Remittance stays robust
Remittance flow to Bangladesh has maintained its robust growth in January despite the persisting pandemic although it dropped below $2 billion for the first time in the last five months. Expatriate Bangladeshis sent home $1.96 billion last month, up 19.78 per cent year-on-year, data from the central bank showed yesterday. Remittance fetched more than $2 billion for Bangladesh between September and December. The inflow, however, has started to slow since September. Between July and January, the country received $14.9 billion in remittance, up 34.95 per cent a year ago, BB data showed. Mujeri, a former chief economist of the central bank, said migrant workers might have sent more money to support family members during the crisis. Many migrant workers lost jobs as their host countries have imposed lockdowns to contain the deadly virus, which might have compelled the migrants to send all assets back home. Remittance has helped swell the country’s foreign exchange reserve, which stood at $42.91 billion yesterday compared to $32.38 billion a year ago. In a study conducted between November and December, the Sanem found that remittance to households declined during the pandemic.
Exports, cheap foreign loans to take a hit for LDC graduation
Bangladesh’s export earnings and the flow of concessional foreign financing and grants will decline once it becomes a developing country, according to a government study. The projected loss of exports and grants and higher debt service costs would lead to higher current account deficit, said the study styled “Impact assessment and coping up strategies of graduation from LDC status for Bangladesh” prepared by the General Economics Division (GED), a wing under the planning ministry. The biggest blow will emerge in the form of the loss of duty-free market access. The projected export loss from garment products in the European Union and non-EU markets estimated to be about 5 per cent of the total exports in the fiscal year of 2017-18. This amounts to a loss of $7 billion in FY27, which would steadily increase to $13 billion by FY31. The concessional debt is already declining: the ratio came down to 51.3 per cent of the total external debt in FY16. Bangladesh has accessed a significant amount of non-concessional financing in recent years. Under the hypothetical scenario, where Bangladesh had remained an LDC in the foreseeable future, the proportion of concessional external debt would have remained high at more than 65 per cent. Bangladesh’s dependence on foreign grants has come down significantly over the last several decades. In recent years, grants received by the public sector are estimated to be about 0.1 per cent of GDP, or less than $300 million per annum. The combined impact of the three types of losses will directly affect the BoP, and the current account deficit may swell to 0.9-1.4 per cent of GDP in FY27. Most of the losses are on account of export loss in both EU and non-EU markets. The widening of the current account deficit from garment market loss in the EU alone contributes a 0.9 per cent increase in the current deficit. If the export losses from the non-EU readymade garment, other exports and the loss of grants are considered, these add another 0.5 per cent to the current account deficit in FY27.
Sugar refiners relieved of advance tax
The National Board of Revenue (NBR) has relieved sugar refiners of advance tax (AT) on import of raw sweeteners for processing — a move that will reduce pressure on their working capital. The move comes one and a half years after the revenue authority introduced the AT in July 2019 under the VAT law 2012 in order to ensure that firms maintain records of transactions. The NBR said the value added tax (VAT) was 5 per cent and refundable after adjustment of the payable VAT. In reality, a number of businesses are yet to get refunds of excess VAT. The City runs one of the biggest refineries having a processing capacity of 5,000 tonnes a day. Bangladesh annually requires 18-20 lakh tonnes of sugar and imports meet 95 per cent of the domestic demand as local production is scanty. Raw sugar imports soared 36 per cent year-on-year to 27 lakh tonnes in the January-September period of 2020, according to data of the Bangladesh Bureau of Statistics. The NBR issued the notification at a time when prices of sugar were increasing, thanks to its upward trend in the international market. Prices of each kilogramme of sugar rose 6 per cent to Tk 65-Tk 70 yesterday in the city markets from Tk 62-65 a month ago.
DSE turnover dips below Tk 8.0 billion-mark
The turnover on Dhaka Stock Exchange (DSE) tumbled below Tk 8.0 billion-mark on Monday, hitting a seven-week low, as investors were reluctant to take fresh exposure in the market. Turnover, a crucial indicator of the market, came down Tk 8.18 billion, which was 13 per cent lower than the previous day’s mark of Tk 8.23 billion. It was the biggest single-day transaction about seven weeks low since December 17, 2020, when the turnover totalled a record Tk 7.05 billion. Market analysts said most of the investors fear that the index may fall further, so they are reluctant to purchase stocks, which brought down the turnover. DSEX, the prime index of the DSE, went down by 50.06 points or 0.88 per cent to settle at 5,599. DSEX eroded 125 points in the past two consecutive sessions. Two other indices also saw major corrections. The DSE 30 Index comprising blue chips plunged 34.90 points to finish at 2,125 and the DSE Shariah Index (DSES) fell 11.23 points to close at 1,254. The stockbroker noted heavy sell pressure in food, financial institution, pharma, power and telecom sectors pushed down the DSEX to below 5,600 points mark which was the lowest since 30 December 2020. Among the major sectors, food & allied saw the highest correction, losing 3.80 per cent, followed by miscellaneous with 2.80 per cent, financial institutions 1.60 per cent, pharma 1.20 per cent, power 1.0 per cent and telecom 0.90 per cent. Cement sector gained 2.50 per cent riding on M. I. Cement as the cement marker-stole the show gaining almost 10 per cent for the second straight day as the investor reacted positively to its second quarter earnings result. It reported that its EPS was Tk 1.52 in Q2 of 2020, up from negative Tk 1.80 in the same period a year earlier. The Chittagong Stock Exchange (CSE) also fell sharply with the CSE All Share Price Index – CASPI -losing by 178 points to settle at 16,296 and the Selective Categories Index – CSCX shedding 109 points to close at 9,833.