8

CHAMBER NEWS July 201307

Bangladesh NewsSalient features of the National Budget 2013-14

Sectoral allocation in the Budget 2013-14

Sources of Financing Defi cits

The total outlay of the national budget for 2013-14 has been set at Tk 2224.91 billion, which is 17.52 percent higher as compared to that in the revised budget for 2012-13 and accounts for 18.72 percent of GDP. The defi cit in the budget has been estimated to be at 4.0 percent and 4.6 percent of GDP on the basis of including and excluding grants. These were 4.2 percent and 4.8 percent respectively in the revised budget for 2012-13. GDP growth rate has been projected to be 7.2 percent in 2013-14 compared to 6.03 percent in 2012-13. The budget indicates revenue to grow by 19.90 percent to Tk. 1674.59 billion (14.09% of GDP) compared to the revised estimate of Tk. 1396.70 billion (13.46% of GDP) in the outgoing fi scal. In 2013-14, the development expenditure has been budgeted to grow by 25.15% to Tk. 722.75 billion (6.08% of GDP) compared to that in the budget for 2012-13. Non-development expenditure will also grow by 21.53% to Tk. 1344.49 billion (11.31% of GDP) in 2013-14.

The total Annual Development Program (ADP) for 2013-14 has been set at Tk. 658.70 billion or 25.79% higher than the revised budget for 2012-13. The highest allocation of Tk.160.60 billion or 24.38% of ADP was for transport and communication, Tk.125.16 billion or 19.00% for local government and rural development, Tk.90.71 billion or 13.77% for education and technology, Tk.90.53 billion or 13.74% for power sector, Tk.36.02 billion or 5.47% for health sector, Tk.31.74 billion or 4.82% for social security and welfare and Tk.26.87 billion or 4.08% for industrial and economic services.

The budget for 2013-14 has shown a defi cit (including grants) of Tk 483.62 billion or 4.0 percent of GDP. Foreign fi nancing and domestic fi nancing have been estimated to be 29.77 percent and 70.23 percent in 2013-14 compared to 26.82 percent and 73.18 percent in the revised budget for 2012-13. This means that dependency on foreign resources for fi nancing budget defi cit is increasing (Table-1).

Table-1: Sources of Revenue and Expenditure (Billion Tk.)

Particulars FY14* FY14 as % of GDP FY13** FY13 as %

of GDP FY12# FY12 as % of GDP

Revenue and foreign grants (i+ii) 1741.29 14.65 1449.50 13.96 1182.59 12.93

i) Revenue (a+b) 1674.59 14.09 1396.70 13.46 1146.93 12.54

a) Tax 1412.19 11.88 1168.24 11.25 952.28 10.41

b) Non-tax 262.40 2.21 228.46 2.21 194.65 2.13

ii) Foreign grants 66.70 0.56 52.80 0.51 35.66 0.39

Total expenditure 2224.91 18.72 1893.26 18.24 1524.28 16.66

a) Current 1134.71 9.55 1028.92 9.92 892.99 9.76

b) ADP 658.70 5.54 523.66 5.04 375.08 4.10

c) Others 431.50 3.63 340.68 3.28 256.21 2.80

Budget defi cit(including grants) (i+ii) 483.62 4.07 443.76 4.28 341.69 3.74

i) Foreign borrowing(net) 143.98 1.21 119.03 1.15 36.25 0.40

ii) Domestic borrowing(a+b) 339.64 2.86 324.73 3.13 305.43 3.34

a) Borrowing from bank 259.93 2.19 285.00 2.75 271.91 2.97

b) Non-bank borrowing 79.71 0.67 39.73 0.38 33.52 0.37

Source: Ministry of Finance, Note: * =Budget, **= Revised Budget, #= Actual Budget

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CHAMBER NEWSJuly 201307

China to provide $290.80 million under the two loan agreementsUnder two agreements signed recently China will provide US$ 290.80 million as loan to implement the "Padma (Jashaldia) Water Treatment Plant" project of Dhaka WASA under the Local Government Division. The project will treat water from river Padma at Jasaldia to supply pure drinking water in the capital city which will reduce pressure on ground water level and maintain a balance in the environment.

IMF approves 3rd tranche of $136.6 million under ECFThe International Monetary Fund (IMF) approved the third installment of US$136.6 million for Bangladesh under the Extended Credit Facility (ECF) arrangement. The disbursement will bring the total amount disbursed so far to about $409.7 million equivalent to SDR 274.269 million. It may be mentioned that the IMF approved the three-year ECF arrangement for Bangladesh on April 11, 2012 for a total amount of about $956 million equivalent to SDR 639.96 million or 120 per cent of her quota.

$34.5 million WB loan for public procurement reform project

$198 million ADB loan deal to upgrade highway, portsThe Asian Development Bank (ADB) recently signed a $198 million loan agreement with Bangladesh to help upgrade a regional highway and two land ports to boost connectivity and trade across South Asia. A 70-kilometre road of the Dhaka-Northwest highways stretching from Joydevpur to Elenga road via Chandra and Tangail will be expanded and improved under the South Asia Subregional Economic Cooperation (SASEC) Road Connectivity project. Measures will be taken to upgrade land ports at Benapole and Burimari which handle the bulk of goods transported from Bangladesh to India, Bhutan and Nepal. The loan can be repaid within 40 years with eight-year grace period and it carries 1 percent interest rate in the fi rst eight years of grace period and 1.5 percent for the rest of the years.

New investments in EPZs

■ An Indian garments manufacturing company will set up a garments factory in Comilla Export Processing Zone with an investment of $7.53 million. The company with an annual production capacity of 8.10 million pieces of various garments items will create employment opportunities for 2220 local people.

■ A local garments manufacturing company will invest $10.12 million to set up a garments factory with annual production capacity of 4.59 million pieces of various garments item in Uttara Export Processing Zone. The company will create employment opportunities for 2000 local people.

■ Another local readymade garments company will set up a garment factory in Uttara Export Processing Zone investing $10.12 million. The factory will produce over 2.50 million pieces of various types of men’s shirt and ladies, school and occasional wear and create employment opportunities for 2000 local people.

The World Bank (WB) will provide US$34.5 million worth of additional loans for the second phase of the Public Procurement Reform Project (PPRP-II) to help scale up electronic procurement (e-GP) and on-line procurement performance monitoring in the key public agencies. Earlier, the WB provided $24.10 million assistance for the PPRP-II which is scheduled to be completed in December 2016. The credit from the International Development Association (IDA), the World Bank's concessional lending arm, has 40 years to maturity, including a 10-year grace period and carries a service charge of 0.75 per cent.

Meanwhile, the World Bank approved $375 million credit and $25 million grant to help increase the resilience of the country’s coastal population to climate change induced fl ooding and other natural disasters. The credits from the IDA have also 40 years to maturity with a 10-year grace period, and carry a service charge of 0.75 per cent.

First iron ore reserve discoveredThe fi rst iron ore (magnetic mineral) reserve has been discovered in Dinajpur, according to the Geological Survey of Bangladesh. Experts are certain about the presence of iron in four levels, each up to three feet thick, at Moshidpur in Hakimpur Upazila, Dinajpur. Apart from it, a reserve of limestone has also been found there, which some experts say is an 'exceptional case'.

10

CHAMBER NEWS July 201307

33.81 million Internet users in the country

Agricultural credit disbursement rose by 13.46% in eleven months

Private sector credit growth falls

The country’s internet users reached 33.81 million at the end of May this year thanks to mobile technology driving internet penetration. There are two types of internet users--mobile and broadband--in the country. Of them, around 98 percent (33.19 million) use internet through mobile network and remaining (0.62 million) use broadband internet, according to the Bangladesh Telecommunication Regulatory Commission (BTRC).

Agricultural credit (including non-farm rural credit) disbursed by banks during July-May 2012-13 amounted to a provisional Tk.129.95 billion as compared to Tk. 114.53 billion during July-May 2011-12, showing a growth of Tk. 15.42 billion or 13.46 percent. The credit disbursement achieved 91.97 percent of total target (Tk.141.30 billion) set for 2012-13. Agricultural credit disbursed by banks in May 2013 amounted to a provisional Tk.12.55 billion as compared to Tk. 12.53 billion in May 2012, showing a rise of Tk. 0.02 billion or 0.16 percent compared to May 2012.

Meanwhile, total recovery of agricultural loan during July-May 2012-13 stood at a provisional Tk 125.57 billion as compared to Tk.110.23 billion during July-May 2011-12, showing a rise of Tk. 15.34 billion or 13.92 percent. The recovery of agricultural loan in May 2013 stood at a provisional Tk 11.54 billion as compared to Tk.9.52 billion in May 2012, showing a rise of Tk. 2.02 billion or 21.22 percent in May 2013.

The credit growth in the private sector declined to 7.92 percent during July-April 2012-13 compared with that of 14.66 percent during the same period a year ago due mainly to recent political unrest. The credit growth in the private sector also slumped by 12.68 percent to Tk.4402.18 billion in April 2013 compared with that of 18.22 percent to Tk. 3906.64 billion in April 2012. The low credit growth in the private sector indicated that the country’s investment sector was facing a severe crisis which would ultimately hit the expected growth rate in the gross domestic products for 2012-13. Meanwhile, the credit growth in the government (net) sector decreased to 9.62 percent during July-April 2012-13 compared with that of 22.47 percent during the same period a year ago. The credit growth in the government sector also slumped by 12.18 percent to Tk.1008.85 billion in April 2013 compared with that of 41.10 percent to Tk. 899.34 billion in April 2012.

$154 million foreign loan approvedThe Board of Investment Scrutiny Committee for approval of Private Sector foreign borrowing at its 76th meeting approved $154 million foreign loan against 15 projects such as US$ 30.0 million for Summit Meghna ghat Power Company Limited, US$ 5.0 million for Summit Bibiyana Power Company Limited, US$ 21.1 million for Midland Power Company Limited, US$ 40.0 million for BSRM Steel Limited, US$ 12.23 million for Saiham Textile Ltd, US$ 10.25 million for Phartali Textiles & Hosiery Limited, US$ 8.61 million for Amann Bangladesh Ltd, US$ 7.32 million for J. M. Fabrics, US$ 6.0 million for Holcim Cement (BD) Ltd, US$ 3.58 for Impress-Newtex Ltd and the rest amount for other projects.

Source: Bangladesh Bank

Source: BMETSource: Bangladesh Bank

Downtrend in overseas employmentThe country's overseas employment continued to show a declining trend. Only 407238 Bangladeshis got foreign jobs during July-May 2012-13 compared to 638292 in the same period of last fi scal year, showing a fall of 36.20 percent. In May 2013, a total of 34370 Bangladeshi workers got jobs in foreign countries compared to 72271 in May 2012, showing a decrease of 52.44 percent in May 2013 but an increase of 6.47 percent from 32281 in April 2013, according to the Bureau of Manpower Employment and Training (BMET). A total of 10228 documented workers went to Oman in May 2013, 5032 to Singapore, 4961 to Qatar, 2366 to Bahrain, 2231 to Jordan, 1461 to Lebanon, 1138 to United Arab Emirates, 1131 to Saudi Arabia, 778 to Mauritius, 698 to Iraq, 659 to Italy, 439 to Brunei, 176 to Malaysia and 3072 to other countries.

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CHAMBER NEWSJuly 201307

Remittance rose by 13.85% in eleven months

54 percent of ADP implemented in ten months

The inward remittances received from Bangladeshi nationals working abroad remained strong during July-May 2012-13 and continued to play an important role in strengthening the foreign exchange reserves and current account balance, according to Bangladesh Bank. The remittance during the period rose by US$ 1630.33 million or 13.85 percent to US$ 13402.90 million from US$ 11772.57 million during July-May 2011-12.

During July-May 2012-13, US$ 3612.14 million remittance were received from Saudi Arabia, US$ 2631.08 million from the United Arab Emirates, US$ 1692.86 million from U.S.A., US$ 1088.55 million from Kuwait, US$ 916.28 million from Malaysia, US$ 914.81 million from U.K., US$ 560.41 million from Oman, US$ 464.91 million from Singapore, US$ 329.26 million from Bahrain, US$ 267.05 million from Qatar, US$ 211.73 million from Italy and US$ 713.82 million from other countries. Meanwhile, remittances decreased by US$ 69.64 million or 6.02 percent to US$ 1087.19 million in May 2013 from US$ 1156.83 million in May 2012 and US$ 107.21 million or 8.98 percent from US$1194.40 million in April 2013.

Government’s spending of the Annual Development Programme (ADP) decreased by 1.82% in the ten months of the current fi scal year compared with that of the same period in the previous fi scal year. Implementation of ADP during July-April 2012-13 by all the ministries and divisions amounted to Tk 309.74 billion or 54 percent of the total Tk 571.20 billion ADP outlays for 2012-13 fi scal year, according to the Implementation Monitoring and Evaluation Division (IMED). During the review period, the highest ADP expenditure was in Local Govt. Division which utilized Tk. 73.87 billion (66 percent) from the allocated Tk. 111.28 billion for 2012-13, the power division utilized Tk. 56.36 billion (66 percent) from the allocated Tk. 85.61 billion, the Ministry of Primary and Mass Education utilized Tk. 26.87 billion (69 percent) out of the allocated Tk. 39.16 billion, the Roads Division utilized Tk. 24.56 billion (69 percent) from the allocated Tk. 35.83 billion,

Source: Bangladesh Bank

Source: IMED

Infl ation falls to 7.86% in May 2013

Container handling at Chittagong Port witnessed strong growth

The country's general infl ation on point-to-point basis (as per the base year 1995-96 =100) dropped by 0.07 percentage points to 7.86 percent in May 2013 compared to 7.93 percent in the previous month due mainly to the falling food prices, according to data of Bangladesh Bureau of Statistics (BBS). The infl ation surpassed the offi cial target of 7.50 percent, set for 2012-13. The food infl ation also decreased to 8.40 percent in May 2013 from 8.57 percent in April 2013 but non-food infl ation increased to 6.93 percent from 6.81 percent in the previous month. The monthly-basis food infl ation slightly fell 0.17 percentage points in May 2013. On the other hand, monthly non-food infl ation increased by 0.12 percentage points in May 2013 due to increases in house rent, transports, household utensils and other essentials.

The container handling by Chittagong Port showed an 8.13 per cent growth in 11 months ending in May 2013 of the outgoing fi scal year (FY) 2012-13 mainly due to rise in import and export cargoes, according to offi cial data. The number of containers handled rose by 99,343 TEUs (20-foot equivalent units) to 1.32 million TEUs during the period compared to 1.22 million TEUs handled during the July-May period of FY2011-12.

Source: Bangladesh Bureau of Statistics

the Ministry of Health & Family Welfare utilized Tk. 15.33 billion (42 percent) from the allocated Tk. 36.23 billion and the Education Division utilized Tk. 14.50 billion (64 percent) from the allocated Tk. 22.53 billion.

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CHAMBER NEWS July 201307

Items of Revenue Collection

NBR Revenue (Taka in Billion)% Change

Rise(+)/Fall(-)July-May 2012-13

July-May 2011-12

VAT 356.28 312.77 +4.32Income Tax 291.28 216.70 +34.42Supplementary Duty 148.86 147.31 +1.05Import Duty 119.22 118.87 +0.29Excise Duty 7.57 6.44 +17.59Others 5.71 4.80 +18.96Total NBR Revenue 928.92 806.89 +15.12

Source: NBR

NBR revenue collections grew by 15.12% in eleven months Automated system in Chittagong

customs house introducedThe National Board of Revenue (NBR) will introduce a fully automated system in Chitagong Customs House from July 1, 2013 in a bid to make the customs procedures paperless. The automated system will establish inter-connectivity among the stakeholders and customs stations to ease and expedite customs clearance. The system will be automated under ASYCUDA World with the technical support of the UNCTAD (United Nations Conference on Trade and Development). Currently, the customs automation is functioning under ASYCUDA ++. After introduction of the ASYCUDA World, banks will be able to send electronic letters of credit (LC) and shipping documents. Other government agencies like Bangladesh Standard and Testing Institution (BSTI) and Export Promotion Bureau (EPB) will also be able to send certifi cates or reports. Clearing and Forwarding (C&F) agents would be able to pay from their prepaid accounts maintained with Sonali Bank Ltd. at customs houses against the bill of exports. Traders, C&F and shipping agents will get all information related to status of their consignments by email and SMS push-pull services.

Total revenue collected by the National Board of Revenue (NBR) during July-May 2012-13 amounted to Tk. 928.92 billion as against Tk. 806.89 billion during July-May 2011-12, showing a growth of Tk. 122.03 billion or 15.12 percent. The NBR revenue collection during July-May 2012-13 achieved 82.75 percent of total target (Tk.1122.59 billion) for 2012-13. Meanwhile, revenue collections in May 2013 increased by Tk 5.50 billion or 5.94 percent to Tk. 98.09 billion from Tk. 92.59 billion in May 2012. The revenue collections in May 2013 decreased by Tk. 0.65 billion or 0.66 percent from Tk. 98.74 billion in April 2013.

(Figures in million)

OperatorsSubscribers

in April, 2013

Subscribers in May,

2013

Increase(+)/decrease(-)

Grameenphone 42.372 43.263 +0.891

Banglalink 26.309 26.574 +0.265

Robi 21.697 22.192 +0.495

Airtel 7.557 7.662 +0.105

Citycell 1.425 1.408 -0.017

Teletalk 1.844 1.897 +0.053

Total 101.204 102.996 +1.792

Source: BTRC

102.996 million active mobile phone users in the countryThe number of active mobile phone users in the country reached 102.996 million at the end of May 2013, as the six mobile operators registered 1.792 million new subscribers during the month, according to the Bangladesh Telecommunication Regulatory Commission (BTRC).

BB asks banks to settle loan accounts of sick or closed industries

The Bangladesh Bank (BB) advised the commercial banks to settle the loan accounts of sick or closed industries identifi ed by the government. The central bank issued a circular in this connection asking the chief executive offi cers and managing directors of the commercial banks for taking necessary measures for settling the loan accounts of such industries. Under the directives, the bank's board of directors may settle such loan accounts considering the merit of a case based on bank-clients relationship before announcement of incentive package by the government. The banks are now allowed to transfer overdue amount of loans to block accounts with fl exible repayment schedule for settling such loan accounts, according to the circular. It also said the interest accrued but not charged, interest on suspense account and penal interest may be exempted fully or partially. In case of sanctioning fresh loans, the board of directors of the banks can relax the terms and conditions for down payment. The banks may seek no objection certifi cate from the central bank on case to case basis, if necessary. The borrowers have been requested to apply to their banks concerned for settleing such loan accounts within two months from the date of issuing of the circular. The Ministry of Industries has already identifi ed nearly 600 industries as sick, but yet to announce any incentive package for the newly identifi ed sick industrial units.