Haque Specialized Group's News

Bangladesh's merchandise trade deficit with the rest of the world widened 46.62 per cent in the past fiscal, leaving its current-account balance in the red. Bangladesh Bank released Wednesday an update on the country's balance of payments (BoP) which revealed such state of this macroeconomic indicator. It showed that the trade deficit hit $9.47 billion in FY17 in a climb from $6.46 billion in FY16. Slower growth in export earnings, around 1.73 per cent, alongside greater growth of 9.0 per cent in import payments increased the trade imbalance. The central bank statistics further showed that deficit in services trade also gaped, amounting to $3.28 billion, in the past fiscal year from $2.70 billion in FY16. As such, the annual balance of payments (BoP) showed the current-account balance in red in FY17 after four years. Country's current account incurred a deficit of $1.48 billion in the past fiscal, which had a record surplus of $4.26 billion in FY16, as per latest estimation. The last time Bangladesh experienced current-account deficit was in FY12 when it counted a $447 million negative balance. Negative current account generally means that the country is paying or spending more on the external front than its earning from the external economic activities. The deficit in current-account balance also reduced the huge surplus in the overall balance of payments to $3.16 billion in FY17 as against $5.03 billion in the previous fiscal. Dr Mirza Azizul Islam, former adviser of the caretaker government, finds the overall balance-of-payments situation not so alarming. "With higher import and lower export, trade gap surged while drastic fall in remittance contributed to turning the current account negative," he explained. "But our foreign-exchange reserves are still good and able to finance around eight months' import bills of goods and services," he added. The economist, however, cautioned that if the rising trend in trade- and current-account deficit continued, then it could create additional pressure in the near future. "These deficits mean that we are financing the gap through borrowing," he said. "Higher external borrowing will create additional liabilities in future." The central bank data also showed that financial-account balance posted a record surplus of $4.17 billion in the past fiscal year, which was only $944 million in FY16. Higher inflow of Foreign Direct Investment (FDI) along with a surge in medium- and long-term loans contributed to maintaining a healthy balance of the financial account. Surplus in capital account, however, dropped to $314 million in the past fiscal year from $464 million in FY16. According to the International Monetary Fund (IMF)-designed manual, BoP consists of three accounts: current, capital, and financial.   When contacted, Dr Md Akhtaruzzaman, economic adviser of the central bank, told FE that current account deficit was below one per cent of the country's Gross Domestic Product (GDP) and that there was no need to worry. He attributed the deficit to robust growth in import, slowdown in export and big decline in the remittance. "But decline in remittance is a global phenomena," he added. "Nevertheless, we have to enhance our effort to increase its inflow." asjadulk@gmail.com....

Published at: 2017-08-17 05:00:06

The Asian Development Bank's (ADB's) loan to Bangladesh is going to be expensive in the coming years as it would provide nearly 86 per cent of its planned assistance from its hard window OCR, officials said Wednesday. According to the ADB's proposal, it will provide nearly US$9.6 billion loan in next three years from 2018 to 2020. Of the loans, 86 per cent or $8.26 billion will come from the non-concessional lending arm -- Ordinary Capital Resources (OCR). The remaining 14 per cent or $1.36 billion is expected to come from the concessional loan providing arm -- the Concessional OCR Lending (COL). The OCR is a market-based loan which depends on the LIBOR (London Inter-Bank Offered Rate). According to the sources, the loan from OCR is charged interest based on the 6-month US$ LIBOR rate plus 500 basis points. It also charges 0.15 per cent commitment fee on undisbursed amount and 0.15 per cent maturity premium for the loans. The repayment period of the loans is also shorter than that of other donors like the World Bank and Japan. The OCR loan is payable in 25 to 30 years with five years' grace period. On the other hand, the interest rate for the COL loan is fixed at 2.0 per cent. Its maturity is 25 years with five-year grace period. There is no commitment fee or maturity premium applicable for this loan. On August 14 this year, the six-month US$ LIBOR rate was 1.45 per cent. The LIBOR rate is flexible. A senior official of the Economic Relations Division (ERD) said a few years back, the Manila-based lender was providing more concessional loan (ADF) than its non-concessional one (OCR). But it has been reversed in recent years, he added. "Currently LIBOR rate is hovering at below 2.0 per cent rate. If the LIBOR increases in any time during the long repayment period of any ADB loans, we have to repay on that high rate. Everybody knows that the LIBOR rate jumped to 5.75 per cent in 2006-07 period," the official pointed out. So, borrowing of the OCR loan from the ADB is risky for any country, he told the FE. The country's largest multilateral donor World Bank charges 0.75 per cent interest rate for its loan to Bangladesh with 38 years of repayment period offering eight-year grace period. Meanwhile, the largest bilateral development partner Japan charges 0.01 to 0.70 per cent interest rates on its loan for Bangladesh. The loan is payable in 30 years with a grace period of 10 years. The ADB is the second largest multilateral donor of Bangladesh which disbursed nearly US$800 million to $1.0 billion loans and grants in recent years. In the FY2015-16, the ADB confirmed $1.1 billion loans and grants while it disbursed $823 million for development of Bangladesh. In 2016, the ADB approved 10 projects for Bangladesh, with loans totalling $1.1 billion and technical assistance of $7.85 million. The Bank also mobilised $841.7 million in co-financing during 2016. The ADB has so far provided Bangladesh with $18.3 billion for 269 loans, $252.4 million for 422 technical assistance projects, and $787.10 million for 35 grants. An official of Dhaka office of the ADB said although the ADF has been merged with the OCR, Bangladesh, as a poor country, will continue to get concessional loan in addition to the OCR. The terms and conditions for the COL will be almost similar to those of loans from the ADF of the Bank, he told the FE. "In the last three-year country lending programme up to 2017, the ADB made commitment to provide nearly $5.0 billion assistance. But in the next 3-year package, the amount has picked up to nearly $9.0 billion. So, the contribution from its OCR has been enhanced," the ADB official said. ERD Secretary Kazi Shofiqul Azam told the FE that since Bangladesh needs huge investments to improve its infrastructure and social sector, the donor has extended its support to the country. "We need higher investments. The ADB's financial support is going up year-on-year. We hope their support will facilitate Bangladesh's development," he added. According to the ADB, the OCR equity of the Bank has almost been tripled from about $17.5 billion to nearly $49 billion by combining ADF equity (together with lending operations) to the OCR balance sheet. Economic Relations Division (ERD) officials said since Bangladesh's external fund demand has been rising, the ADB has been increasing its portfolio for the country even mobilising funds from the open market resulting in higher ratio of the hard-term loan. When asked on the increased amount of OCR loan, ADB Country Director in Bangladesh Kazuhiko Higuchi told the FE: "The amount of concessional lending is based on country-specific allocation of available resources, which is fixed. Therefore, where demand for loans is high, as in Bangladesh, additional resource requirements are met from the market-based ordinary capital resources." The ADB will continue to provide concessional lending to Bangladesh at the present level in the coming years. During 2011-2015, ADB lending was split about evenly between concessional lending and market-based lending, he said. "In the five-year period of 2016-2020, the ADB's market-based OCR lending is expected to be more than concessional lending. This is a reflection of the ADB's aspiration to meet the country's need for greater infrastructure investment, especially in energy, transport, and urban and municipal infrastructure and services, in support of higher economic growth expected during the Seventh Five Year Plan," Mr Higuchi said. kabirhumayan10@gmail.com....

Published at: 2017-08-17 05:00:05

President Donald Trump disbanded two high-profile business advisory councils on Wednesday after several chief executives quit in protest over his remarks blaming weekend violence in Virginia not only on white nationalists but also on anti-racism activists who opposed them. A parade of prominent Republicans and US ally Britain also rebuked Trump, leaving him increasingly isolated after his comments on Tuesday about the bloodshed in the college town of Charlottesville further enveloped his seven-month-old presidency in controversy. The mayor of Phoenix asked Trump to delay a rally planned for next Tuesday, an appeal the president appeared to reject. A memorial service was held on Wednesday in Charlottesville for 32-year-old Heather Heyer, killed when a car plowed into anti-racism protesters. A 20-year-old Ohio man said to have harboured Nazi sympathies has been charged with murder. Trump, a real estate magnate who had never before held public office, was elected president in November touting his experience in the business world and ability to strike deals. But some of the Republican president's actions and words have alienated many corporate leaders. Trump said he would dissolve the American Manufacturing Council and the Strategic and Policy Forum after eight executives including Campbell Soup Co CEO (CPB.N) Denise Morrison and 3M Co CEO (MMM.N) Inge Thulin quit the panels. Both of the councils were moving to disband on their own when Trump made his announcement on Twitter. "Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both," he wrote. The Strategic and Policy Forum was headed by Blackstone Group (BX.N) CEO Stephen Schwarzman, a close ally of Trump in the business world. Schwarzman organised a call on Wednesday for member executives to voice concerns after Trump's comments, and an overwhelming majority backed disbanding the council, two sources said. Schwarzman then called Trump to tell him about the decision to disband. "Racism and murder are unequivocally reprehensible and not morally equivalent to anything else that happened in Charlottesville," Morrison said. JPMorgan Chase & Co (JPM.N) CEO Jamie Dimon, a member of one of the panels, said in a statement that "fanning divisiveness is not the answer." Dow Chemical Co (DOW.N) Chief Executive Andrew Liveris, who headed the manufacturing council, said he told the White House on Wednesday that "in the current environment it was no longer possible to conduct productive discussions." The Strategic and Policy Forum was intended to advise Trump on how government policy impacts economic growth, job creation and productivity. The manufacturing council was designed to promote US job growth. Along with the snubs from business leaders, Trump was rebuked by a string of Republicans including Senate Majority Leader Mitch McConnell, Ohio Governor John Kasich, Senator Lindsey Graham and former US presidents George HW Bush and George W Bush. The president needs the support of fellow Republicans as he tries to push his policy agenda, including tax cuts, through a Congress that is controlled by the Republicans. Phoenix Mayor Greg Stanton, a Democrat, said Trump would "enflame emotions and further divide our nation" if he used next week's rally to pardon Joe Arpaio, a former Arizona sheriff who was found guilty last month of criminal contempt of court. Arpaio gained a national profile due to his harsh treatment of inmates and outspoken opposition to illegal immigration. Shortly after Stanton's statement, Trump urged supporters on Twitter to attend the rally. Few public figures have voiced support for Trump over his response to the violence. Vice President Mike Pence, who is cutting short a trip to Latin America, told reporters in Chile that "I stand with the president and I stand by those words." Former Ku Klux Klan leader David Duke praised Trump's "honesty and courage." Richard Spencer, head of a white nationalist group, lauded the president for "speaking the truth." US stocks ended slightly firmer but off the day's highs as investors worried that the backlash to Trump's remarks could stunt his ability to deliver on pro-business promises. POSSIBLE RESIGNATIONS A former senior Trump administration official raised the prospect that some White House officials could quit because of Trump's comments. The demise of the councils raised Wall Street speculation that senior administration figures such as White House economic adviser Gary Cohn or US Treasury Secretary Steven Mnuchin might step down to avoid the tarnish of being associated with Trump. Cohn, Mnuchin and Transportation Secretary Elaine Chao stood awkwardly by Trump during his remarks at Trump Tower on Tuesday. "He's worried about his reputation being trashed, which is much more valuable to him than anything else," the former administration official, speaking on condition of anonymity, said of Cohn. McConnell, who last week drew Trump's ire over the Senate's failure to pass healthcare legislation, issued a statement saying "messages of hate and bigotry" from white supremacists, should not be welcome in the United States. McConnell's statement did not mention Trump by name. The Republican Jewish Coalition, a group whose board includes big party donors including casino mogul Sheldon Adelson, called on Trump to "provide greater moral clarity in rejecting racism, bigotry and antisemitism." There is "simply no place" in American public discourse for "hate and violence" displayed in Charlottesville, US Secretary of State Rex Tillerson said before meeting with Canada's foreign minister. 'BLAME ON BOTH SIDES' Trump's remarks on Tuesday were a more vehement reprisal of his initial response to the bloodshed. At a heated news conference in New York, he said "there is blame on both sides" of the violence, and that there were "very fine people" on both sides. In London, British Prime Minister Theresa May offered a rare rebuke of Trump from so close a US ally. "I see no equivalence between those who propound fascist views and those who oppose them and I think it is important for all those in positions of responsibility to condemn far-right views wherever we hear them," May told reporters. Politicians in Germany, which has tough laws against hate speech and any symbols linked to the Nazis who murdered six million Jews in the Holocaust, expressed shock at the images of people in Charlottesville carrying swastikas and chanting anti-Jewish slurs. The country's justice minister accused Trump of trivializing anti-Semitism and racism. Senior American military officers usually stay clear of politics, but two more of the US military's top officers weighed in on Wednesday, without explicitly mentioning Trump. US Army Chief of Staff General Mark Milley wrote on Twitter, "The Army doesn't tolerate racism, extremism, or hatred in our ranks. It's against our Values and everything we've stood for since 1775." Air Force Chief of Staff General Dave Goldfein‏ said on Twitter that "I stand with my fellow service chiefs in saying we're always stronger together." Their comments followed similar ones from the top officers of the Navy and Marine Corps.  ....

Published at: 2017-08-17 05:00:05

The government is looking forward to a framework agreement signing with China as soon as possible over its $156.55 million funding for the Info Sarker Phase 3 project to ensure its completion within the stipulated timeframe. According to a UNB report, the ICT division will implement the Tk 19.99 billion National ICT Intra-network for Bangladesh Government Phase-III, which is also known as Info Sarker-3 project, to connect 2,600 union parishads through fibre optic cables. State Minister for ICT Junaid Ahmed Palak has sent a letter to the Economic Relations Division (ERD) Secretary Kazi Shofiqul Azam early this month requesting him to hold the negotiation with the Chinese EXIM Bank without any delay to expedite the signing of the Chinese government's concessional loan agreement. In the letter, he said since the Info Sarker Phase 3 project is a priority project of the government and it is scheduled to end by June 2018, it would be uncertain to complete the project work within the timeframe if the signing of the framework agreement is delayed further. "Negotiation should have to be completed speedily to sign the framework agreement with financing organisation EXIM Bank of China," Palak said in the letter. As per the state minister's instruction, ERD Deputy Secretary AKM Matiur Rahman sent a letter to Economic and Commercial Councillor of Chinese Embassy in Dhaka Li Guangjun on August 8 requesting him to communicate this to the authorities concerned of China for kind action on their part. "Under the circumstances, ERD is inviting EXIM Bank of China to send a negotiation team to negotiate on the above loan agreement, which may be held in Dhaka in the 3rd week of August this year or any convenient date at your end," Matiur said in the letter. Talking to the news agency, an ERD official said as per the draft agreement the terms of the loan shall not exceed 20 years including the period of utilisation, grace and repayment. The grace period should not exceed five years. The annual interest rate of the loan shall be two per cent. Besides, the agreement shall come into force on the date of its signature while it will remain valid for three years. The agreement shall become invalid automatically if the creditor and the borrower could not reach the lending agreement of the loan within the above specified period. State-owned China Railway International Group Company Limited would supply the equipment for the project through a direct purchase method. The ERD official said the inking of the loan agreement would follow the Memorandums of Understanding inked between Dhaka and Beijing on ICT framework, maritime cooperation, capacity building, sharing of information and tackling climate change risks during the historic visit of Chinese President Xi Jinping to Bangladesh last year. Beijing has offered loan worth over $20 billion with 40 agreements and MoUs during the visit, most of them are suppliers' credits in nature. EXIM Bank of China will provide Tk 12.27 billion in the Info Sarker Phase-3 project, which also aims to provide internet and other connectivity to the local government offices. The government under the project will also build some other digital infrastructure at the union level. Countrywide fibre connectivity will be established by 2018 while this project is part of the government's efforts to build a Digital Bangladesh by 2021, said officials of the Bangladesh Computer Council (BCC) which is the executing agency of the project. Earlier, the ICT division also completed Info Sarker-2, a Tk 13.33 billion project, which connected 18,130 government offices through a nationwide network. The project ended in June this year. Under the project, the ICT division distributed 2,500 tablets among the government officials. The BCC also connected the Bangladesh Secretariat, seven divisional and all district and 485 upazila level government offices under this project, said officials of the ICT division.....

Published at: 2017-08-16 05:00:04

Grameen Bank has earned good profit in recent months despite the lending rate cut by the present management, according to the latest data available from the bank. The bank for the poor made a profit of Tk 1.02 billion (102 crore) in the first six months of this year as against the yearly profit of Tk 1.39 billion in 2016, reports BSS. On the other hand, the bank is now charging lower rate of interest for lending to its members who mainly belong to the lower income groups of the society. "We are now charging the highest 20.0 per cent interest against a loan though the ceiling of interest is 27.0 per cent fixed by the Microcredit Regulatory Authority (MRA)," said acting Managing Director of the bank Ratan Kumar Nag. While talking to the news agency, he claimed the rate is the lowest among the microcredit organisations in the country. Besides, he said, the rate of interest is even lower for various purposes. For instance, the interest rate for education loan is 5.0 per cent and for buying house is 8.0 per cent. "In addition, Grameen Bank offers interest-free loan to help rehabilitate beggars and other people who are struggling for a better life," Nag said. Apart from lowering the interest rate, the bank has also initiated exploring new areas of lending with the aim of bringing more people under its operations, the bank's high official said. "The bank has so far disbursed loan to 52,000 students for higher education while planning loan for helping medical graduates to establish hospitals in rural areas to provide poor people with better health services," Nag said. He said the bank is also providing loans to rural entrepreneurs who need financial support to expand their existing businesses. "The expansion of loan operation coupled with efficient monitoring of its disbursement and recovery helped the bank increase its profit while cutting interest rate for the betterment of its low-income clients," the acting MD said. "We have increased field-level monitoring and launched Skype for maintaining communications with Regional Managers and field-level officials," he added. According to him, loan disbursement surged to Taka 187.54 billion last year from Taka 96.15 billion in 2010 when the rate of loan recovery was 99.05 per cent in 2016 against 97.37 per cent in 2010. The number of the bank's members or loan recipients increased from 8.341 million in 2010 to 8.902 million in 2016 and overdue loans also fell significantly in the recent months while it came down to 0.41 per cent in June this year from 0.55 per cent in 2016 and two per cent in 2015, Nag said. "All the bank's indicators including profit, loan disbursement and recovery and number of beneficiaries are currently on a steady rise," he said, adding that the bank has already brought all the villages of the country under its operation.....

Published at: 2017-08-16 05:00:04