrupted through "police action" or vigilantism, we may see higher inflation.


The main culprit behind rising inflation is a tepid and conflicted monetary policy that has kept demand for goods and services high on one side and their supply low on the other. It has kept supply low by rationing artificially low-priced foreign currency which has suppressed imports of vital raw materials, intermediate, and capital goods.

It has kept demand high because despite increasing the main policy interest rate (that is, the repo rate at which banks borrow from BB) six times, the increases have been too little, too late. Thus, although inflation rose sharply in 2022, the central bank waited until June 2023 to remove the market cap on interest rates, which was also somewhat deceptive. Commercial banks' lending rates are still capped by its so-called SMART instrument which ties market interest rates to the past six-month average rate of treasury bills: the rate at which the government borrows, which has been kept artificially low by stopping bidding when the interest rate became high.


For these reasons, the main policy interest rate has been negative in real terms—less than inflation rates—since 2021, encouraging commercial banks to borrow and finance higher demand, discouraging savings, and raising the advance-deposit ratios. Thus, credit to commercial banks increased by nearly four times over FY2023, and even last November was nearly three times what it was a year ago.

The second problem is with money supply. On one hand, money supply growth, especially credit growth in the private sector, has been limited—likely negative in real terms—over the past year. On the other hand, the central bank has been indulging in the most inflationary of activities: financing government deficits. Since this lending requires new money—referred to as "printing money"—it is inherently inflationary. Bangladesh Bank nearly tripled its lending to the government to nearly Tk 98,000 crore in the 2022-23 fiscal year. While the government has repaid some of this money over the previous six months, the stock of lending to the government as of last December was over twice what it was in June 2022.

Overall, the sharp rise in borrowing by commercial banks and by the government has meant that the velocity of money—how fast money changes hands—has markedly increased alongside a decrease in output or GDP growth. That is the only way to understand why inflation is creeping up despite low money supply growth.


So, what now? There are good reasons to be cautious and well prepared in the face of a floating exchange rate. One does not want to cause exchange rate overshooting and an inflation-depreciation spiral. But the exchange rate has to be floated, even if as a crawling peg at first. And caution should not turn into paralysis that increases uncertainty and erodes confidence.

Firstly, to dampen demand, the repo rate—the central bank's policy interest rate—has to be increased to make it positive in real terms. Also, commercial banks' lending rates have to be made market-based. If Bangladesh Bank insists on keeping rates in a corridor anchored to the SMART, it must stop interfering with the bidding and let treasury bill rates increase where demand meets supply. BB must signal its determination to fight inflation. Otherwise, inflationary expectations could run away, making the problem vastly more acute.

Second, to reduce the monetary overhang, Bangladesh Bank needs to continue to recover its government loan; let the government borrow from the market to repay this loan and finance its deficits. This will also help to set interest rates appropriately. It may be that the fiscal deficit and government spending must be squeezed more, but in a prioritised manner. Not, for example, by pressing down the woefully under-budgeted expenditures on repairs and maintenance, which already saw only four percent of its budget being spent in the first three months. These measures will cause pain, much as vaccine shots cause pain.


Third, along with implementing the measures above, the government needs to implement its plans to introduce a crawling exchange rate system that allows the exchange rate to float, albeit in a managed manner initially. There is no other option to stabilise the external account. However, and this is critical, the only way to make a crawling peg effective will be to liberalise interest rates.

Finally, when the banking sector is already under stress in this time of uncertainty, it is essential to make a strong start on reforming the financial sector. As the central bank's recent Financial Stability Assessment Report stated, non-performing loans (NPLs) comprised nearly half the assets of five banks. Overall, NPLs amounted to Tk 156,000 crore in June last year, or over three percent of GDP. When loans are correctly classified, the situation will reveal itself to be far worse.

It will be difficult to finance Bangladesh's long-term growth without cleaning out the balance sheet of our financial sector. Left ignored, systemic risks may cause significant adverse shocks to the economy in the near term. On the other hand, thinking positively, banking reforms, as in the 1980s and 1990s, can pave the way to sustained future growth.

Dr Ahmad Ahsan is director at the Policy Research Institute of Bangladesh, a former World Bank economist, and a Dhaka University faculty member. ​

 

[Saif]

Send remittance through proper channel: foreign minister tells expats

Foreign Minister Dr Hasan Mahmud has urged Bangladeshi expatriates in Saudi Arabia to send remittances to the country through legal channels

www.thedailystar.net

Send remittance through proper channel: foreign minister tells expats​

Foreign Minister Hasan Mahmud. File photo

Foreign Minister Dr Hasan Mahmud has urged Bangladeshi expatriates in Saudi Arabia to send remittances to the country through legal channels.

Speaking at a reception in Jeddah, Saudi Arabia, this afternoon he said that about three million Bangladeshis are living in Saudi Arabia. Each expatriate is a representative of the country and the country is known by their behaviour.​

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If everyone sends remittances through legal channels, it will play a big role in the country's economy, he said.

The minister said that Bangladesh's relationship with Saudi Arabia is very friendly and that the government of Prime Minister Sheikh Hasina has made it multidimensional.

He said the previous relationship with the kingdom was mainly based on manpower export.

"Now we have made this relationship multidimensional with cooperation in various fields including petroleum, agriculture, environment, infrastructure development, trade and investment, and technology," the foreign minister.

Hasan highlighted his participation in the recently concluded 19th Extraordinary Session of the OIC Foreign Ministers in Jeddah as well as his meetings with the Saudi Foreign Minister and the OIC Secretary General.

The minister also highlighted the discussions on the proposed visit of Saudi Crown Prince Mohammed bin Salman to Bangladesh, purchase of petroleum, and industrial cooperation in the meeting with Saudi Foreign Minister Faisal bin Farhan Al-Saud, which took place in a very cordial atmosphere.

He said that the Saudi foreign minister has spoken about giving priority to the interests of Bangladesh.

Bangladesh Ambassador to Saudi Arabia Dr Mohammad Javed Patwary, Consul General in Jeddah Muhammad Nazmul Haque, and others attended the reception.​

 

[Bilal9]

Send remittance through proper channel: foreign minister tells expats

Foreign Minister Dr Hasan Mahmud has urged Bangladeshi expatriates in Saudi Arabia to send remittances to the country through legal channels

www.thedailystar.net

Send remittance through proper channel: foreign minister tells expats​

View attachment 3790
Foreign Minister Hasan Mahmud. File photo

Foreign Minister Dr Hasan Mahmud has urged Bangladeshi expatriates in Saudi Arabia to send remittances to the country through legal channels.

Speaking at a reception in Jeddah, Saudi Arabia, this afternoon he said that about three million Bangladeshis are living in Saudi Arabia. Each expatriate is a representative of the country and the country is known by their behaviour.​

​

If everyone sends remittances through legal channels, it will play a big role in the country's economy, he said.

The minister said that Bangladesh's relationship with Saudi Arabia is very friendly and that the government of Prime Minister Sheikh Hasina has made it multidimensional.

He said the previous relationship with the kingdom was mainly based on manpower export.

"Now we have made this relationship multidimensional with cooperation in various fields including petroleum, agriculture, environment, infrastructure development, trade and investment, and technology," the foreign minister.

Hasan highlighted his participation in the recently concluded 19th Extraordinary Session of the OIC Foreign Ministers in Jeddah as well as his meetings with the Saudi Foreign Minister and the OIC Secretary General.

The minister also highlighted the discussions on the proposed visit of Saudi Crown Prince Mohammed bin Salman to Bangladesh, purchase of petroleum, and industrial cooperation in the meeting with Saudi Foreign Minister Faisal bin Farhan Al-Saud, which took place in a very cordial atmosphere.

He said that the Saudi foreign minister has spoken about giving priority to the interests of Bangladesh.

Bangladesh Ambassador to Saudi Arabia Dr Mohammad Javed Patwary, Consul General in Jeddah Muhammad Nazmul Haque, and others attended the reception.​

I'm dead set against this. Sending through proper channel will only enhance the chance for these govt. looters (and their industrialist cohorts) to loot the money and stash it overseas (so AL can use the money to come to power again). By all means, use Hundi, that way the money gets to your relatives safely. Don't give any chance to these looters.

 

[Saif]

Moody’s Report: Banking outlook revised to stable from negative

US rating agency Moody’s Investors Service yesterday changed its outlook for Bangladesh’s banking system to stable from negative, which will relieve the central bank boss of stress.

www.thedailystar.net

Moody’s Report: Banking outlook revised to stable from negative​

US rating agency Moody's Investors Service yesterday changed its outlook for Bangladesh's banking system to stable from negative, which will relieve the central bank boss of stress.

It comes at a time when there is a negative perception at home and abroad about the country's banking sector.​

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The changed outlook reflects "our expectation that profitability and liquidity stress has eased despite ongoing asset-quality difficulties", Moody's said in a report.

It said profitability would be stable due to steady net interest margins (a profitability indicator that measures the difference between interest income and interest paid out by financial institutions) and credit costs.

Capital will also be stable because internal capital generation will be in line with capital consumption, it said, adding that the lenders' funding and liquidity will be tight but stable.

"The stable outlook also reflects our expectation that the government will continue to support banks when needed to maintain systemic stability," it said.

Zahid Hussain, former lead economist at the World Bank's Dhaka office, said Moody's latest outlook is a positive sign for Bangladesh's banking sector.

"There has been an erosion in global confidence about Bangladesh's banking sector. The latest outlook will prevent this," he said.

The central bank has implemented several reform measures in the banking sector in line with the International Monetary Fund's $4.7 billion loan programme, a Bangladesh Bank official told The Daily Star yesterday.

It has been a year since the reforms were taken up and some improvements are already visible, he said, adding, they expect more progress ahead. Moody's latest outlook could be a reflection of the reforms, he said.

Moody's had downgraded the outlook to negative from stable in March last year when Bangladesh went for the IMF loan programme.

Moody's in its latest outlook mentioned that the economy's operating environment would deteriorate as economic growth slows and inflation remains elevated.

Bangladesh's real GDP growth, which historically has been about 6.5 percent, is expected to slow to 6 percent in the fiscal year ending June 2024 and 6.3 percent in the fiscal year 2025, Moody's said.
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"There has been an erosion in global confidence about Bangladesh's banking sector. The latest outlook will prevent this."
— Zahid Hussain, former lead economist at the World Bank's Dhaka office​

It also said the moderation in economic growth will be due to a weakening of external demand and persistently high import prices and inflation. As a result, the country's trade deficit will moderately widen.
In the banking sector, Moody's said despite rising asset risks, loan-loss provisions would be broadly steady because of regulatory forbearance that allows banks to actively restructure or reschedule problem exposures and continue classifying those loans as performing.

It forecasts the bank's capitalisation to be stable.

"We expect banks' internal capital generation will keep pace with capital consumption. However, banks' current capital levels remain modest."

It, however, said relatively weak capitalisation will give Bangladeshi banks a limited buffer against large and unexpected loan losses. State-owned banks will remain undercapitalised because of their weak earnings capacity caused by high levels of nonperforming loans and the absence of government capital infusions.

Moody's said it expects the banks' funding and liquidity to stabilise as the central bank measures to restrict imports and the opening of letters of credit have helped reduce foreign-currency outflows.

Incentives offered by the government and banks for remittance will help foreign-currency inflow increase but their effectiveness will be limited.

While Bangladeshi banks are self-sufficient in foreign-currency liquidity, the country's declining foreign-currency reserves will pose a risk to them as their access to dollars via the central bank in times of need will be limited, it said.
It expects domestic currency liquidity to remain tight because of high interest rates and inflation.

Moody's expects the government to support banks, particularly the larger ones, through regulatory forbearance and liquidity measures when needed.

The repayment capacity of domestic companies -- to which banks have significant exposures -- will continue to deteriorate because of rising borrowing costs, high inflation and weakening exports caused by slowing economic growth in key export markets, Moody's said.

Structural weaknesses, such as lax regulations and poor corporate governance, will continue to pose asset risks. As a result, stressed loans, which include performing loans with modified payment terms in addition to nonperforming loans, are expected to remain elevated, it said.

Zahid Hussain said the central bank has undertaken some policy programmes including the introduction of a smart interest rate system. Besides, the dollar situation has also improved slightly. "This might have been instrumental in Moody's outlook change," he said.

He also said funding and lending costs in the banking sector have increased. As a result, Moody's assumes that profitability will remain stable.

In the case of liquidity, Moody's might have thought that liquidity would be stable, even though there are problems in distressed assets because of necessary liquidity support from the central bank, he further said.​

 

[Saif]

I'm dead set against this. Sending through proper channel will only enhance the chance for these govt. looters (and their industrialist cohorts) to loot the money and stash it overseas (so AL can use the money to come to power again). By all means, use Hundi, that way the money gets to your relatives safely. Don't give any chance to these looters.

.........but the problem is if our foreign exchange reserve is not enough to pay for 3 months import bills we will not get loans from international lending agencies.

 

[Bilal9]

.........but the problem is if our foreign exchange reserve is not enough to pay for 3 months import bills we will not get loans from international lending agencies.

That is true, but then you will not get the treasury looted as much in any case, there will hardly be enough for running the economy.

I see no issue if the govt. falls when AL runs it into the ground. The sooner the better we get rid of Hasina.

If you send money using official channels, it sits in the banks, and is prime target for looting by Hasina's cohorts.

This I bet will intensify follow the India out movement - which is a mechanism for getting rid of Hasina.

Too early to say however.