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July-August of FY19: ‘Foreign aid disbursement increases 19.07% to $589.08 million’

  • Published at 04:51 pm November 26th, 2018
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The current foreign exchange reserve (less ACU liability) is equivalent to 6.35 months’ import payments

Foreign aid disbursement in July-August of FY19 increased significantly by 19.07% to $589.08 million, from $494.72 million in the corresponding period of the previous fiscal year, according to provisional data by the Economic Relations Division (ERD)

In its recent “Economic Situation in Bangladesh review, July-September 2018 (Q1 of FY19)”, the Metropolitan Chamber of Commerce and Industry (MCCI) reported that the net foreign aid disbursement stood at $412.59 million during July-August of FY19, compared to $340.39 million in July-August of FY18, after debt servicing of $176.49 million. 

The review further said that Bangladesh’s economy is progressing well, but due to infrastructure bottlenecks and shortage of power and energy, its performance has remained below its true potential.

Quoting the government’s latest data, the MCCI said all major macroeconomic indicators – per capita income, foreign currency reserves, import and export, and foreign direct investment –  depict a strong positive trend, including public sector revenue collection. 

Export and import

Export earnings in the first quarter (Q1) of FY19 rose year-on-year by 14.75% to $9.941 billion from $8.663 billion. Export earnings also exceeded the strategic target ($9.330 billion) by 6.55%.

Import payments in July-August of FY19, stood at $9.538 billion, which is 5.66% higher than import payments during the corresponding period of FY18. 

Import payments increased mainly due to higher imports of petroleum and petroleum products, and intermediate goods to meet the growing demands of the local market.

Foreign exchange reserves

Bangladesh Bank's gross foreign exchange reserves stood at $31.958 billion (with ACU liability of $0.54 billion) at the end of September this year, as compared to $32.927 billion (with ACU liability of $1.15 billion) at the end of August. 

The current foreign exchange reserve (less ACU liability) is equivalent to 6.35 months’ import payments.

Remittance

Remittance inflows in Q1 of FY19 increased by 13.68% to $3.856 billion compared to $3.392 billion in the corresponding quarter of FY18. The increase in remittance was mainly due to the rise in global oil prices, the stronger dollar against Taka, and BangladeshBank's steps to encourage expatriates in remitting funds through legal channels. 

In September of this year, expatriate Bangladeshis sent over $1.127 billion home, indicating a 31.51% year-on-year increase from $856.9 million in September, 2017

Exchange rate

Between the June and September this year, the Taka depreciated by 0.06% in terms of the US dollar. 

On the inter-bank market, this year, the US dollar was quoted at Tk83.70 at the end of June, and Tk83.75 at the end of September.

Price situation

In September ofthis year, the general point-to-point inflation in the country fell from 5.48%to 5.43% in August. The inflation in September was at its lowest in 18 months following continuous fall in food prices. 

According to Bangladesh Bureau of Statistics, the lowest inflation rate was recorded at 5.39% 1.5 years ago in March, 2017. The inflation rate was 6.12% in September, 2017.

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