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Stocks plummet for 4th consecutive day, investors remain on edge
FICCI expresses concerns over provisions in new income tax law
The foreign investors' concerns came as the National Board of Revenue wants to slap a 5 per cent tax on gross receipts or turnover of carbonated
Economy
Reserves to get a boost with USD 800m budget support from ADB, AIIB
June 13, 2023
· Bangladesh is set to receive USD 800mn in budget support from two development partners this month, providing significant relief for the government at a time of declining foreign exchange reserves and challenges faced by businesses in meeting import bills due to a shortage of US dollars.
· The Economic Relations Division (ERD) has confirmed that the Asian Development Bank (ADB) and the China-led Asian Infrastructure Investment Bank (AIIB) will each contribute USD 400mn towards this financial assistance.
· Typically, budget assistance is disbursed promptly after the loan agreement is finalised. Therefore, the $800 million is expected to be released within the next 7-10 days.
· Currently, the Secured Overnight Financing Rate (SOFR) stands above 5%. The ADB budget support will carry an interest rate of the SOFR rate plus 0.5%, along with a commitment fee of 0.15%. The repayment period for this loan is set at 15 years, with a grace period of three years.
· On the other hand, the interest rate for the AIIB loan will be calculated based on the SOFR rate plus a variable spread. The commitment fee for this loan will be 0.25%, along with a front-end fee of 0.25%. The repayment period for the AIIB loan is 26 years, with a grace period of three years.
· In addition to these two organizations, a budget support agreement of approximately USD 230mn is scheduled to be signed with the Japan International Cooperation Agency (Jica) this month – although in yen, according to sources at the ERD.
From: https://www.tbsnews.net/economy/reserves-get-boost-800m-budget-support-adb-aiib-648906
BBS to release first quarterly GDP report in November
June 14, 2023
· The Bangladesh Bureau of Statistics (BBS) would unveil the quarterly report on gross domestic product (GDP) from November next, starting with the last-quarter data of the current fiscal year (FY 2022-23).
· “After releasing the first report in November 2023, it will continue,” Director of the National Accounting Wing of the BBS Ziauddin Ahmed said at a dissemination session in Dhaka on Tuesday.
· He added that the BBS would publish the QGDP of the July-September quarter, Q1 of the upcoming FY, by December 2023.
· The International Monetary Fund (IMF) has also recommended publishing the QGDP to get a better understanding of the country’s latest economic situation.
· It will also set a new base year of 2015-16 from existing 2005-06.
Saudi firm to modernize Patenga terminal
June 14, 2023
· Bangladesh is set to sign an agreement with a Saudi company on the operation, modernization, and expansion of the Patenga Container Terminal (PCT) beside Chittagong seaport, in the first go of Riyadh's port-venture bids here.
· The deal with Red Sea Gateway Terminal (RSGT) Company is expected to be signed by November this year, Ambassador Essa bin Yousef Al Duhailan of the Kingdom of Saudi Arabia (KSA) to Bangladesh said on Tuesday.
· He said that there are no issues regarding this matter as the Ministry of Shipping and the company had multiple rounds of negotiations to finalise the deal.
· The Saudi envoy also expressed optimism that the RSGT would secure contracts for operating other port terminals, given their expertise in managing world-class facilities.
Banking
Cenbank plans policy rate hike in new monetary policy to tame inflation
June 13, 2023
· In the new monetary policy, the central bank plans to move away from the lending rate cap regime and introduce an interest rate-based monetary policy, following the International Monetary Fund's (IMF) suggestion.
· In the new monetary policy framework, the lending rate cap will be lifted, and a new lending rate formula will be introduced for commercial banks.
· The new lending rate system is referred to as "SMART" – Short-Term Moving Average Rate. The six-month average interest rate on 182-day Treasury bills will be treated as the base rate. There will be a corridor rate along with it. This corridor may be around 3%. Banks can determine the lending rate by adding or subtracting the corridor rate from the Treasury bill rate.
· Currently, the interest rate on 182-day Treasury bills is a little over 7%. This means the interest rate on consumer loans will be as high as 10%. Loans that are currently carrying 9% interest will also bear interest as per the new rate.
· A central bank official said the corridor could be slightly lower than 3%. In that case, it will be possible to keep the lending rate in single digits.
· In today's board meeting, the central bank will approve the amount of the increase in the policy rate and changes in monetary policy. Subsequently, on 18 June, it will be published for all.
Consumer Electronics
Mobile production declines sharply in April
June 13, 2023
· Local production of mobile phones declined substantially in Bangladesh in April as manufacturers grappled with a massive drop in sales amidst the grey market's expansion.
· About 1.5mn units of phones were manufactured in the month, a drop of 56.28% year-on-year.
· Feature phones accounted for 54.67% while smartphones the rest, according to the latest data from the Bangladesh Telecommunication Regulatory Commission (BTRC).
· Although the 0.7mn smartphones produced in April was the highest in six months, it was down 47.11% compared to the same month a year earlier, highlighting the dire situation the local device manufacturers were in.
· Production of 4G smartphones plummeted by over 61% year-on-year in the first quarter of this year.
· Due to the taka's sharp depreciation against the US dollar, import costs have increased. Moreover, there is a shortage of the greenback, making it challenging to open letters of credit.
· High inflation, which is running at a decade high, has further reduced the purchasing power of smartphone enthusiasts.
· Mobile sales experienced a year-on-year drop of more than 40% in the first quarter of 2023 due to the economic slowdown, said industry people.
From: https://www.thedailystar.net/business/economy/news/mobile-production-declines-sharply-april-3344696
note: this post is for research and analysis only