Saudi offers large scale investment in Bangladesh

Saudi Arabia has offered to make a large scale of investment in various sectors of Bangladesh, as the country has a stable government and a tremendous record of economic growth. 

Saudi Arabian Minister of Investment Khalid A Al-Faliah and Minister of Economy and Planning Faisal Alibrahim came up with the offer when they jointly called on Prime Minister Sheikh Hasina at her place of residence in Doha today.

While briefing the reporters, after the meeting, Foreign Minister Dr AK Abdul Momen quoted the two ministers as saying, “We see few issues as investors. Firstly, the stability (of the country), businessmen see whether it is stable, the future of investment. The present and future of Bangladesh is very good, and that is why we’ve taken the decision to strengthen relations with Bangladesh.”

“Bangladesh’s leadership is very good, vision is good and their commitments are very good,” commended the ministers of the brotherly country, adding that the country has a stable government and Bangladesh’s economic growth is very good.

“Saudi Arabia wants to establish Bangladesh as a regional hub considering its geographical location as the country is in between South and South-East Asia. If we make it a hub, we can cover up Indonesia, Malaysia and more…,” they added.

The two ministers said they want to do here petrochemical, diesel, jet fuel, fertiliser and major distribution centres as well as shipping lines.

In reply, the Prime Minister said that she has already given permission and urged them to start it immediately.

Sheikh Hasina also offered Matarbari and Paira Sea ports and economic zones to Saudi Arabia for mutual benefits.

In this regard, she directed the authorities concerned to take necessary measures to remove obstacles to facilitate Saudi investment in Bangladesh.

Saudi Arabia also wants to develop a partnership with Bangladesh through cooperation in various sectors including agriculture for mutual benefits.

In this regard, they assured the Prime Minister of providing necessary financial and technical assistance to Bangladesh.

While discussing the issues of Hajj, both ministers requested Bangladesh to invest in building housing and hospitals in Saudi Arabia.

The two Ministers of Saudi Arabia requested the Prime Minister to establish pharmaceuticals, beverage and real estate industries in Saudi Arabia for the benefit of the people of the two countries.

The Saudi Minister of Investment and the Minister of Economy also sought cooperation from Bangladesh in achieving the goal of Saudi Arabia’s Vision 2030.

They highly appreciated Bangladesh’s RMGs describing Bangladesh has shown that it has become the capital of textiles and garments in the world.

PM’s Speechwriter M Nazrul Islam was present at the briefing.


Interbank dollar exchange rate rises to Tk108.75

The interbank exchange rate for dollars rose from Tk108.50 to Tk108.75, which is the highest in the country’s history.

The rate at which one bank sells dollars to another bank is called the interbank exchange rate.

According to central bank data, the American greenback traded at the lowest rate of Tk108.50 and highest rate of Tk108.75 on Monday (22 May).

Earlier on 15 May, the dollar rate rose to Tk108.50 in interbank exchange, which was the highest dollar rate in this market till Monday.

On 7 May, the dollar rate rose to Tk108 in interbank exchange.

Bankers said the interbank dollar rate has increased mainly due to the increase in remittance rates.

On 30 April, Association of Bankers Bangladesh (ABB) and Bangladesh Foreign Exchange Dealers’ Association (BAFEDA) increased the remittance dollar rate by Tk1 to Tk108.

Earlier, the dollar rate of remittance was Tk107 for about six months, although several banks have brought remittances with higher rates in March.

Source: The Business Standard
--FILE--A truck transports a container of Maersk unloaded from a container ship on a quay at the Port of Qingdao in Qingdao city, east China's Shandong province, 12 April 2016.

Maersk Line, the world's biggest container shipper, has decided to stop services to and from 10 ports in China as part of a drive to reduce costs. Maersk Line said it would stop serving ports in Chizhou, Luzhou, Yingkou, Jinzhou, Rizhao, Yueyang, Lijiao, Taiping, Jiaoxin and Nansha old port. The ports are currently served by feeder vessels that move goods to larger ports where mega-vessels with capacity of up to 20,000 20-foot containers take over and transport the goods to ports mostly in Europe and the United States.
No Use China. No Use France.

Can falling imports alone ease stress in the economy?

Chattogram port Imports

Bangladesh’s trade gap and current account deficit have narrowed significantly in recent months but the positive developments might not prove enough to bring back stability to the economy.

The government and the central bank earlier took a set of initiatives to reduce import payments in order to decrease both the trade gap and the shortfall in the current account. The initiatives have not paid off since the erosion of the foreign exchange reserves could not be stopped.

The large shortfall in the financial account, which had historically enjoyed a surplus, is now responsible for the drastic fall in the reserves.

Bangladesh’s international currency reserves stood at $30.34 billion last week in contrast to $42.20 billion in May last year, a decrease of 28 per cent year-on-year.

“The entire economy has been hit hard because of the continued fall in the reserves,” said Ahsan H Mansur, the executive director of the Policy Research Institute of Bangladesh.

“If we can’t restore the discipline in the foreign exchange market, attaining the economic growth target will be difficult in the days ahead and inflation may go up further.”

The gross domestic product (GDP) growth has already slowed owing to the persisting severe fallout of the Russia-Ukraine war.

GDP grew 6.08 per cent in the current fiscal year, ending in June, provisional data from the Bangladesh Bureau of Statistics showed. The economy expanded by 7.1 per cent in 2021-22.

The government has set a GDP growth target of 7.5 per cent for the next fiscal year, which begins in July.

And the factors behind the drastic fall in the reserves such as higher import bills, runaway inflation and escalated commodity prices are still there.

And Mansur, also a former official of the International Monetary Fund (IMF), thinks there is no scope to rein in import payments further.

“If imports decrease further, industrial production will shrink,” he said.

In the first nine months of 2022-23, import bills dropped 12.33 per cent year-on-year to $53.93 billion. As a result, the trade deficit, which occurs when a country’s imports exceed its exports, declined 41.6 per cent year-on-year to $14.61 billion in July-March.

“Imports of industrial raw materials and capital machinery have already decreased significantly, so a further reduction in imports should be stopped in the interest of the economy,” Mansur said.

Imports of raw materials stood at $20.64 billion in July-April, down 6.68 per cent from a year earlier.

Mansur says if the central bank tries to tackle the ongoing stress in the foreign exchange market by reducing the deficit in the current account, it will be a “draconian adjustment”.

The deficit in the current account, which records a nation’s transactions with the rest of the world, was $4.64 billion between July and March, a decrease of 75 per cent from a year ago.

The economist argued many businesses are facing a dollar shortage to import raw materials to run their factories, leading to a shortage of essential goods in the market and fueling inflation.

Inflation fell slightly to 9.24 per cent in April after the Consumer Price Index jumped to a seven-month high of 9.33 per cent in March.

And if the exchange rate of the taka against the dollar declines, it will compound further pressure on the poor and limited-income households, which are already struggling to make ends meet amid the cost-of-living crisis.

The dollar traded at Tk 108 on May 14, down 25 per cent year-on-year.

“We have to stop the downward trend of the reserves. And strengthening the financial account is key to bolstering the reserves. If we can’t do so, the local currency will weaken further,” Mansur said.

The eroding reserves have already sent a negative signal to foreign entities.

Mansur said: “Many foreign lenders are showing reluctance to give out loans to local businesses due to the existing turbulence in the economy, putting an adverse impact on the financial account.”

“Macroeconomic stability is highly important to strengthen the confidence of foreigners. If we can’t do so, foreign entities and individuals will neither invest nor lend to the country.”

A financial account is a component of a country’s balance of payments that covers claims or liabilities to non-residents concerning financial assets.

Between July and March, the financial account registered a deficit of $2.21 billion in contrast to a surplus of $11.92 billion a year ago.

Zahid Hussain, a former lead economist of the World Bank’s Dhaka office, says that the global economic outlook is good now as the United States and the European Union might have avoided recession.

Besides, inflation is showing a downward trend in the developed economies.

“But the positive developments will not help Bangladesh as both the central bank and the government have not taken time-befitting measures to address the burning issues,” he said.

Hussain cited that the central bank is going to roll out an interest rate corridor, which will be determined by the average yields of treasury bills.

This may push up the lending rate by 1-2 percentage points but the hike will not be enough to tackle ongoing challenges, he said.

“Besides, the central bank has not allowed the market to determine the floating exchange rate in a true sense.”

Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, thinks strengthening the financial account is the most important task at the moment to restore discipline in the economy.

“The government should implement more foreign-funded projects as it will help the country mobilise US dollars from external sources.”


How to maximise return on savings certificates

What is the best investment area to maximise your return?

Considering the available investment areas in Bangladesh, saving certificates are a secure investment sector because these instruments are issued by the government and they will give you the highest return.

There are four categories of saving certificates but the interest rate is different. Let’s discuss all of the savings’ certificates.

Pensioner savings certificates

The interest rate is 11.76 per cent and this is the highest interest rate among the four saving certificates. But this is not eligible for all investors. Only the retired officials of the government, semi-government, autonomous, semi-autonomous and their deceased family members are eligible to invest.

So, if you fall under the categories, it will be a good decision to invest your money into this savings tool.

Family savings certificates

You will get the second-highest return from family saving certificates. The interest rate is 11.52 per cent.

This rate is also not available for all. Only the women, disabled men and women, and 65-year-old men and women are eligible to invest in this category.

The investors who are not eligible for pensioner saving certificates may first invest in this certificate. To avail the highest return, you may invest money in the name of your wife or mother.

If the investment limit exceeds, then invest in two other certificates in your name. All are eligible to invest in these two categories.

Three-month profit earning savings certificates

The interest rate is 11.28 per cent, which will be disbursed every three months. If you require a regular income stream to meet your family expenses, this is the best investment sector.

Five-year Bangladesh savings certificates

The interest and the actual investment will be disbursed at the end of the maturity. So, if you do not require any return or money for the next five years, you may decide to invest in this certificate. The interest rate is 11.04 per cent.

Important points to remember

The total investment limit is Tk 50 lakh, it may be in one category or in all four categories collectively.

The interest rate will decrease if your investment exceeds the limit of Tk 15 lakh in each savings certificate. So, it will be wise to limit investment to Tk 15 lakh and then move to the next savings certificates with a view to availing the highest interest rate.

The tax at source is 10 per cent and it will be deducted at the time of interest disbursements. However, no tax will be charged if your investment in the pensioner savings certificates is Tk 500,000 or less.    Now make up your mind to get the highest return on your investments.


Jasim Uddin Rasel is author of Smart Money Hacks

Source: The Daily Star


SEC identifies cos that failed to pay out dividends for FY22

As many as 15 companies listed on the stock exchanges have not disbursed dividends as promised for FY22.

The issuers of listed securities shall pay off the dividends within 30 (thirty) days of declaration or approval, as the case may be, according to a regulatory provision.

Cash dividends are to be transferred to the bank accounts of securities’ holders while stock dividends into BO (beneficiary owner’s) accounts.

The companies’ category still remains the same despite their failure to pay out returns on investments within the stipulated time.

Of the companies, 11 are listed in the main board while the other four are on the SME board.

The regulator is working to collect further information about the companies that have not distributed dividends, said Dr. Shaikh Shamsuddin Ahmed, a commissioner of the Bangladesh Securities and Exchange Commission (BSEC).

“The matter will not remain as unaddressed and necessary actions will be taken,” he said.

Categorising companies

Listed companies are labeled based on the amount of dividends they give to investors.

A company will be in the A category if it has distributed at least 10 per cent dividend or above per share. Companies come under B category for paying dividend less than 10 per cent per share.

Stocks get to be in Z category if they have failed to hold annual general meetings for three years in a row and issue no dividend even for a year.

Six companies are still in the A category despite their failure to meet the criterion set.

The companies are Fortune Shoes, Taufika Food and Lovello Ice-cream, Lub-rref (Bangladesh), Associated Oxygen, Premier Cement Mills and S. S. Steel.

These firms recommended dividends between 5-12 per cent.

Five other companies of the main board are in ‘B’ category and they recommended dividends between 1-3 per cent.

The non-compliant companies of the SME board declared dividends between 10-15 per cent for FY22.

Managing Director of Midway Securities Md. Ashequr Rahman said the securities regulator and the stock exchanges should issue show cause notices to know as to why the companies have not yet distributed dividends.

A company recommends dividend on its financial strength, and its auditor signs the financial reports on completion of a scrutiny.

“If it is so, an investigation should be conducted”, said Mr Rahman, to find out why the companies failed to disburse dividends that were recommended based on financials.

The auditors should also be asked if they approved the financial results.

Responses from companies

Meanwhile, company secretary of Premier Cement Mills, Kazi Md. Shafiqur Rahman claimed that the company had distributed dividends. But the DSE website does not have any declaration in this regard.

Md. Mostafizur Rahman, company secretary of S.S. Steel, said a process was on to pay out dividends.

Representatives of some other companies could not be reached despite repeated attempts.

The DSE website has some announcements regarding non-disbursement of dividends.

A disclosure posted on March 12 said the DSE had issued a query letter to Taufika Food and Lovello Ice-cream. The prime bourse also cited Fortune Shoes as one of the non-compliant.

Source: The Financial Express


April saw highest Tk29,697cr govt borrowing from banks in FY23

Infographic: TBS

Infographic: TBS

As the fiscal year draws to a close, the government is turning to banks, especially the central bank, to secure funds to cover its expenses amid a decline in revenue collection.

Data from the Bangladesh Bank shows that the government borrowed Tk29,697 crore from banks in April, the highest amount borrowed in a single month during the fiscal 2022-23.

In March, the borrowing was Tk17,770 crore, while in February, it was Tk6,803 crore.

According to the Bangladesh Bank, from July to April in FY23, the government borrowed a total of Tk82,057 crore from the banking system, and around 80% of this fund was provided by the central bank.

It is worth noting that when a central bank lends money to the government by printing additional currency, it is referred to as high-powered money, which can potentially result in higher inflation.

Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, told The Business Standard, “The borrowing from the central bank is high-powered money. It has an inflationary effect on the economy. Besides, loans taken from commercial banks will reduce the amount of loanable funds in the private sector.”

“However, as the revenue is less than the target, the government has to borrow to meet its expenditure. The government should now pay more attention on how to underwrite government expenditure by increasing domestic resource mobilisation. Otherwise, it will be challenging to control inflation,” added the economist.

Analysts predict that the government’s borrowing from banks may surpass the target of Tk1,06,334 crore for fiscal this year, considering the remaining two months and the typical rise in borrowing during this period, coinciding with increased expenditure.

According to data from the central bank, the government’s total borrowing from the country’s banking system stood at Tk3.56 lakh crore till April. Of the amount, Tk2.22 lakh crore has been taken from commercial banks.

Several senior officials at the central bank said that the government had a tendency to repay the loans of the commercial banks even though it increased borrowing from the Bangladesh Bank in most of the months of the current financial year. However, the government’s borrowing from commercial banks also increased slightly in March and April.

A large part of the amount borrowed from the central bank has been provided through government treasury bills and bonds. The central bank itself buys them by releasing money from the vault; this is called “devolvement”, a part of which is supplied again by printing money.

The central bank made devolvement of more than Tk11,000 crore in April, which stood at over Tk66,000 crore in the first 10 months of the fiscal year.

Earlier in a central bank report, the government was asked to reduce borrowing from banks and take loans from the non-bank sector.

Explaining the matter, a central bank official, who did not wish to be named, said that inflation is already higher than normal. When the central bank makes devolvement the money supply in the country’s economy increases. When new money enters the market, it triggers inflation.

He also said there was a liquidity crunch in the banking sector a few days ago. Later, due to an increase in lending to commercial banks through repo and liquidity facilities from the central bank, the crisis decreased. However, if the government increases borrowing from commercial banks, there may again be a liquidity crunch in the banking sector.

The government had set a target of borrowing Tk1,06,334 crore from the banking sector to meet the budget deficit for the fiscal 2022-23. By the end of April, the government had met 77.17% of this target.

According to data from the central bank, the government has borrowed around Tk1 lakh crore from the banking sector in the last one year, starting in April 2022, the majority of which is from the central bank.

Officials said that the government takes loans from the banking sector to meet the deficit budget. Most of the loan is spent on the Annual Development Programme.

In the current financial year, the government had set a target of borrowing Tk40,000 crore from the non-banking sector –  Tk35,000 crore from savings tools and Tk5,000 crore from non-bank financial institutions (NBFIs) and other sources.

Borrowing from other sectors, including NBFIs, stood at Tk8,841 crore till April, the central bank said. However, instead of increasing, borrowing from savings tolls has decreased by Tk4,162 crore.

Screenshot 2023-05-12 091705

রিজার্ভের পরিমাণ যে কারণে কমেছে

ডলারছবি: রয়টার্স

দেশের রিজার্ভের পরিমাণ কমে যাওয়ার জন্য কৃত্রিমভাবে ডলারের দাম আটকে রাখা ও বিনিময় হারের ওপর কড়াকড়ি আরোপের দায় রয়েছে বলে এক প্রতিবেদনে জানিয়েছে বিশ্বব্যাংক। সংস্থাটি বলছে, রিজার্ভ কমে যাওয়ায় আমদানি ব্যয় বহন কঠিন হয়েছে। এ ছাড়া বাইরের ঋণ পরিশোধেও সমস্যা হয়েছে। গতকাল ঢাকায় এক সম্মেলনে এ প্রতিবেদনের বিভিন্ন বিষয়ে আলোচনা হয়।

দক্ষিণ এশিয়ার দেশগুলোকে নিয়ে সম্প্রতি প্রকাশিত বিশ্বব্যাংকের আঞ্চলিক অর্থনৈতিক আপডেটে এসব কথা বলা হয়। প্রতিবেদনে বলা হয়েছে, বাংলাদেশে দীর্ঘদিন ধরে ডলারের দাম কৃত্রিমভাবে আটকে রাখা হয়েছে। পাশাপাশি বিনিময় হারের ওপরও কড়াকড়ি আরোপ করা ছিল।

এসব কারণে বাংলাদেশে আনুষ্ঠানিক ও অনানুষ্ঠানিক ডলারের দামে এক পর্যায়ে বড় পার্থক্য তৈরি হয়। এতে আনুষ্ঠানিক মাধ্যমে প্রবাসী আয় আসা কমে যায়। যার ফল হিসেবে দেশের রিজার্ভের পরিমাণও কমে গেছে।

শুধু বাংলাদেশ নয়, এ অঞ্চলের আরও কিছু দেশে বৈদেশিক মুদ্রার বাজারে হস্তক্ষেপ ও আনুষ্ঠানিক প্রবাসী আয়ের প্রবাহ কমায় বৈদেশিক মুদ্রার রিজার্ভ কমে যাওয়ার ঘটনা ঘটেছে। প্রতিবেদনে খেলাপি ঋণ নিয়ে বলা হয়েছে, উচ্চ আমদানি ব্যয়, ঋণ আদায়ে শৃঙ্খলা না থাকা ও নিয়ন্ত্রক সংস্থার তদারকির দুর্বলতার কারণে দেশে খেলাপি ঋণের পরিমাণ বেড়েছে।

বিশ্বব্যাংক বলেছে, দক্ষিণ এশিয়ার দেশগুলো গত তিন বছরে বড় ধরনের ধাক্কা খেয়েছে। এ অবস্থা থেকে পুনরুদ্ধার হয়ে প্রবৃদ্ধিতে যেতে হলে বৈষম্য দূর করে অন্তর্ভুক্তিমূলক অর্থনৈতিক উন্নয়ন নিশ্চিত করা প্রয়োজন।

গতকাল সোমবার রাজধানীর মহাখালীর ব্র্যাক ইন সেন্টারে আয়োজিত ১১তম দক্ষিণ এশিয়া অর্থনৈতিক পলিসি নেটওয়ার্ক সম্মেলনেও বিষয়টি নিয়ে আলোচনা হয়েছে। অনুষ্ঠানে বক্তারা বলেন, সুযোগের অভাবে অনেক মানুষই তাদের সম্ভাবনাকে পুরোপুরি কাজে লাগাতে পারেন না।

জন্মস্থান, পারিবারিক পটভূমি, বর্ণ, জাতিসত্তা ও লিঙ্গ— ইত্যাদি কারণে এ ক্ষেত্রে বৈষম্যের শিকার হন অনেক সম্ভাবনাময় মানুষ। এতে সামাজিক স্থিতিশীলতা নষ্টের পাশাপাশি দীর্ঘ মেয়াদে অর্থনৈতিক প্রবৃদ্ধিও বাধাগ্রস্ত হয়। তাই অন্তর্ভুক্তিমূলক প্রবৃদ্ধি অর্জন করতে হলে যোগ্যদের সমান সুযোগ দিতে হবে।

বিশ্বব্যাংক, সাউথ এশিয়া ইকোনমিক পলিসি নেটওয়ার্ক ও ব্র্যাক ইনস্টিটিউট অব গভর্ন্যান্স অ্যান্ড ডেভেলপমেন্ট স্টাডিজ (বিআইজিডি) যৌথভাবে এ সম্মেলনের আয়োজন করেছে।

দুই দিনব্যাপী সম্মেলনের উদ্বোধনী অনুষ্ঠানে প্রধান অতিথি ছিলেন জাতীয় সংসদের স্পিকার শিরিন শারমিন চৌধুরী। বিআইজিডির নির্বাহী পরিচালক ইমরান মতিনের সভাপতিত্বে অনুষ্ঠানে সূচনা বক্তব্য দেন বিশ্বব্যাংকের কান্ট্রি ডিরেক্টর আবদুল্লায়ে সেক। প্রথম দিনের বিভিন্ন কর্ম–অধিবেশনে ১০টি প্রবন্ধ উপস্থাপন করা হয়।

সম্মেলনের উদ্বোধনী অনুষ্ঠানে বক্তারা বলেন, গত দুই দশকে দক্ষিণ এশিয়ার দেশগুলোতে দৃশ্যমান অর্থনৈতিক প্রবৃদ্ধি হলেও সুযোগের বৈষম্য এখনো প্রকট। বিশ্বের সবচেয়ে বেশি সুযোগের বৈষম্য রয়েছে এই অঞ্চলের দেশগুলোতে।

স্পিকার শিরীন শারমিন চৌধুরী বলেন, দক্ষিণ এশিয়ার দেশগুলো সামাজিক জীবনমান উন্নয়নে এখনো পিছিয়ে আছে। শুধু অর্থনৈতিক উন্নয়ন দিয়ে বৈষম্য দূর হবে না। এ জন্য আর্থসামাজিক সব ক্ষেত্রে অন্তর্ভুক্তিমূলক প্রবৃদ্ধি প্রয়োজন।

বিশ্বব্যাংকের কান্ট্রি ডিরেক্টর আবদুল্লায়ে সেক বলেন, সুযোগের অভাবে অনেক মানুষই তাদের সম্ভাবনাকে পুরোপুরি কাজে লাগাতে পারেন না।তাই সুযোগের এ বৈষম্য শুধু অন্যায্যই নয়, এটি দেশের দীর্ঘমেয়াদি অর্থনৈতিক প্রবৃদ্ধিকেও কমিয়ে দেয়।

সূত্রঃ প্রথম আলো

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Wide gap in formal-informal exchange rates led to forex reserve slide: WB

formal exchange

A wide gap in formal and informal exchange rate has been one of the factors behind the sharp fall in the foreign exchange reserves in Bangladesh as it shifts remittances from official channels to unofficial routes and impedes repatriation of export proceeds, said the World Bank.

The observation comes as the country’s foreign exchange reserves dropped 29.45 per cent to $29.77 billion in a span of one year owing to higher import bills against moderate export and remittance earnings, Bangladesh Bank data showed.

“The widening of the exchange rate gap and the uncertainty about exchange rates, in general, diverted remittance inflows away from official channels, especially as remitters can obtain more favourable market rates through unofficial channels,” the WB said in a report.

In Bangladesh, a one-per cent deviation between the formal and informal exchange rate shifts 3.6 per cent of remittances from the formal to the informal financial sector, said the multilateral lender’s latest regional economic update titled “Expanding Opportunities: Toward Inclusive Growth.”

On the subject, a two-day conference began in Dhaka yesterday. The Brac Institute of Governance and Development (BIGD) and the WB jointly organised the event at the Brac Centre Inn.

According to the report, interventions in the foreign exchange market and declining official remittance inflows have reduced foreign reserves in most countries.

As countries sold US dollars to stabilise the exchange rate, the move brought down the level of reserves. The decline in official remittance inflows and export proceeds put further downward pressure on the reserves of the countries.

The report said as the official exchange rate was set at an artificially strong level that is inconsistent with the market, the gap between the interbank and the informal market widened in Bangladesh.

In 2021-22, external sector pressures rose due to rising commodity prices, a strengthening US dollar, sharp increases in imports, and declining official remittance inflows.

In response, the BB sold US dollars, which drew down foreign reserves. To address the mounting pressures, the central bank floated the exchange rate in June last year.

The policy led to a rapid exchange rate depreciation of 11 per cent against the US dollar. As a result of the reversal, the gap between official and unofficial exchange rates widened in August, which depleted foreign exchange liquidity in banks.

The taka has lost its value by about 25 per cent against the US dollar in the last year.

In September last year, Bangladesh moved to a multiple exchange rate regime with a less favourable rate for export proceeds than for remittances. The policy further discouraged exports and the repatriation of proceeds.

The rate has varied between as low as Tk 99.6 to as high as Tk 107 per USD so far.

Because of the gap between the exchange rates for imports and remittances, importers have incentives to over-invoice imports to buy more US dollars from banks and send the profits back as remittances. This rate arbitrage leads to a further decline in US dollar liquidity in banks, the report said.

“Parallel exchange rates discouraged the inflow of foreign currencies.”

The report also talked about the asset quality of the banking sector, saying the asset quality of banks deteriorated.

“The NPL ratio has risen due to higher import costs, poor payment discipline of borrowers, and weak regulatory enforcement.”

It said the resumption of lax loan rescheduling and asset classification in the middle of 2022 has delayed the full recognition of distressed assets.

The NPL ratios among non-bank financial institutions are even higher than in the banking sector, going past 23 per cent in June.

“Bangladesh has made significant progress in bridging gaps between low and high-opportunity groups, particularly in the education sector. However, much remains to be done,” said Abdoulaye Seck, country director of the WB for Bangladesh and Bhutan, in the opening session of the conference.

He said South Asian countries must continue to reduce socioeconomic disparities as they lead to differences in access to jobs, earnings, consumption, and welfare, and impact overall growth.

“Inequality of opportunity is not only a matter of fairness, but it is also a matter of efficiency. It prevents an optimal allocation of talent and reduces incentives to accumulate human capital, and derails long-term economic growth.”

Speaker of the Bangladesh Parliament Shirin Sharmin Chaudhury said inclusive growth, not just growth, is necessary for the development of the economy.

“Eradication of inequality needs to include in the arena of political economy so that inclusive growth is ensured.”

The high levels of inequality of opportunity and low inter-generational mobility in South Asia are not only unjust but also impede long-term economic growth, according to Imran Matin, executive director of the BIGD.

“Policies to address it will create a more equitable society and help unlock the region’s full potential. We should remember that lack of social progress means lack of social justice,” he added.


High subsidy big concern in crisis-time budget

Finance seeks PM’s nod to new budget today

High subsidy requirement remains main concern in the forthcoming fiscal budget set to be placed in parliament at a time when the economy is facing severe internal and external shocks, sources say.The finance division will submit draft budget to the Prime Minister today (Wednesday) for her consent on the policy changes and new measures crafted for the next fiscal year, officials said.

The budget for the financial year 2023-24 will be placed on June 1.

The finance officials have proposed the size of the budget at an incremental figure of Tk 7.64 trillion. The new budget will have an allocation of Tk 1.10 trillion for subsidy and incentives, marking a record 33-percent rise compared to the previous year.

In the current fiscal year total allocation for subsidy and incentives was Tk 827.45 billion which in the revised budget was hiked to Tk 1.02 trillion.

The allocation for social protections will be Tk 1.18 trillion in the budget for 2023-24 in a rise from Tk 1.13 trillion in the current fiscal year, according to finance officials. They said the government would expand the safety-net coverage in next fiscal year keeping in mind the next year’s national election.

The allocation for social-safety net, according to officials, will rise since the government wants to expand coverage as well as the amount of allowance for each beneficiary in some categories. Government spending on interest payments will also increase mainly due to devaluation of the Taka against the US dollar, the finance officials said.

Source: The Financial Express


Travel tax might increase by 20-50%

The government has planned to increase travel tax, which will have a direct impact on the overall expenses individuals or businesses incur when planning and undertaking trips.

The National Board of Revenue (NBR), as part of its multifaceted efforts to increase revenue, is moving to raise the tax by 20-50% in the upcoming budget for FY24, officials familiar with the matter told The Business Standard.

Currently, the tax is Tk500-4,000 for each outbound traveller depending on their destination countries and mode of transportation.

“The changes in travel tax and other taxes will be finalised for the finance bill at a budget meeting on 14 May between Prime Minister Sheikh Hasina and NBR officials,” said a revenue board official. He wished to remain unnamed as he is not authorised to talk to the media.

“If there is no major change, it will be placed as proposed budget on 1 June,” he added.

Economists, however, opined that the government should widen the tax net rather than increase tax pressure as people are already hit hard by inflationary pressure.

“People are under pressure from price hikes. So, sudden increases in taxes will not be rational at the moment,” Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development, told The Business Standard.

He believes that no taxes should be imposed on outbound migrant workers.

The NBR collects travel tax from people travelling abroad, including migrant workers, under the Travel Tax Act 2003. The tax amounted to TK871 crore in FY22.

Syed Md Aminul Karim, former NBR member (tax policy) feels that tax should not be increased on migrant workers and people who go abroad for medical treatment.

“The tax increase, however, is logical from the consideration that it did not increase for the past few years despite sharp depreciation of taka,” he told The Business Standard and said the tax should be raised for those who travel to developed countries including those in Europe and America.

According to the data of the Bureau of Manpower, Employment and Training (BMET), Bangladeshi workers migrating to different countries, including Middle East ones, doubled to some 11.35 lakh in 2022. Most workers pay Tk3,000 each.

Travel tax was revised in 2014 for the last time. Currently, people who travel to Saarc countries need to pay Tk500-1,200 each depending on their mode of transportation. The tax is Tk4,000 for each outbound traveller to North America, South America, Europe, Africa, Australia, New Zealand, China, Japan, Hong Kong, North Korea, South Korea, Vietnam, Laos, Cambodia and Taiwan. For other countries, the travel tax is Tk3,000.