Budget deficit widens on lower revenue receipt

LC tightening enforced in the wake of dollar crunch squeezes imports and slows economy that prompts an industry leader to urge the government to relax restrictions.A noted banker joins his voice with the business leader in calling for import acceleration, as he rues income loss for banks and the government too.The opening of letters of credit (LCs) for import slummed by over 23 per cent during eight months to February as Bangladesh gets tightfisted to ease pressures on its foreign-exchange reserves.This is apparently impacting many local manufacturers as the import of raw materials, capital machinery and intermediate goods also slumped.Many involved with the international trade say the downturn in import has been slowing the economy at large.But the main export-earning sector of apparel--both oven and knit garments--remained outside the belt-tightening as they import through back-to-back LCs. The share of back-to-back LCs is nearly 13 per cent of the US$45.5 billion worth of LC openings.During the period under review, the total opening of LCs was recorded at US$45.5 billion, down by 23.53 per cent from the same period a year earlier.The opening of LCs against intermediate goods dropped by 30.32 per cent during the eight months, capital machinery by 54.11 per cent, industrial raw materials by 30.05 per cent, consumer goods 14.53 per cent, machinery for miscellaneous industry by 43.18 per cent and others by 17 per cent.Only petroleum imports whose market remained volatile since the beginning of war in Europe rose 24.51 per cent, according to official statistics prepared by Bangladesh Bank (BB), the central bank of Bangladesh.People familiar with such developments on the trade front told The FE that the tight-fisting has been impacting many local manufacturing sectors, especially who depend on imported raw materials."A local mobile-phone assembler came to us for importing some of intermediate goods for manufacturing smart phones, but it did not open LCs following the central bank restrictions imposed during July last," said Syed Shahriyar Ahsan, Chief Executive Officer (CEO) at Pioneer Insurance, a leading nonlife insurer. Importers need insurance coverage for importing any goods.As the number of LCs keeps declining, their business is on the downturn too although the company listed with the bourses announced 30-percent dividend to their shareholders for 2022 period, he said.President of Bangladesh Chamber of Industries (BCI) Anwar-Ul Alam Chowdhury Pervez mentions that many non-RMG industries have been facing problem in opening LCs that has adversely impacted their production.The government took the belt-tightening measures in the wake of recent volatility in the global macroeconomic situations in order to protect falling forex reserves. "But, I think, the government should lift the import restrictions considering survival of the industries as the economy started rebounding again," Mr. Chowdhury said.Managing Director and Chief Executive Officer of Mutual Trust Bank (MTB) Limited Syed Mahbubur Rahman feels that the falling trend in import orders indicates that the economy is slowing down.It (the fall in imports) has multiple affects on the economy, with declining earnings for the government and the banks as well, he said."Of course, it is a matter of concern for banks," the banker added.jasimharoon@yahoo.com and jubairfe1980@gmail.com

Bangladesh and Netherlands held discussions to deepen economic cooperation between the two countries, as Prime Minister""s Principal Secretary M Tofazzel Hossain Miah called on Dutch Prime Minister""s Foreign and Security Adviser Ambassador Geoffrey Van Leeuwen.Leeuwen, during the meeting held yesterday (Friday), mentioned the Dutch Government""s intention to deepen cooperation with Bangladesh beyond water sector, according to a press release of Bangladesh Embassy to the Netherlands received in Dhaka today (1 April).Bangladesh Ambassador to the Netherlands M Riaz Hamidullah was present at the meeting.The Principal Secretary highlighted Bangladesh""s journey in building a pluralist and liberal society, advancing women and commitment to strengthening the function of democratic institutions in Bangladesh.He also sought Dutch support towards sustainable return of the Rohingyas and political solution of the issue in Myanmar.Leeuwen lauded Bangladesh""s continued journey in development under the leadership of Prime Minister Sheikh Hasina, and reiterated the Dutch Prime Minister""s invitation to visit the Netherlands.The Principal Secretary proposed for instituting a Public-Private Dialogue mechanism with the Netherlands which was welcomed by the Dutch side.The Principal Secretary is leading a high-level Bangladesh delegation joined by Commerce Secretary Tapan Kanti Ghosh, BGMEA President Faruque Hassan, former MCCI President Barrister Nihad Kabir and the Secretary-General Farooq Ahmed.The delegation held several day-long meetings at the Dutch Foreign Ministry where the two sides discussed a wide range of issues, including extension of EU GSP facilities towards Bangladesh apparel sector beyond graduation as an LDC, collaboration on implementation of transformative projects under Bangladesh Delta Plan (BDP), facilitating Dutch investment financing in private sector, especially across diverse sectors of Bangladesh agriculture, brining innovative Dutch water solutions to Bangladesh.The Principal Secretary also met with representatives of leading Dutch financial institutions and the Eindhoven-based Brainport.

The support and cooperation of the European Union would remain vital for Bangladesh in its pursuance of sustained economic growth in the post-LDC era.The EU is an indispensable trade and development partner of Bangladesh, and its trade preference under GSP scheme helped Bangladesh to secure big export share in the EU countries, which has contributed a lot in achieving the threshold requirement for LDC graduation.The continued trade preferences under the EU""s GSP would contribute to making the LDC graduation smooth and sustainable, reports BSS citing a press release.A delegation led by Mohammad Tofazzel Hossain Miah, Principal Secretary to the Prime Minister of Bangladesh, made the observations during a meeting with Helena K"nig, Deputy Secretary General for Economic and Global Issues, European External Action Service (EEAS) and Monika Bylaite, Deputy Head of Delegation, South Asia, EEAS, in Brussels on Thursday.Other members of the delegation were Commerce Ministry Senior Secretary Tapan Kanti Ghosh, Bangladesh Ambassador to Belgium Mahbub Hassan Saleh, Deputy Head of Mission Preeti Rahman, BGMEA President Faruque Hassan, former President of MCCI Nihad Kabir, and Commercial Counsellor Md. Saiful Azam.They discussed issues of mutual interests, especially LDC graduation, its possible implications on Bangladesh""s trade and economy and Bangladesh-EU relations in the post-LDC era.In the meeting, BGMEA President Faruque Hassan gave an overview of the apparel industry of Bangladesh, especially the vast progress made by the industry in the areas of workplace safety, environmental sustainability and workers"" rights and well-being.He said the trade preference under the EU""s GSP scheme is one of the key factors behind the RMG industry""s success.The sector is now pursuing growth in a manner that is sustainable and has positive impacts on the economy, environment and the lives of people, he added.The RMG industry is working and making investment in circular fashion with focus on recycling pre-consumer waste and upcycle post-consumer waste.The continued trade preference after LDC graduation would help the industry of Bangladesh to pursue its sustainable development vision and prepare for the next phase of development, Faruque Hassan further said.

The Malaysia-bound Bangladeshi workers need to pay extra migration cost due to a faulty recruitment system at the Malaysian end, said Expatriates"" Welfare and Overseas Employment Minister Imran Ahmad on Thursday."Why does it cost Tk 400,000 to Tk 450,000 each to go to Malaysia?" he questioned, and opined that this high expenditure is due to the faulty system.The minister was speaking at an award giving ceremony - ""Obhibashon O Shonar Manush Shommilon 2023"" - organised by Refugee and Migratory Movements Research Unit (RMMRU) in the city."In the case of Malaysia, we have calculated that the migration cost should be within Tk 80,000 each. On the other hand, Malaysia said the migration cost would be zero for workers.""But now we are hearing that the workers are spending Tk 400,000 to Tk 450,000 each to go to Malaysia for jobs."The minister also said the recruiting agents have no fault in this case. Costs and hassles are all due to the Malaysian side.All must have the same thought that they would reduce the migration cost. If even one thinks differently, the whole process would fail, he observed."Anyway, we are trying. Everything is possible, if there is goodwill."In response to a question what kind of systemic changes Bangladesh wants, the minister said they want to interlink the country""s system with Malaysian system, which is at proposal stage and not done yet.Finally Malaysia said they would be linked with Bangladesh""s platform ""Ami Probashi"" app."After the linkage we can track down where the mess is," he added.arafataradhaka@gmail.com

Net government borrowing from domestic banks and nonbanks for deficit financing ballooned over 72 per cent in the first seven months to January of this fiscal year (FY 2023) year on year.Economists raise fears of crowding-out effect on private-sector credits-although needs there are yet limited under the shadows of global and local economic slowdown.Officials have said the significant rise in the net domestic borrowing by government to meet its fiscal requirement was mainly because of less-than-expected collection of tax-and non-tax revenues.As the crowding-out effect looms in form of distributing more funds to the public sector, the capacity of the banks to lend to the non-public areas is shrinking and thus the access of the private sector to formal credits is getting squeezed.The total net government borrowing from domestic sources during the July-January period of this ongoing fiscal stood at Tk 427.17 billion, up 72.26 per cent from the corresponding period a year before when the figure was Tk 247.98 billion.Government borrows to finance deficit budget mainly from two internal sources: banks and nonbanks.Its net borrowing from the banking system amounted to Tk 390 billion, up from Tk 102.81 billion registered in the same period of previous fiscal. In terms of non-bank financing, the government borrowed Tk 37.16 billion in the period under review--down from Tk 145.17 billion in the same period of previous fiscal.According to official statistics, the government revenues earned from the NBR, non-NBR and non-tax-revenue sources fell short of the target in the first six months of this fiscal (FY""23). The overall revenue target is Tk 4.33 trillion for this fiscal, but until December 2022, it had earned around Tk 1.61 trillion--down by Tk 555 billion from the half-yearly revenue target.Chairman of the Policy Exchange of Bangladesh Dr M. Masrur Reaz says the fiscal pressure continues mounting because of the lower revenue earnings that prompted the government to borrow more from the domestic sources.As part of the ongoing government austerity measures under the current volatile macroeconomic situation following the Russia-Ukraine war, he notes, the government tightened the opening of LCs (letter of credit) to save the forex reserves.As a result, the volume of LCs dropped by around 40 per cent. It means the government cannot receive a large volume of revenue in the form of customs duty and other forms of duties. On the other hand, the government skipped continuing and taking fresh less-priority development projects, considered the single-largest revenue source."So, the government revenues from NBR, non-NBR and non-tax sources are falling. But the government needs funds to finance the budget. That""s why the government domestic borrowing keeps mounting," he said.Responding to a question, Mr Masrur said it would cast crowding-out effect on the funds but it would not be too adverse as the demand for funds from the private sector is less under the current context of business.Dr Zahid Hussain, former lead economist of the World Bank, says as the government borrows more money from the banking system, the banks take it as an opportunity to earn more through investing in risk-free instruments like treasury bonds and treasury bills."But there is still a liquidity stress in the banking system. If the government continues borrowing more funds from the banks, it would create crowding-out effect," the economist predicts.Government""s net borrowing from the banking system consists of borrowing from the central bank and scheduled banks. From banking system, government borrows mainly through ways and means like advances, overdraft, and issuance of Treasury Bills and Bonds.On the other hand, government borrowing from non-banking domestic sources includes savings instruments introduced by the Department of National Savings and government T-Bills and Bonds held by nonbank financial institutions, insurance companies, individual investors and so.jasimharoon@yahoo.com, jubairfe1980@gmail.com

The government has made electronic payment of income taxes mandatory by scrapping the provision of payment through pay order and manual treasury challan.The National Board of Revenue (NBR) on Thursday issued a statutory regulatory order (SRO) that took effect from March 23, 2023.The pre-publication gazette has been signed by Income tax member Dr Sams Uddin Ahmed.However, the revenue board will review the SRO if any objection or recommendation is made on this issue by the next 15 days.In the SRO, the NBR has replaced provisions in the Income Tax Ordinance-1984 on ‘manner’ and ‘mode’ of tax payment by assesses and tax deducted at source.As per amendments, taxpayers have to pay tax through automated challan (a-challan) or through electronic payment from now on as per specified rules of the NBR.Officials said the NBR has to issue the SRO just two months before the next budget proposal to meet a condition of the Asian Development Bank (ADB) against $2.0 billion loan.doulotakter11@gmail.com

Germany will provide 7.0 million Euros to Bangladesh as a grant for ensuring the social protection of workers in the textile and leather sectors.In this regard, a bilateral agreement named "Accident Insurance for Employees in the Textile and Leather Sector (Working title: Social Protection for Workers in the Textile and Leather Sector (SoSi)" involving a grant of 7 million Euros was signed today between the government of Bangladesh and the government of Germany.Sharifa Khan, Secretary, Economic Relations Division (ERD), Ministry of Finance and Dr. Andreas Kuck, Country Director, GIZ Dhaka office in Bangladesh signed the agreement on behalf of their respective governments, reports BSS citing a press release.The objective of the project is to improve the conditions for access to social protection for workers in the textile and leather sector. This project was proposed in the "Technical Cooperation Agreement 2021" signed on January 11, 2022 between Bangladesh and Germany.Ministry of Labour and Employment (MoLE) is the partner ministry while the Department of Inspection for Factories and Establishments (DIFE) and the central fund of MoLE is the executing agency of this project.

Prime Minister Sheikh Hasina on Thursday emphasised enhancing economic cooperation between Bangladesh and Vietnam for the mutual benefit of the two countries.She made the observation while outgoing Ambassador of Vietnam Pham Viet Chien called on her at her official residence Ganabhaban, PM’s press secretary Ihsanul Karim told reporters.He said during the meeting they expressed satisfaction the growing bilateral relations between the two countries, reports UNB.Hasina mentioned that Bangladesh and Vietnam have many common issues like victorious struggle for the liberation of their countries.The people of the country admired the Vietnamese struggle for independence, the PM said adding, during their Liberation War against Pakistani military junta, people of Bangladesh used to chant slogans ‘Bangla will be Vietnam’.Talking about the agricultural sector, she said that Bangladesh is a densely populated country and it has a huge population, so researchers have been engaged for boosting agro production.The PM put emphasis on improving connectivity with South Asian countries.She thanked the Vietnamese envoy for completing his tenure successfully.She congratulated the Vietnamese envoy on the success of his country in the socioeconomic arena.Vietnamese Ambassador Pham Viet Chien termed himself as the friend of Bangladesh.He said apart from the Vietnam government the Vietnam Communist Party has relation with Bangladesh Awami League.On behalf of Vietnamese leader the ambassador invited the prime minister to visit Vietnam to mark the 50 years of the diplomatic relation of the two countries.He said that the trade between Bangladesh and Vietnam was USD 1.5 billion while Bangladesh’s export to Vietnam increased by 30 percent.PMO secretary Mohammad Salahuddin was present during the meeting.

Japan will provide $1.27 billion for the tranche of the Matarbari Port Development Project, Chattogram-Cox""s Bazar highway improvement project, and for the construction of a dual gauge double line (railway) between Joydebpur-Ishwardi sections.In this regard, loan agreements for the projects were signed between Bangladesh and Japan at the Economic Relations Division (ERD), reports UNB.Sharifa Khan, Secretary, ERD, and IWAMA Kiminori, the Ambassador of Japan in Bangladesh signed the ""Exchange of Notes"" agreement on behalf respective sides.ICHIGUCHI Tomohide, Chief Representative, JICA Bangladesh Office, Dhaka signed the ""Loan Agreements on behalf of Japan. The signing ceremony was held at the NEC-2 Conference Room of ERD, Sher-E-Bangla Nagar on Wednesday.

Bangladesh""s revenue authority has begun tightening the tax-exemption regime incorporating provisions to pass on its benefits to the common people, under an overdue fiscal reform.The National Board of Revenue has tagged some new conditions, including free-of-cost services in healthcare centres, and public-welfare measures, with the tax- waiver SROs.A senior tax official says the Statutory Regulatory Orders (SROs) on tax exemption usually consisted of mandatory submission of tax return which has a brief description on income and expenditure of a company."There was no such provision to compel the beneficiary to pass the benefit to the poor people," he adds.The revenue board has adopted the strategies on offering the tax benefit instead of giving it on a wholesale basis, he said.Such strategies have been implemented on a case-by-case basis to review tax-exemption applications from the private sector, he adds about the reform measures.Recently, for an instance, the government offered tax benefit on import of sugar but its prices at consumer stage increased rather than relieving the commoners with its downward adjustment.Moreover, the official said, the NBR is discouraging zero-tax benefit to the industries in a bid to promote "culture of tax payment".""The industry should start paying a nominal amount of taxes rather than enjoying a full waiver," he says about the fiscal rethink prompted by the fact that such incentives do not reach the consumer in most cases.The government revenue authority has also moved to review the existing tax expenditures or tax exemptions to phase out the benefit eating up around 2.8 per cent of tax GDP."It""s time the tax benefits were cut off from some sectors that achieved hefty growth and developed capacity to contribute to the public exchequer," he said.The IMF has suggested increasing country""s tax-GDP ratio by 0.5 per cent each in 2024 and 2025 and 0.7 per cent in 2026.In the current fiscal budget, the NBR has phased out tax exemptions from some industries, including local refrigerator manufacturers and mobile-phone manufacturers.Some more similar steps might take place in the upcoming budget for the industries graduating into full-blown capacity, sources said.The NBR officials said the tax authority would have to bring down corporate taxes, import duties and other duty taxes as Bangladesh is approaching towards graduation to middle-income-country status.It""s a two-way challenge for the NBR-to raise tax-GDP ratio and also to bring down the tax rate, they added.Economists, however, said the avenue that tax authority can overhaul is the tax benefit for some industries that became well-established availing the tax incentives.Noted economist Dr Ahsan H Mansur suggests reviewing entire gamute of tax exemptions so far offered by the NBR to make transparent statements of the facility."The NBR should conduct scrutiny of the time-bound tax exemptions, its phases of extensions, time of expiry instead of primary judgment on the facility," says Dr Mansur, Executive Director of the Policy Research Institute (PRI).The tax exemptions should come through parliament where statements on volume of net tax waiver must be written clearly, he adds.Currently, the tax-exemption facility is not given in a transparent way, he observed.Md Humayun Kabir, former president and council member of the Institute of Chartered Accountants of Bangladesh (ICAB), said statutory exemptions ( ie directive revenue leakage) or evasion or avoidance of tax with or without collaborations (systematic revenue leakage) are the reasons of low tax- to-GDP ratio."One of the ways to identify and minimise these leakages could be to use common or standard national code for tax collection and GDP calculations," he said.This will help the policymakers focus on the variations and finding the corrective measures.For example, he says, if GDP contribution of transport or apparel sector does not match the contribution of total taxes, then existing tax policies for the sectors need revision.He, however, feels that low tax- GDP ratio should not create that level of "hypo" or importance as country""s economic growth trajectory of the recent past is impressive,"Why do nation needs 17-18-percent tax of its GDP if it could achieve 7-8-percent growth with such a low tax-GDP ratio?" he posed the question.He, however, underscored the need for reforming tax administration and laws."Fiscal policy framing and implementation thereof should be separated for establishing effective accountability in tax collection," the accountancy specialist suggests." …….low tax-GDP ratio does not mean that the amount of money has remained idle and is not contributing to the GDP growth. In fact, the money in the hands of private sectors will generate more ""economic value"" than in government hands," he views.doulotakter11@gmail.com

The revenue collection by the National Board of Revenue (NBR) during the July-February period of the current fiscal year (FY23) witnessed an 8.92 per cent growth from income tax, VAT and customs with a collection of Tk 1.96 trillion.The revenue collection by the NBR during the same period of the last fiscal year (FY22) was Tk 1.79 trillion, reports BSS.Revenue board officials said out of the overall revenue collection of Tk 1.96 trillion during this eight-month period, Tk 591.98 billion will come from customs, Tk 764.01 billion from VAT and Tk 604.37 billion from income tax and travel tax.This overall revenue collection is, however, lower than the revenue collection target of Tk 2.19 trillion during this eight-month period.The NBR officials said that the revenue collection during the July-February period of the last fiscal year (FY22) from customs or import and export duty was Tk 567.26 billion which increased to Tk 591.98 billion during this period having a growth of 4.36 per cent.On the other hand, the revenue collection from income tax and travel tax during this eight month period witnessed a growth of 6.29 per cent while the revenue collection from VAT during this July-February period experienced a healthy growth of 15.07 per cent.The revenue collection from income tax and travel tax during July-February period of last fiscal year (FY22) was Tk 568.61 billion while the revenue collection from VAT during the same period of the last fiscal year was Tk 663.96 billion.The NBR has a target of collecting Tk 3.7 trillion in the current fiscal year.

Collection of value-added tax (VAT) registered a hefty growth of about 15 per cent in the first eight months to February of the current fiscal year (FY) over the same period of last FY, largely contributed by domestic consumption of goods.The VAT wing of the National Board of Revenue (NBR) mobilised Tk 2.37 billion less from import sources during the July-February period of FY 2022-23 than that of the same period previous FY.However, its performance was impressive as compared to the other two wings of the NBR, officials said.The income tax and travel tax collection grew by 6.29 per cent during the period under review while customs revenue rose 4.36 per cent, according to provisional data of the NBR.The aggregate tax revenue grew by nearly 9.0 per cent in the July-February period over the corresponding period of last FY. In February last, it grew by only 1.71 per cent.However, the collection fell Tk 229.78 billion short of target which is equivalent to one month""s direct tax collection.The NBR collected Tk 1.96 trillion in taxes in the July-February period against its target of Tk 2.19 trillion.Last year, the NBR collected tax revenue worth Tk 1.79 trillion in the same period.In February, the NBR collected Tk 237.27 billion tax revenue against its target of Tk 294.40 billion for the month.The VAT wing collected Tk 764.01 billion, followed by income tax Tk 604.37 billion and customs wing Tk 591.98 billion.A senior official at the NBR said that enforcement of the VAT measures geared up in recent time to check evasion and realise due revenue from the businesses."The VAT collection witnessed growth mainly due to efforts made by the VAT officials and the revenue generated from the domestic sources," he said.The revenue collection scenario was different in the same period of last FY, with 17.50 per cent growth achieved by income tax wing, 22.68 per cent by customs wing and 10.69 per cent by VAT wing.In the current FY, VAT collection surpassed the growth of the two other wings, said the official.The average tax revenue collection growth was 12.12 per cent in the last five FYs.However, the three wings of the NBR lagged behind their respective targets in the July-February period of the current FY.The VAT collection fell short of target by Tk 57.38 billion while income tax by Tk 34.25 billion and customs by Tk 138.14 billion.The government has set Tk 3.70 trillion tax revenue target for FY 2022-23. The NBR will have to collect around Tk 1.73 trillion in tax revenue during the remaining March-June period to achieve the target.NBR officials said that achieving the annual target would be a huge challenge due to the decline in imports and the government""s austerity measures on different development projects.A senior VAT official said the large taxpayers"" unit has so far kept the revenue collection growth in a positive trajectory. VAT collection from beverages grew by 15 per cent, mobile phone users by 18 per cent and gas consumers by 20 per cent during this period."The NBR is trying to realise huge arrears lying with the state-owned Petrobangla," the official said.On poor growth of direct taxes, Dhaka University Economics Professor Dr M Abu Eusuf, who is also Executive Director of the Research and Policy Integration for Development (RAPID), said there is no visible step by the government to widen the direct tax net to increase the number of taxpayers and boost revenue collection.The tax offices should be set up in the upazila level to tap the potential taxpayers in the growth centres, he said, adding that the number of taxpayers is still low compared to that of the size of the population in the country.The NBR collects 60-70 per cent of the direct taxes from import sources as the Advance Income Tax (AIT).Dr Syed Aminul Karim, former income tax member of NBR, said the recent higher collection from VAT would be reflected by higher collections of income tax in the following year and later years as it is an outcome of higher production or sales of the industries."Income tax payments have been affected by the current liquidity crisis while the VAT collection may have witnessed positive outcomes from the recently introduced online collection system," he said.He also pointed out manpower shortage in the remote growth centres and absence of proper efforts by field-level tax offices as the weaknesses of the revenue collection system.doulotakter11@gmail.com

Bangladesh is updating the consumer inflation index with lot many goods and services in count, with 2021-22 as new base year, as price rises have upset indices locally and globally.Officials say the updated gauge to measure inflation is likely to be launched next fiscal year, beginning in July, as the existing one uses 2006 fiscal as base year and fails to portray real picture of inflation.The updating with the additional items in basket will result in new weightings for the components of its Consumer Price Index (CPI) basket, people at the national statistics office told the FE Sunday."There have been huge changes in the consumption habits over the years, so we need the latest commodity basket to reflect the real picture of the price changes," said a senior official working at the national accounting wing of Bangladesh Bureau of Statistics (BBS)."The existing basket will be updated and most of the weightings will be also changed because the present structure of people""s habits has changed remarkably," he added.But the official wouldn""t say what the impact of the re-basing would be on the headline inflation, which, measured by the BBS, has surpassed government-set target --7.5 per cent (revised for FY 2023) --- for seven straight months to stand at 8.78 per cent in February.However, the BBS statistician said there would be around 700 commodities in the new basket, up by 66 per cent from the existing 422 commodities.People in the agency, meantime, said they had already finalised lists of the goods and services, both for urban and rural areas.They will also organise a technical session for the BBS people today (Monday) at its headquarters in Dhaka.Many items, including MFS or mobile-phone financial services, were not covered in the 2006 index. "Many more people spend a lot more on mobile telecommunications these days and this will significantly increase the weight of communications in the consumer basket," the statistician noted. Usually, each decade needs to be rebased for the basket for changes in eating habits.The BBS first rebased the CPI in 1973-74, and it continued until FY 1987. Later it introduced 1985-86 as the base year with new weights, and in 1995-96, the BBS also updated. And the existing yardstick is based on 2005-06.Currently, the BBS collects price data from 140 (64 from urban, 64 from rural, and 12 from Dhaka City Corporation) main markets across the country to calculate the price indices.Three price quotes per item are collected from each of the markets. Prices of 151 food items as well as 271 non-food items in urban areas, 133 food items as well as 185 non-food items in rural areas (2005-06) are collected.In collecting prices, four schedules (Darchak) are used (i) monthly rural retail (ii) monthly urban retail (iii) monthly urban wholesale and (iv) quarterly house rent.Data are usually collected from select shops in each market or selected units or service providers in case of services.In constructing price indices, the average price for each item is considered.jasimharoon@yahoo.com

Foreign Minister Dr AK Abdul Momen, on Sunday, called upon the international community to continue providing trade facilities to the countries who have graduated from the LDC status.Addressing the 25th founding anniversary celebration programme of the Diplomatic Correspondents’ Association of Bangladesh (DCAB) in the city, the minister said that the continuation of trade facilities is essential for the successful transition of the graduated countries.The minister attended the event through a virtual platform.Quoting the UN secretary-general, the minister said the graduated countries must not be punished.He said that the global financial regime or the international financial institutions need to understand that those who are graduating need a smooth transition.The foreign minister also mentioned that though that developed countries pledged to contribute to climate funding to help vulnerable countries mitigate the loss, no money has been provided yet.The foreign minister proposed that the developed countries which are polluting the climate should contribute 10 per cent of the defence budget to the climate fund.Nearly US$ 2.30 trillion is being spent by these countries, he said adding that by providing 10 per cent of this budget the negative impact of climate change on the vulnerable countries can be mitigated.He said his ministry stressed gearing up elementary economic diplomacy to help increase inward foreign direct investment so that the country can create more jobs for people and also increase trade.State Minister for foreign affairs, M Shahriar, Alam, was the chief guest in the programme, and foreign secretary Masud Bin Momen was the special guest.Ambassador Humayun Kabir, Chairman of the International Relations Department of the Dhaka University Lailufer Yasmin, and Secretary of the Press Club Shyamol Dutta were panel speakers at the discussion.Shahriar Jaman of the Bangla Tribune and Mir Mostafizur Rahman of the Financial Express presented the keynote paper, titled “Role of media in pursuing foreign policy”, at the seminar, organised to mark the silver jubilee anniversary of the DCAB.DCAB President Rezaul Karim gave the welcome speech and Secretary Imrul Kaes gave the vote of thanks at the programme moderated by Raheed Ezaz and Pantho Rahman.In his speech, the state minister said that the diplomatic correspondents played a very responsible role during Bangladesh legal battle to establish its rights in the maritime boundary.Lauding the role of media in realising the country’s development drive he said the foreign ministry always gives due importance to the media.Mr Alam reminded that Bangabandhu Sheikh Mujibur Rahman also once chose to be a journalist.Mr Masud said, “there are many issues that are contemporary and we are dealing with them and not all of them are meant for public consumption.”“Some of it is in the formative stage, some in the internal discussion stage, some are ready for discussion with the stakeholders, and then the final output is ready,” he added.“In foreign policy, there are some sensitive components.”“And therefore, we do hope that your understanding and support because many of these issues have a lot of implications on our national life or daily life,” he added.Ambassador Humayun Kabir said that in the age of social media, credibility becomes a key issue as a lot of things are being discussed on social media, some of which are not true.He pointed out that journalists can play a crucial role in identifying which of those are true and which are wrong, and that is why journalists are greatly respected in society.Ms Lailufer said the role of social media has been also very divisive in the wake of social media.In our society and in the world, the rise of populism affected the process of the media’s role in informing people.“For example, in the case of Brexit, the politicians accepted that they actually provided wrong information to the people on the basis of which they may take it such a big position for which the UK now has to deal with a very different way.”“So we can see that how knowledge is power, knowledge can be divisive and knowledge can be exploited by a handful of people” she added.In his keynote paper, Mir Mostafizur Rahaman said, in critical foreign policy issues like Bangladesh’s bilateral ties with its neighbours and important countries, local media played the role of both the information provider and opinion builder.Media in both India and Bangladesh have been vocal in ensuring closer ties between the two countries against the backdrop of anti-Indian sentiment among a section in Bangladesh.“In India, a lot of journalists have been proactive in suggesting to the ruling class that India should take steps to resolve disputed issues like water sharing and land border issues.”“The Ganges water sharing treaty and land boundary agreement appeared to be the outcome of this pressure,” he mentioned.“Similarly we have seen huge write ups in Bangladeshi media in favour of providing transit to India which was once an almost blasphemous issue in the post-75 regimes” he added.mirmostafiz@yahoo.com

Bangladesh and Thailand have agreed to seriously explore the prospects of an FTA (free trade agreement) to further enhance the bilateral trade between the two countries.Bangladesh also apprised the Thai side that a qualitative feasibility study is being undertaken by the Ministry of Commerce in this regard.Bangladesh and Thailand agreed to hold the Joint Trade Committee (JTC) in Dhaka this year at a mutually convenient time to review the whole range of bilateral trade and investment portfolio, and increase the volume and diversity of trade to its true potential.Bangladesh requested the Thai side to ease the trade regime of Thailand in the form of removal of non-tariff barriers, duty waiver/reduction etc. for Bangladeshi products to help achieve a better balance in the bilateral trade.Bangladesh and Thailand held the third Foreign Office Consultations at the Ministry of Foreign Affairs in Dhaka on Tuesday.Foreign Secretary Masud Bin Momen led the Bangladesh delegation, while Sarun Charoensuwan, Permanent Secretary, Ministry of Foreign Affairs of Thailand, led the Thai side.Senior officials of the ministries of Foreign Affairs, Commerce, Agriculture, Industries, Civil Aviation and Tourism and Bangladesh Investment Development Authority (BIDA) also attended the meeting. The meeting discussed the whole gamut of the Bangladesh-Thailand bilateral relations. The 2nd FOC was held in Bangkok last year.Both sides appreciated the existing excellent bilateral relations and reaffirmed their commitment for raising the profile of bilateral ties to newer heights in the coming days.The two sides lauded the growing pace of engagement and enthusiasm in areas of political, economic, social and cultural ties and agreed to further explore new areas of cooperation.The meeting took stock of cooperation in the areas of trade, investment, health services, tourism, defence cooperation, consular cooperation, agriculture and agro-processing, manufacturing, connectivity, ICT, energy, cultural exchange and people to people contacts.The two sides also exchanged views on regional and multilateral issues of mutual interest.During the meeting, the foreign secretary expressed satisfaction that both countries marked the 50th anniversary of diplomatic ties with commemorative events throughout 2022 in a befitting manner.The permanent secretary for foreign affairs of Thailand assured that the country will continue its support to enhance collaboration and cooperation in combating transnational crimes.By stressing the need for mutual accreditation and recognition of standards, the foreign secretary expressed hope that the draft MoU on testing and standardization of products would be finalized at the earliest.A 15-member business delegation was accompanying the Thai permanent secretary who are taking part in various business events including the just concluded Business Summit and the business matchmaking and networking with the Bangladeshi business leaders held at the Ministry of Foreign Affairs.Foreign Secretary Masud highly appreciated the presence of the Thai business delegation on the occasion of the 3rd FOC in Dhaka.Thailand appreciated the high potential and lucrative areas for profitable investment in Bangladesh, both in unitary and joint venture formats. Both sides agreed to mobilize greater dynamism in the B2B institutional cooperation between trade bodies and joint chambers of the two countries.The foreign secretary lauded Thailand’s successes and experiences in the sectors of poultry, fisheries, and other agro-based industries and sought the Thai government""s cooperation in agro-based industries to develop capacity through training and technology transfer, reports UNB.He also suggested partnership and research related collaborations on aquaculture and marine biodiversity.The foreign secretary appreciated the visit of Director General of South Asia and Central Asia Division of the Ministry of Foreign Affairs of Thailand to the Cox’s Bazar Rohingya Camp the next day and called for a more proactive role by the Thai government for ensuring voluntary, dignified and sustainable repatriation of Rohingya people currently sheltered in Bangladesh to their homeland in Myanmar.

Bangladesh Bank is expected to go for floating exchange and lending rates by June next as part of an effort to reform its financial sector."Now we""re working on introducing the market-based foreign-exchange and lending rates for a better outcome," BB Governor Abdur Rouf Talukder said on Tuesday.The foreign-exchange rates are administered to some extent by the central bank while the lending rates are capped.The governor was speaking as the chief guest at a discussion in Dhaka on "Middle-income trap and way forward", marking the occasion of Bangladesh-ADB 50 years of partnership."To avoid the Middle-income trap, Bangladesh needs to go for some reforms and take initiatives," he said, stressing the need for investing in product diversification, productivity improvement, developing CMSMEs, climate change issues, and improvement in financial inclusion and digital transformation.Mr Talukder also revealed that the central bank is working to increase cashless transactions in Bangladesh to nearly 75 per cent within the next four years, aiming to reduce dependence on hard currency."We""re also working on keeping the inflation under control through managing the aggregate demand and improving supply-side efficiency," he said, adding that the central bank was also applying different monetary tools in this regard.Earlier, the International Monetary Fund (IMF) has imposed some conditions of financial sector reform against its budget support of US$4.7 billion to Bangladesh. It has already disbursed $476.27 million of the credit""s first trance in February last.kabirhumayan10@gmail.com

Bangladesh may fall into ""middle-income trap"" if it does not fulfill major prerequisites for LDC graduation, Asian Development Bank President Masatsugu Asakawa said Tuesday and listed the dos.Tapping higher domestic and foreign investments, improving supply-side capacity, diversifying export basket and having strong institutions and governance are among the conditions he spelt out for its transition to a higher-middle-income country (HMIC) from the current status."It also needs to pursue the greener and more resilient economic growth in the future days," Mr Asakawa said while speaking at a discussion on ""Middle Income Trap and Way Forward"" in Dhaka.The discussion meeting was organised following the celebration of 50 years of Bangladesh-ADB partnership in the country""s development drive.Bangladesh joined the ADB in 1973, and in 1982 became first ADB member to host a field office. The Asian Bank has mobilised around $50 billion in loans, grants, and technical assistance for the country, including co-financing.Professor David Hume of Manchester University and Prof Yaseu-Sabaka of Japan presented two keynotes at the programme with Bangladesh Bank (BB) Governor Abdur Rouf Talukder attending as chief guest.Principal Secretary to the Prime Minister Tofazzol Hossain, former MCCI President Barrister Nihad Kabir and environment expert Prof Saleemul Huq spoke on the occasion.Lauding Bangladesh""s economic progress over the last one decade, the ADB President said Bangladesh needs immediate actions for enhancing its productivity and for getting on greener- growth trajectory in keeping with the growth momentum.Keynote speaker Prof David Hume said if Bangladesh felt complacent on its current success, it would be in trouble.Terrible complacency of Ghana regarding their middle-income status has pushed the country into a vulnerable situation now, he noted to substantiate his alert message."So, if you (Bangladesh) want to avoid the middle-income trap, you have to go for policy reforms and institutional evolution," Prof Hume said.He also cautioned about adopting external development models and suggested implementing the embedded or homegrown Bangladesh model for uplifting the country to a higher-middle- income and developed nation by 2041.Japanese professor Sabaka thinks that if Bangladesh wants to transcend the ""middle-income trap"", mere development of human capacity is not enough. "You have to develop a quality human capital."Showing a study outcome, the professor showed that the countries which are in MIC status for long, their physical capital is 55.5 per cent, the labour-force participation is 21.9 per cent, the human capital 12.8 per cent and the productivity contribution is 9.8 per cent."But those countries which have graduated from MIC to high-income country have a 50-percent participation from physical capital, 10.3 per cent from the labour, 11.4 per cent from the human capital and 28.3 per cent from the productivity," he told the meet.About a major reform plan on the financial front Bangladesh Bank Governor Abdur Rouf Talukder said the central bank would go for market-based foreign-exchange and lending rates by June."Besides, the central bank is working to keep the inflation under control through different monetary mechanisms," he told the cutting-edge function regarding the country""s socioeconomic transition.The governor also laid emphasis on enhancing Bangladesh""s productivity and capacity to avoid the MI trap.Barrister Nihad Kabir said the country needs to scale up its workforce, diversify productions and exports, and go for high-tech system of production to become HMIC."We have more than 150 green and US Green Building Council (GBC) LEED-certified ready-made garment factories in Bangladesh. But the factory owners have failed to enhance their product prices with those huge efficiency and compliant manufacturing units," she added.She called for ensuring high access to funds for the local companies so that they could expand their business for facilitating the country""s development.Prof Saleemul Huq cautioned about the future climate-change impact on Bangladesh as well as across the globe."If the countries do not go for checking carbon emission and climate-friendly development, the world will become severely vulnerable within next 50 years," he told the audience.Principal Secretary Tofazzol Hossian said Bangladesh government has taken necessary policy in its all development plans keeping in mind the middle-income trap.ADB Director-General Woochong Um said challenges facing Bangladesh could get the country into MI trap.So, it needs to go for reform, export diversification, ensuring good governance, up-skilling the human capital, better urbanization, increasing tax-GDP base and climate-resilient growth, he added.Meanwhile, Prime Minister Sheikh Hasina inaugurated the function on Bangladesh-ADP relation of 50 years in the morning in presence of the visiting ADP president in Dhaka.kabirhumayan10@gmail.com

Bangladesh has signed an agreement and three memoranda of understanding (MoU) with Saudi Arabia and China on an inaugural day (Saturday) of Bangladesh Business Summit 2023.An agreement has been signed with a Saudi Company to set up gas pipelines through India and Bangladesh under a public-private partnership (PPP) basis.Besides, two MoUs were signed with Saudi Arabia for developing Rangpur Sugar Mills and Patenga Container Terminal, another MoU was signed with China for infrastructure development.The Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) also signed a memorandum of understanding with China Council for the Promotion of International Trade (CCPET).The FBCCI is organising a three-day business summit in partnership with the government at Bangabandhu International Conference Center (BICC), which will be ended on Monday, according to UNB.The summit, envisaged to become Bangladesh""s flagship business promotion event, seeks to highlight Bangladesh""s economic and market strengths, and concrete trade and investment opportunities in Bangladesh, said Dr M Masrur Reaz, Technical Adviser of the summit.The summit creates an opportunity for business-to-business leaders"" interaction with national and global business leaders, investors, policymakers, practitioners, policy and market analysts, academia, and innovators, he said.The Commerce Minister Tipu Munshi set a meeting separately with the delegation of Saudi Arabia, China, and Bhutan.After the meeting, the minister told reporters that Saudi Arabia, China, and Bhutan expressed interest in investment in Bangladesh.Chinese investors have expressed interest in investing in Bangladesh more and more in energy, agro-based industry, food processing, and infrastructure development sectors. China has expressed interest in further increasing ongoing trade and investment with Bangladesh, Munshi said."Saudi Arabia is a friendly country that has decided to invest heavily in the energy sector of Bangladesh," he added.In addition, Saudi Arabia is interested in investing in the agro-based industry and food sector.Bhutan is keen to increase trade with Bangladesh. For this, it wants to increase rapid trade by eliminating various problems of sea and land ports, the commerce minister said.Munshi said, "The development of Bangladesh is now visible and the economy is stronger than ever. Different countries are coming forward to increase trade and investment with Bangladesh."On Sunday, 9 parallel sessions will be held in the summit center in BICC on Investment Opportunities in Key Sectors, Consumer Goods, Infrastructure, Long Term Finance, Apparel & Textile, Digital Economy, Energy Security, Japan Bangladesh Business, and Agro Business.

Government""s austerity or cautionary approach to spending amid current economic shocks fails to stand reality test as it is going to increase its operating expenditure in the revised budget for the current fiscal year.The government has, however, cut the development expenditure, usually considered growth engine of an economy, in the upcoming revised national budget, officials said.The Ministry of Finance (MoF) is going to revise the current national budget outlay cutting allocations by 2.61 per cent to Tk 6.60 trillion from that of Tk 6.78 trillion, MoF officials said.Officials said the MoF has proposed to boost the allocations in the operating budget.It has proposed to increase the operating expenditure to Tk 4.19 trillion in the revised budget from that of Tk 4.18 trillion in the current national budget.Operating expenditure means the government spends funds from the budget for its daily operation like the administrative, repair and maintenance and others.As proposed, the ministry has cut the development expenditure by 7.05 per cent to Tk 2.413 trillion for the upcoming revised budget from that of current outlay of Tk 2.596 trillion.A MoF official said, "The Annual Development Programme (ADP) has already been cut. But since the government""s operating expenditure is almost similar to the target outlay, the overall revised budget size is not coming down much."He said the government is actually maintaining its expansionary policy for keeping the economic growth momentum.Meanwhile, the government has failed to spend its target budget allocation in the first half of the current fiscal year, 2022-23.According to the MoF, government ministries and agencies during the July-December period spent 24.24 per cent of the total operating and development budget worth Tk 6.71 trillion.Out of the expenditures, government agencies spent only 14 per cent of Tk 2.59 trillion from development expenditure and 30.70 per cent from Tk 4.11 trillion operating expenditure, MoF data showed.Former World Bank lead economist Dr Zahid Hussain told the FE that it is a wrong decision of the government at this moment of going with an expansionary budgetary policy even after this current higher inflationary pressure and other economic shocks."If you want to contain inflation, you should go for a cautious or contractionary budgetary policy. If you want to contain pressure on USD, you have to cut development or non-development expenditures relating to the import.""Rather, the government has cut the allocations in the project aid (foreign aid) and kept the GoB fund similar in the ADP. It is also not a correct policy," cited Dr Hussain.The government is also minimising the deficit budget through the reserves, mostly relying on the central bank, which will boost inflation in future, he added. Policy Research Institute (PRI) executive director Dr Ahsan Mansur told the FE that the government""s stance on expansionary budget policy will fail to contain inflation and cut pressure on the foreign-exchange reserves.Although the prime minister earlier said the government would be on an austerity stance in its spending ensuring the quality expenditures, the higher operational expenditure is simply conflicting with the statement, he said. Dr Mansur suggested that the government take such measures which would contain inflation and ease pressure on the forex reserves.kabirhumayan10@gmail.com

Bangladesh""s foreign-exchange reserves are taking a tumble as the central bank goes on selling a record volume of US dollar to the commercial banks having an acute forex dearth to settle their mounting overseas transactions.To avoid the overshooting of exchange rates because of the shortfall of the dollar on the money market, Bangladesh Bank (BB) kept injecting the greenback into the banks for last eight months, official sources have said.Such growing sale of the dollar from the central bank has put more pressure on the country""s foreign-currency reserves already under stress because of growing import costs, largely for global price rises.According to BB statistics, the central bank purchased US$ 7.93 billion from the market and sold US$ 235 million in the financial year (FY) 2020-2021. The arithmetic was altogether different in the previous fiscal (FY""22) as it bought US$210 million while sold US$ 7.62 billion to the banks.And the upward trend in selling dollar has intensified further in the ongoing fiscal year of 2022-2023 with US$ 10.56 billion sold out as on March 05, 2023. But the BB has not bought a single penny so far this financial year.Because of the ongoing forex dearth, the queue of commercial banks to the central bank to buy the greenback to settle LCs (letter of credit) continues to be longer in recent months, sources at the BB said.The state-run banks, in particular, are taking an increased volume of dollar support from the central bank for settling import payments for Bangladesh Petroleum Corporation, Bangladesh Agricultural Development Corporation and Bangladesh Chemical Industries Corporation and so."We (the BB) sold US$ 10.56 billion so far this fiscal (until March 05, 2023), which is the highest in a fiscal year in the history of Bangladesh," says a BB official, who prefers to be anonymous.He said the central bank is selling a large volume of the US currency to stabilise the exchange rate, prices of essential commodities by stopping the scope of rapid depreciation of the currency.The BB official said the central bank had purchased huge volume of US dollars from the market in FY""21 when a record inflow of remittance amounting to US$ 24.77 billion was recorded. There was lockdown, which restricted people""s movement and the hundi business was not in operation because of the Covid-induced shocks."That""s why a record number of remittances had come. As the supply was huge, the BB purchased more foreign currency to make a balance in the market," the BB official said.Now the situation completely reversed. The supply is under stress because of the external factors but the cost of commodities goes up significantly globally following the Russia-Ukraine war, according to the official."So, cost of commodities has gone up globally and the currency depreciation is happening in a faster way. BB is now selling US dollars to overcome this double whammy as much as it can," the official says.When contacted, managing director and chief executive officer of Mutual Trust Bank (MTB) Limited Syed Mahbubur Rahman said the banks face difficulties in settling LCs because of the forex dearth. As a result, he said, banks are trying to use window of buying US dollars from the BB to meet foreign-currency obligations.Considering the current macroeconomic situation, the BB is selling more dollars but it should not be on continuous basis. "There is average monthly need of US$ 4.5 billion to settle import bills. Can the BB meet the requirement regularly? I think they should not. Otherwise, BB will run out of dollars. It is the bank who will earn dollars to meet their obligations."Research director of Bangladesh Institute of Development Studies (BIDS) Dr Monzur Hossain said the BB as part of its market intervention releases dollar to the market as the supply-demand gap gets enhanced in recent times."The BB needs to sell dollar to stabilise the exchange rate but it should not release the greenback at a level that might create more pressure on the reserves," he suggests.According to the central bank data, the size of reserves was US$ 46.39 billion in FY""21.The reserves declined to US$ 41.83 billion in FY""22 when BB""s dollar sales started increasing. The reserves as on March 7 of this fiscal stood down at 31.147 billion and it is believed that the record dollar sale contributes largely to the significant fall.jubairfe1980@gmail.com

Government budget deficit widened in the first six months of the current fiscal year on narrowing revenue receipt, finance officials said Thursday, while economists forecast no better scenario ahead.The budget deficit was recorded up to December at Tk 101.66 billion amid lower revenue collection, official statistics show. The deficit was at Tk 71.53 billion up to November.The total revenue mobilisation was recorded at Tk 1.613 trillion up to December, down by nearly Tk 50 billion from the same period a year earlier. The total expenditure was Tk 1.715 trillion during the period under review.In the official accounting tax revenue was recorded at about Tk 1.449 trillion, down by 3.3 per cent year on year. Non-tax revenue (NTR), however, remained almost at par during the July-December period at Tk 163.87 billion.On the other side of the budget arithmetic, non-development expenditure increased to Tk 1.262 trillion during the period.The annual development programme or ADP expenditure was trimmed to Tk 352.61 billion. It was Tk 370.73 billion a year earlier.The latest government report shows for FY23 shows actual overall balance up to December 2022 (excluding grants) witnessed a negative value which was 0.23 percent of the GDP. The negative value was 0.16 per cent of the GDP up to November last.Economists are of the view that the fiscal side will face troubles in the coming months as the revenue performance remained much lower than expected.They note that the government will have to go for higher spending by avoiding austerity in some areas like payments for power and debt servicing, in order to ramp up revenue mobilisation.Dr Ahsan H. Mansur, executive director at the Policy Research Institute of Bangladesh (PRI), told the FE that ultimately the deficit would cross Tk 1.0 trillion at the end of the fiscal year."Some power-related expenditures and debt servicing, both domestic and foreign, should be defrayed within the fiscal year," he said. Power producers will not wait for a long time.Dr M. Masrur Reaz, chairman of Policy Exchange of Bangladesh, notes that imports have now gone down. As a result, the revenue mobilisation from imports is falling now.The government also earns revenues from development projects as VAT and other taxes. But many projects funding now remained suspended. "So it will affect the resource mobilisation largely," he says.He also forecasts that the deficit will widen in the months ahead.Finance Minister AHM Mustafa Kamal placed the national budget worth Tk 6.78 trillion for the current fiscal year. The budget estimated development expenditures at Tk 2.59 trillion and non-development expenditures at Tk 4.11 trillion.The overall budget deficit for the fiscal year (FY) 2022-23 was estimated at Tk2.42 trillion, or 5.4 percent of the gross domestic product or GDP.jasimharoon@yahoo.com