Rejaul Karim Byron

Bangladesh gravitated towards external borrowing to finance its budget deficit in fiscal 2021-22, leveraging the country’s capacity to absorb more of the relatively economical foreign loans.

The record fuel price hike last week has thrown a spanner in the works to the finance division’s projection of bringing the twin problems of inflation and delicate foreign currency reserves under control by December.

The tax authority’s receipts from black money dropped 94.4 percent year-on-year in fiscal 2021-22 after the increase in tax rate and additional penalty dulled the black money holders’ interest to legalise their undisclosed wealth.

The record fuel price hike yesterday would put Bangladesh in a favourable position as the country enters into negotiations next month with the International Monetary Fund for financial assistance to ease the pressure on the precarious balance of payment and foreign currency reserves.

When a piece of Personal Protective Equipment (medical coveralls) was Tk 1,200, the authorities bought 50,000 of them for Tk 3,900 each from a motor parts supplier.

The International Monetary Fund yesterday conveyed its interest to support Bangladesh with its request for loan to prop up its strained foreign currency reserves.

Inflation bucked its runaway trend in July, becoming the third data point this month after remittance and import to provide some relief to a government on its toes about the direction the economy was taking.

Bangladesh’s regional trade can increase by a staggering 93 percent thanks to the $1.4 billion project the World Bank has set in motion to accelerate trade and transport connectivity in Eastern South Asia -- a development that can cushion the country from the anticipated export losses from LDC graduation.

Revenue collection grew 15.51 per cent year-on-year to Tk 300,179 crore in the just-concluded fiscal year of 2021-22, according to the provisional data of the National Board of Revenue (NBR).

The government is finally moving ahead with a project to roll out fifth-generation (5G) mobile internet services through state-run network provider Teletalk, according to officials of the planning ministry.

The government is expecting $2.5-3 billion by June next year from multilateral lenders other than the International Monetary Fund to help the Bangladesh economy weather the storm caused by the Ukraine war.

Bangladesh’s use of foreign assistance reached a new record high of $10 billion in fiscal year 2021-22, primarily behind vaccinations, one-time budget support, economic recovery from the pandemic and implementation of mega projects.

Bangladesh’s foreign loan servicing burden will peak in fiscal 2029-30 with repayment of $5.15 billion, which experts deem to be very much within the safe territory -- quelling fears that the country might become the next emerging economy after Sri Lanka and Pakistan to run into external debt distress.

Finance Minister AHM Mustafa Kamal has sent in a formal request to the IMF for a $4.5 billion loan, putting to bed the speculations on whether the country would be seeking the support from the Washington-based multilateral lender at all.

Bangladesh Bank plans to sign a memorandum of understanding (MoU) with 10 commercial banks for taking various steps on a pilot basis, including periodically publishing their lists of defaulters, in a bid to reduce their default loans. 

The International Monetary Fund is expecting a formal request for a loan from Bangladesh soon to provide a buffer to the delicate foreign currency reserves amid global economic volatility even though the government remains in two minds about it.

The government is stalling on taking the $4.5 billion loan from the International Monetary Fund to ease the pressure on the foreign currency reserves after seeing the conditions that would be attached.

Inflation raced to a nine-year high of 7.56 percent in June, in a development that lays bare the extent of the cost of living crisis gripping the low-income and middle-class people in Bangladesh thanks to a war taking place some 5,800 kilometres away in Ukraine.

With the partial launch of the country’s first ever metro rail only five months away, the project cost is set to rise by more than half, and the deadline is also going to be extended by a year and half.

In face of growing pressure on the country’s economy, the government issued strict directives to field-level administration to practise austerity while spending from the budget allocation.