[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

National revenue collection takes a hit

With the internet blackout and nationwide shutdown comes a host of problems for internal revenue generation. According to a report published in this newspaper on July 22: "State exchequer counts an estimated domestic revenue loss of Tk 8.73 billion daily as production, trade and services falter for

thefinancialexpress.com.bd

National revenue collection takes a hit
SYED MANSUR HASHIM
Published :
Jul 24, 2024 11:17
Updated :
Jul 24, 2024 11:17

With the internet blackout and nationwide shutdown comes a host of problems for internal revenue generation. According to a report published in this newspaper on July 22: "State exchequer counts an estimated domestic revenue loss of Tk 8.73 billion daily as production, trade and services falter for the ongoing nationwide quota-protest shutdown coupled with internet blackout." The domino effect on production, trade and services due to the cumulative loss of internet access, production and distribution of products and the halting of digital services is contributing to this loss in revenue.

The stakes could not be higher for the economy right now. The volatility on city streets and in various districts around the country will hopefully see some respite as the Appellate Division has delivered its verdict on the quota situation. The gazette publication of the same should take place as soon as possible, and then the question will come whether this will lead to a negotiated settlement with protesters.

Leaving that aside, the current situation has brought economic activity down to a trickle. As stated by revenue officials, a large portion of revenue generation comes from value-added-tax (VAT) on products and services. The internet blackout has hit revenue hard since millions of people use digital services, both on cell phones and broadband. Financial institutions have by and large gone online with their services, as have utility services (gas, water, electricity). Hence, there are serious financial implications to shutting down internet services in the country.

Since VAT collection forms a cornerstone of direct revenue for the National Board of Revenue (NBR), there is simply no way to take this matter lightly. The hospitality industry with its thousands of restaurants, hotels and inns, vacation resorts all depends on daily sales of services. These have taken a serious hit because an increasing percentage of consumers depend on credit / debit card facilities to make payment. With the onset of curfews, few people are venturing out and most commercial establishments have shuttered their shops, not simply due to the fact that there are few people coming, but there are serious security concerns. The relative security enjoyed by the diplomatic enclave is not enjoyed by the rest of Dhaka residents, and why on earth would establishment owners bother to keep their respective shops open when there is serious supply chain disruption?

Moving on, Chattogram Customs House (CCH) ordinarily collects Tk 1.86 billion per day. Indeed, CCH's annual revenue collection in the just-concluded financial year was Tk 680 billion. According to an analysis by this newspaper, the revenue board may suffer a loss up to Tk 3.19 trillion - a mammoth loss! Of course this is not the final tally. With disruption of digital services, customs officials have instructed stations across the country to accept any bank document on releasing perishable items and this makes sense.

It is essential at this time to keep the supply chain for foodstuffs flowing because the main wholesale markets in the city, including Kawran Bazaar which serve as a hub for other retail markets in the city, have been suffering from intermittent supply of various items including vegetables. Indeed, price per kilogram of green chilli (a wholly domestically produced essential food) has shot up to Tk 600/kg. Better it is to forget about revenue loss and keep the goods flowing. This is a national priority. Stock taking on the revenue part can be done later. Imports of raw materials (including food and industrial inputs) need to clear customs on a war-footing so that essentials can get to people and factories can keep operating.​

 

[Saif]

Remittance collection disrupted

The internet blackout for five days has affected remittance collection through banks and mobile financial services (MFS), which may put pressure on the country’s foreign exchange reserves.

www.thedailystar.net

Remittance collection disrupted

The internet blackout for five days has affected remittance collection through banks and mobile financial services (MFS), which may put pressure on the country's foreign exchange reserves.

Bankers and officials of MFS providers said their remittance collection remained suspended from midnight of July 18, when the internet shutdown was imposed, to July 23, when broadband services were partially reinstated.

After the partial resumption of broadband internet services, overall remittance mobilisation by banks and MFS was lower than that on a regular day, they added.

Around $80 million to $100 million in remittances are sent to Bangladesh on a regular day, as per industry insiders.

The reserves stood at $21.78 billion as of June 30, according to calculations based on the International Monetary Fund's Balance of Payment Manual 6.

"We were unable to collect inward remittance for five days amid the internet shutdown but the remittance flow became normal when broadband internet was made available," said Selim RF Hussain, managing director of BRAC Bank.

Hussain, also the chairman of the Association of Bankers, Bangladesh, told The Daily Star that overall remittance collection of July was likely to be low due to the overall situation but a better understanding can be availed next week.

A chief executive officer of a private bank said that liaison offices of the banks and MFS providers received remittance but were unable to send it to the local banks due to the internet outage.

However, some banks failed to collect remittance for the availability of banking services on a limited scale following the partial resumption of broadband internet.

Mercantile Bank faced difficulties in collecting remittance despite the resumption of broadband internet.

Its additional managing director, Mati Ul Hasan, said the bank faced problems collecting remittance as it could not access SWIFT due to slow internet connections.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides the main messaging network through which international payments are initiated.

The MFS providers were faced with the same situation.

An official of a leading MFS provider said they mobilise Tk 5 crore to Tk 7 crore in remittances on a normal day but it had come down to Tk 80 lakh due to the slow internet connections.

During July 1 to July 13, Bangladesh received $978 million in remittances.

Islami Bank Bangladesh PLC usually channels the major portion of remittances to Bangladesh. The Daily Star could not reach the bank's managing director, Mohammed Monirul Moula, over the phone.​

 

[Saif]

Bangladesh's trade deficit reaches $20b

The country’s trade deficit reached $20.22 billion in the July-May period of the 2023-24 financial year, according to the Bangladesh Bank.

www.newagebd.net

Bangladesh's trade deficit reaches $20b
Staff Correspondent 25 July, 2024, 23:22

A file photo shows containers being arranged with a crane at the Kamalapur Inland Container Depot in the capital Dhaka. | New Age photo

The country's trade deficit reached $20.22 billion in the July-May period of the 2023-24 financial year, according to the Bangladesh Bank.

The deficit was reported at $4.74 billion for the July-March period of FY24, but surged in a month to $18.7 billion in the July-April period after the central bank and National Board of Revenue addressed the export data discrepancies.

This correction revealed that the actual export earnings were about $12 billion less than the previously reported.

The Bangladesh Bank data showed export earnings of $37.34 billion for the July-May period, while the Export Promotion Bureau had reported $51 billion in export earnings for the same period.

The correction led to a recalibration of various economic indicators, creating confusion over economic data, including balance of payment figures.

Consequently, the financial account turned positive from negative, and the current account switched to negative from positive in the July-April period of FY24.

The financial account recorded $2,080 million in the July-May period, down from $5,515 million in the July-April period of FY23.

Previously, it had showed a deficit of $9,258 million in the July-March period of FY24.

The current account recorded a deficit of $5,982 million in July-May, compared with that of $12,020 million in July-April of FY23, shifting from a surplus of $5.8 billion in July-March.

The trade deficit was $26.02 billion in July-May of FY23.

BB officials said that the EPB statistics were based on customs house data, which often included duplicate export entries due to procedural issues.

Corrected data reduced the discrepancies between reported exports and actual repatriation of goods, significantly decreasing trade credit and transforming the financial account from a deficit to a surplus.

In the July-May period, the gross inflow of foreign direct investments declined by 6.5 per cent to $3.8 billion compared with that in the same period of the previous year.

Foreign portfolio investments were $111 million negative, compared with that of $38 million negative in the same period of the past financial year.

In response to a severe dollar crisis in the country's banking system, the Bangladesh Bank sold nearly $34 billion to banks over the past 36 months.

The country's foreign exchange reserves, as per International Monetary Fund guidelines, were $21.8 billion as of June 30.

The interbank dollar rate soared to Tk 118 after the central bank raised the rate by Tk 7 on May 8.

The deficit in trade services expanded to $3,475 million in the July-May period of FY24, compared with that of $2,849 million in the corresponding period of the previous financial year.​

 

[Saif]

Export-import operations getting in full gear with systems resurrection

Export-import operations get back in full gear with the resurrection of electronic systems of port processing after a breakdown amid countrywide internet blackout. Both Chittagong Custom House and Chittagong Port Authority (CPA) have said the internet-network systems are now working smoothly in th

thefinancialexpress.com.bd

Export-import operations getting in full gear with systems resurrection
DOULOT AKTER MALA
Published :
Jul 26, 2024 10:15
Updated :
Jul 26, 2024 10:15

Export-import operations get back in full gear with the resurrection of electronic systems of port processing after a breakdown amid countrywide internet blackout.

Both Chittagong Custom House and Chittagong Port Authority (CPA) have said the internet-network systems are now working smoothly in the seaport area in completing trade-clearance processes.

"The CCH started clearing goods more than average on Wednesday to ensure smooth delivery of essential commodities and avoid any congestion in port," says an official.

The CCH and the CPA stopped manual clearance and restored electronic systems on July 23, officials said.

A senior customs official said the CCH assessed some 8,153 bills of export and import Wednesday--it usually clears 7,000 per day on average. On Tuesday, the CCH cleared 3,853 export-import documents.

Officials of CCH, however, say cargo delivery has been slow for few days due to manual assessment as the customs process is solely dependent on Asycuda worldwide network.

"We had resumed 50 per cent of customs-assessment activity since July 23, 2024 and it returned to normal on Wednesday," the official says.

The customs house in the port city CCH is receiving duty taxes through electronic payment switching back from the temporary manual system, he adds.

Md Omar Faruk, Secretary of the CPA, told the FE that there was no congestion in the port yet as its capacity is higher than what it needs to deal with the current stock of goods.

"The Chittagong port has the capacity to store 53,000 TEUs of goods while existing goods aggregated 41,000 TEUs as of Thursday," he said.

Mr Faruk, however, said the pressure of imported goods awaiting delivery increased Thursday as some of the importers could not release goods for the unrest that rattled normal life and business across Bangladesh centering round students' quota-reform movement.​

 

[Saif]

BIDA witnesses surge in investment proposals

A total of 254 industrial establishments have registered with the Bangladesh Investment Development Authority (BIDA) in the past three months through June. Among them, 220 are local enterprises, 19 are foreign-owned firms, and 15 are joint ventures. The combined proposed investments by these esta

thefinancialexpress.com.bd

BIDA witnesses surge in investment proposals
254 firms to invest Tk 773.64b
FE REPORT
Published :
Jul 26, 2024 10:26
Updated :
Jul 26, 2024 10:26

A total of 254 industrial establishments have registered with the Bangladesh Investment Development Authority (BIDA) in the past three months through June.

Among them, 220 are local enterprises, 19 are foreign-owned firms, and 15 are joint ventures.

The combined proposed investments by these establishments reached Tk 773.64 billion in the last quarter of the financial year 2023-24. This figure marks a significant increase from Tk 338.06 billion proposed by 302 industrial units in the previous quarter (January to March), according to official data.

Of the Tk 747.15 billion local investment proposals, the industrial sector accounted for Tk 573.13 billion, followed by the chemical industry with Tk 66.29 billion, engineering industry with Tk 38.07 billion, garments industry with Tk 27.45 billion, and printing and press industry with Tk 17.10 billion.

The foreign investment proposals amounted to Tk 26.48 billion, with the chemical industry receiving the highest share of Tk 14.48 billion, followed by the garments industry with Tk 3.73 billion, agriculture industry with Tk 3.17 billion, engineering industry with Tk 2.51 billion, and tannery and leather industry with Tk 865.32 million.

These investments are expected to create around 47,105 job opportunities across the country.​

 

[Saif]

Economic loss: Restore a state normalcy

The violence that erupted centering the quota reform movement of the students, the curfew and stern action like shutting off the internet service has pushed the economy towards a direr situation.

en.prothomalo.com

Economic loss: Restore a state normalcy
Editorial Desk
Published: 26 Jul 2024, 18: 11

The country's economy is already under considerable pressure because of the dollar crisis, reduction of foreign currency reserve and the price hike of daily commodities. And, there's no doubt the violence that erupted centering the quota reform movement of the students, the curfew and stern action like shutting off the internet service has pushed the economy towards dire staits.

The business community believes Bangladesh has incurred huge losses due to the export-oriented factories remaining closed. Garments industries owners' association BGMEA president Abdul Mannan said that there has been financial loss of about 110 billion (11,000 crore) taka in the few days of stand still. Out of this, BGMEA has incurred a loss of Tk 64 billion (6,400 crore) in direct export.

According to knitwear industries owners' association BKMEA executive president Mohammad Hatem, if the factory remains closed even for a day the financial loss incurred is 160 million (16 crore) dollars which amounts to 17.28 billion (1,728 crore) in Bangladeshi taka.

Policy Research Institute's executive director Ahsan H Mansur said that the economy has suffered a loss of more than Tk 840 million (84,000 crore) in the past one week.

There has been a daily loss of almost Tk 120 billion (12,000 crore) in the ongoing stagnation. It might be possible to measure the economic loss in terms of money but there's no scale to measure the damage done to country's image.

International transactions of the banks in the country is completely dependent on internet. Since the internet was down, communication with the foreign banks as well as with the buyers and the sellers was totally closed.

The internet service has been reactivated on limited scale since Wednesday. The industries have restarted production. Meanwhile, the banks, government and private offices also remained open for a limited period in the last two days.

Users submitted 7,819 export and import consignment documents online for taxation at Chattogram Customs House this Wednesday. The clearance of goods from the port has also resumed in full swing.

But, when the government is considering that everything has become normal, why delay in reopening everything? On one hand, policy makers of the government are saying that the students are not involved in the violence and destruction caused centering the quota reform movement, on the other hand, cases are being filed one after another against unknown number of protesters.

This is clearly a self-contradictory stand. Already, allegations have been found about several leaders of the quota reform movement being picked up from their homes and being tortured. These need to be investigated properly.

There has been extensive loss to the economy of the country. More than 200 people have been killed centering an apolitical issue like quota reform. Many have been crippled or lost their vision for good. This loss cannot be allowed to increase any further. Let the government take legal action against those who destroyed property based on investigation. But, no innocent people can be harassed.

To restore normalcy in public life, ensure a fear-free environment alongside security and democratic rights of all citizens.​

 

[Saif]

Inflation increase feared due to unrest and uncertainty

The supply chain of daily essentials had almost collapsed due to the violent incidents from the past couple of days. So, the prices of commodities started rising.

en.prothomalo.com

Inflation increase feared due to unrest and uncertainty
The inflation rate has been higher than 9 per cent for over a year. Prices of commodities have gone up due to the violence over the past few days.
Staff CorrespondentDhaka
Published: 25 Jul 2024, 14: 32

The common people were already floundering under the high inflation rate for the past two years. The people feel this pressure in the market every day. Various initiatives of the government have also failed to relieve the pressure of inflation. The prices of rice, lentils, onions, garlic, sugar, vegetables, fish and meat are hardly affordable by the low and fixed income group.

Under these circumstance the ongoing uncertainties have created newer crises regarding high inflation in the economy, believe economists. The poor people have fallen in trouble afresh from the price of commodities going up. Since the internet is down about 10 million (one crore) families with TCB cards have not been receiving daily commodities at subsidised prices over the last couple of days.

The supply chain of daily essentials in the country had almost collapsed due to the violence over the past couple of days. The prices of commodities started rising in the markets of the capital. The government took initiative to bring the situation under control by imposing curfew. However the supply chain of commodities between the capital and the whole country only started becoming active again over the last two days.

Supply of commodities in the markets of the capital has increased and the prices have also started coming down a bit. However, it still hasn't returned back to the situation from two weeks back yet. Controlling the high inflation rate is indeed a major challenge for the government. The price hike of commodities or the high inflation rate directly impacts the common public. And, the cost of running their households goes up.

Speaking on this topic, executive director of South Asian Network on Economic Modeling (SANEM), Selim Raihan told Prothom Alo that the public is under the pressure of high inflation for about two years. But, the low and limited income population has fallen under unnatural pressure because of the recent violent incidents. Nobody was prepared for this situation.

On one hand the low income population is left without work as almost everything is closed, on the other hand the prices of commodities in the markets are mounting. The working class people don't even have the savings to survive two to three days. So, the growing prices of commodities have increased the ongoing new crisis of high inflation even further, he added.

People under most pressure in 12 years

The people have been under the most pressure of inflation for one year over the last 12 years. The income of people is not increasing in line with the rate inflation is increasing. The pace of expenditure being higher than the income has caused trouble for the low income population.

According to latest data from Bangladesh Bureau of Statistics (BBS) the average inflation rate in the recently over 2023-24 fiscal was 9.72 per cent, which is the highest among the last 12 years as per the fiscal-based records. The overall inflation did not drop below 9 per cent in any month of the whole year. Meanwhile, the national wage rate has experienced an increase of roughly 7.5 per cent.

food inflation had already been in a bad shape for the last one year. This had been above 10 per cent in as many as seven out of the last 12 months. The food inflation had risen to 12.54 per cent in August last year, which was the highest in that fiscal.

While the target was to retain the inflation rate within 6 per cent in the last fiscal, it's nowhere near that actually.

Market is heated

The supply of daily commodities to the capital from different parts of the country had almost closed because of the clashes that erupted in the last couple of days. So, the prices of various items including rice, broiler chicken, chicken eggs, fish, meat, green chillis, onions and potatoes increased considerably in the market. However, the prices of vegetables have relaxed a bit in the last two days. The retail sellers and the buyers are saying that the market is still heated and the prices have not come down to the previous levels yet.

Visiting Mohammadpur Town Hall, Krishi Market, Shewrapara and Karwan Bazar kitchen markets in the capital on Tuesday it was found that the prices of various rice varieties have increased by Tk 2 to 5 per kg. For example, a kilogram of coarse rice (paijam) was selling for Tk 54 at Mohammdpur Krishi Market on the retail level. The same rice was sold for Tk 50-51 two weeks back.

Traders from Mohammadpur Krishi Market, the largest wholesale depot of rice in the capital said that no rice trucks have arrived there since Friday till Tuesday because of the uncertainties caused from the clashes. However, the price remains stable there as rice had been stored on the wholesale level. Seller of the Bengal Rice Agency in Krishi Market, Md Nazim Uddin hopes the price of rice will come down in the retail market when the supply increases.

Except for rice the prices of other daily commodities like sugar, onion, broiler chicken and chicken egg have increased a little. Sugar sold for Tk 135-140 per kg in the markets of Dhaka on Tuesday. Just two days ago, the price of sugar was Tk 5-10 less on a kg. Local verities of onion are selling for Tk 110-120 per kg in the market now. While the import from India has increased, there's no news of the price coming down yet.

Broiler chicken is selling for Tk 190 per kg now, which cost Tk 170 two weeks back. The price of browns egg from farm chickens has also increased by Tk 10-20 per dozen and are selling for Tk 150-160 now.

The supply of vegetables to Dhaka from different districts of the country has increased in the last two days. So, the price of vegetable has started decreasing. Most of the vegetables are selling below Tk 100 right now. The retail sellers however say that the prices of the vegetables are yet comparatively very high. The prices were supposed to be a lot lower in this peak season.

Meanwhile, the fish market has been impacted as well. The prices of fish are high as the supply has been low in the past few days. People with a limited income consume rui, tilapia, pangash and shrimp more. The prices of these varieties of fish are Tk 20-40 higher compared to normal times.

Consumer Association of Bangladesh (CAB) president Golam Rahman said if the supply of commodities is fine, the prices also remain under control. But it cannot be denied that there is high inflation in the country. Common people are in a difficult predicament with the increased prices. So, the government needs to focus on increasing people's purchasing power as to their income. However, an environment for normal economic activity needs to be created at the earliest by fixing the supply chain that has come to a standstill in the last few days.

State minister reassures

After remaining closed due to the clashes in the past few days, the supply of daily commodities to the capital has been increasing gradually from Monday. The state minister for commerce Ahsanul Islam visited the Karwan Bazar and Mohammadpur kitchen markets in the capital in person on Tuesday to explore how much the supply of daily commodities has increased in the markets. At the time he visited the shops and enquired about the price as well as supply of commodities.

Following the market visit, Ahsanul Islam told the journalists that the supply chain has been restored within the fastest time possible even after so much destruction. There's no shortage of supply for any of the daily commodities in the wholesale market. When these commodities reach the retail markets, the price will logically come down there as well.

The state minister for commerce also stated that the government is working especially to ensure that there is no obstruction in the supply of perishable commodities like onions and green chillies even during the curfew. So, he hopes that there will be no shortage of supplies.

Ten million TCB card-holder families in trouble

A few daily commodities including rice, lentils and edible oil are supplied among ten million (one crore) families of the country at susidiesed prices from the Trading Corporation of Bangladesh (TCB). The distributers run the whole operation through a specific app. However, the app cannot be activated as the internet is down. The supply of these products among the beneficiaries has been suspended for the last three to four days. So, many of the TCB card-holding consumers are buying commodities at higher prices from outside markets.

Commenting on the overall situation, SANEM executive director Selim Raihan told Prothom Alo, "The violent incidents of the past few days turned into a heavy loss for the economy. A sort of fear, uncertainty and insecurity has risen among the public. We are still unable to fix the trade and movement of the commodities. The supply chain of goods needs to be restored by strengthening security. Plus, it's necessary to introduce special aid interventions for poor families."

Selim Raihan also stated that the government is failing to bring the ongoing high inflation rate under control for the last two years. There is a lack of coordination between the monetary policy, revenue policy and market management. Concerted efforts on these issues are needed to control the inflation.​

 

[Saif]

Govt may miss IMF’s revenue collection target

Bangladesh is unlikely to fulfil the revenue collection target set by the International Monetary Fund (IMF) as part of its conditions for the fourth tranche of a $4.7 billion loan programme.

www.thedailystar.net

Govt may miss IMF's revenue collection target

Bangladesh is unlikely to fulfil the revenue collection target set by the International Monetary Fund (IMF) as part of its conditions for the fourth tranche of a $4.7 billion loan programme.

The target is measured through the performance of both revenue collection by the National Board of Revenue (NBR) and non-NBR taxes.

As per the IMF target, the government was supposed to collect Tk 394,530 crore in taxes in fiscal year 2023-24.

According to the NBR's provisional data, the tax administrator collected Tk 371,842 crore in FY24 against a collection target of Tk 410,000 crore in the revised budget.

On the other hand, the collection target for non-NBR taxes was Tk 19,000 crore in the revised budget.

Although data for non-NBR tax was not available for the entire fiscal year, finance ministry statistics showed that only Tk 5,109 crore was collected as non-NBR taxes in the first eight months of the last fiscal year.

This means that even if the target set in the revised budget is met, it will still not be possible to meet the revenue collection target set by the IMF.

In FY23, only Tk 7,978 crore was collected as non-NBR taxes.

Finance ministry officials said the country may fail to meet the target for revenue collection but it had already met the target for forex reserves.

Bangladesh was tasked with keeping net international reserves (NIR) of $14.79 billion on June 30. On that date, Bangladesh had an NIR of $16.7 billion.

Prior to that, the country had failed to fulfil the NIR target ahead of each instalment of the loan.

The country could achieve the target for the first time after record budgetary assistance from global creditors as several bilateral and multilateral lenders approved $4.8 billion in June alone.

The IMF approved the $4.7 billion in January last year.

In its first review, Bangladesh failed to fulfil the conditions for both revenue collection and NIR.

As a result, Bangladesh sought a waiver from the global lender's board against the two key conditions.

In the IMF's second review, which was based on the performance of December last year, Bangladesh successfully fulfilled both targets as the NIR target was revised down to $14.78 billion from $20.10 billion.

In May this year, Bangladesh also requested the IMF to revise down the revenue collection target but the lender did not do it.

An IMF mission is likely to visit Bangladesh to review the conditions by the end of this year. The fourth tranche is expected in December this year.​