Remittance up 33.5pc
Remittance increased 33.51 per cent year-on-year to $16.68 billion in the first eight months of this fiscal year. The inflow since June last year was characterised by robust growth every month in context to that a year ago. Expatriate Bangladeshis sent $1.79 million in February, up 22.61 per cent year-on-year, showed Bangladesh Bank data. The hundi system, an illegal cross-border money transfer system, has come to a halt because of the restriction on movement and this might have taken remittance to a new high. The trend would continue until at least when an end is declared of the pandemic, given the global economic scenario and the initiatives taken by the government. Remittance may decrease to some extent when the pandemic is declared to have ended as the global hundi cartel will witness a revival. The 2 per cent cash incentive introduced by the government in 2019 has also encouraged the expatriate Bangladeshis to send more money through the formal channel. Riding on the strong remittance inflow, the country’s foreign exchange reserve stood at $44.12 billion as of March 1.
Govt ADP portion trimmed by only Tk 7 lakh despite cost-cutting measures
The allocation to the revised annual development programme may trim by only Tk 7 lakh although the government had decided to put low-priority projects on hold in the beginning of the fiscal year because of the coronavirus pandemic. In the original ADP, the government fund was Tk 134,643.07 crore for the fiscal year of 2020-21. The government has halted the release of 25 per cent of the fund for the low-priority projects, meaning ministries and divisions can spend 75 per cent of the allocation. Even after being directed, the ministries cut expenses worth only Tk 10,000 to Tk 50,000 from the local portion, the official said. As a result, the planning ministry managed to trim down the government portion of the ADP by only Tk 7 lakh in the revised ADP. In the NEC meeting today, the planning ministry will propose to slash the development budget by 3.26 per cent, or Tk 7,501.79 crore. The size of the revised ADP would be Tk 197,643 crore, which was Tk 205,144.79 crore in the original budget. The use of foreign funds would trim by 10.64 per cent to Tk 63,000 crore from Tk 70,501.72 crore. Though the ministries were unwilling to cut the expenses of the local portion, the implementation of the ADP has been slow in the last seven months. Ministries and divisions spent Tk 61,048 crore in the July-January period, which is the lowest in the last five years, according to the Implementation Monitoring and Evaluation Division. Expenditure from the state coffer dropped 16 per cent to Tk 39,342 crore. Spending from the foreign portion of the ADP declined marginally.
Capital base of banks improves marginally
The capital base of the country’s banks has improved marginally in 2020 mainly due to the ‘decline’ in the volume of their non-performing loans (NPLs). The capital-to-risk weighted-asset ratio (CRAR) of all the scheduled banks rose to 11.64 per cent as on December 31 last year from 11.57 per cent on the same day of the year before, according to the latest statistics of the Bangladesh Bank (BB). The bank’s capital base rose in the outgoing calendar year due to the fall in default loans significantly in 2020. The NPLs shrank by more than 6.0 per cent or Tk 60.49 billion to Tk 882.82 billion, excluding offshore banking operations, as of December 31 from Tk 943.31 billion a year ago. Meanwhile, the total regulatory capital increased by 8.83 per cent or Tk 106.99 billion to Tk 1,318.34 billion in the final quarter of 2020 from Tk 1,211.34 billion a year before. The central banker also said the capital shortfall of the banks may improve in April this year if the central bank offers regulatory forbearance to some banks considering the overall economic situation. In 2019, eleven banks suffered a total capital shortfall of Tk 227.98 billion as the growing classified loans wiped off their profits. The 11banks-five SoCBs, three PCBs, a foreign commercial bank (FCB) and two SBs-were put on the list of capital-deficient ones. The CRAR of PCBs was found, on average, 13.96 per cent as on December 31 last while the CRAR of nine foreign commercial banks stood at 28.24 per cent.
WB to give $250m aid in FY ’21 to create jobs
After a long stalemate, the World Bank (WB) has finally agreed to provide budgetary support worth US$250 million to Bangladesh within this fiscal year (FY), 2020-21. Both the WB and the government completed negotiation last week on providing the third tranche of the Development Policy Credit (DPC), assured three years ago, for facilitating job creation in Bangladesh. The Washington-based global lender, in a negotiation with the government in 2018, assured of providing the DPC worth $250 million, of the total assured credit of $750 million. The ERD official said the lender restarted budget support programme for Bangladesh through confirming $250 million worth of first tranche of the $750-million DPC through a negotiation in 2018. Then it provided the second tranche worth $250 million in early 2020. The WB also asked the government to formulate a market-based interest rate system for the national savings certificates (NSCs) by slashing the government’s intervention on it, and quicken handing over of lands for the special economic zones (SEZs) to get the proposed budgetary support credit.
Dhaka Bank signed agreement with Energypac Electronics Limited
Dhaka Bank has signed an agreement for providing cash management services and payroll banking services to Energypac Electronics Limited. Mohammad Abu Jafar, Additional Managing Director of Dhaka Bank, and Md. Nurul Aktar, CEO & Director of Energypac Electronics, signed the agreement recently.