1

Selected Macroeconomic

Indicators

29 August, 2012Bangladesh Bank

Monetary Policy Department

Greater stability but challenges remain…

Exchange rate has stabilized in mid February and remained almost stable till

to date due to higher remittances and aid, lower import pressures and close

market monitoring by BB.

Domestic liquidity pressures have eased reflected in a fall in the call money

market rate from around 18% in February to 12.23% in August (upto 26

August)2012 because of BB’s prudent liquidity operation and monetary

policy implementation.

External sector indicators are smoothening gradually .

Current Account balance is still in positive zone.

Overall inflation is in downward trend, but non-food inflation remains a

major policy concern.

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Broad Money(M2)

(In crore taka)

June 2011 June 2012

440320.10

(+21.36)

516865.60

(+17.38)

Broad money growth path has been around the program level reflecting a restrained monetary stance.

Programme & actual development : Growth

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Domestic Credit

(In crore taka)

June 2011 June 2012

430221.90

(+28.25)

513201.90

(+19.29)

Year on year domestic credit growth remained more than 25 percent until December 2011 but became 19.3 percent in June 2012 which touched the program path.

Programme & actual development : Growth

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Public sector credit

Public sector credit growth in FY12 remained below the programme target because Govt. borrowed Tk.171billion which was less than the revised budgetary target of Tk.291.0 billion for FY12. Govt. start FY13 with a repayment of loan, as a result, credit to Govt.(net) stood at Tk.-16.53 billion in 31st July 2012 against the credit of Tk.19.16 billion of the corresponding time of FY12.

Programme & actual development : Growth

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Private Sector Credit

(In crore taka)

June 2011 June 2012

340712.70

(+25.84)

407771.1

(+19.68)

Programme & actual development : Growth

Private sector credit growth in June 2012 was higher than May 2012 , but it is well below the growth rate of June 2011.

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CPI inflation (Base : FY96=100)

CPI inflation at national level (Base : FY96=100)

June 2011 July 2011 June 2012 July 2012

On Average Basis 8.80 9.11 10.62 10.37

On Point to Point Basis

10.17 10.96 8.56 8.03

•The annual average rate of inflation (12-month annual average) and

the rate of inflation on point to point decreased in July 2012 .

•Both measures of inflation declined due to slowing down of food

inflation for the last few months.

• Headline and Food CPI inflation (p to p) are already in single digits,

non–food CPI inflation (p to p) is also on declining trend since April

2012.

CPI inflation (Base : FY96=100)

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Interbank Call Money Rates

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Domestic liquidity pressure have eased reflected in a fall in the call money rate from around 18 % in February to 10.58% in July 2012 showing prudent liquidity management by BB.

Interest rates spread

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Interest rate spread remained widened slightly to 5.6% in June 2012 after 3 months of continuous fall.

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Public Finance : NBR Tax Revenue

• During FY12 NBR has collected revenue of Tk.94457.37crore which is 18.96 percent higher than the tax received over FY11 and 2.8 percent above the annual target for FY12.

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Public Finance: NSD certificates

(In crore taka)

July-June, 2010-11 June 2011 July-June, 2011-12 June, 2012

Net sale 2056.90 -386.10 479.02 -98.33

Outstanding 63438.32 63438.32 63917.34 63917.34

Government borrowed less through NSD certificates in June 2012.

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External Sector-Import Payments

(Million US$)

July-June 2010-11 June 2011 July-June 2011-12 June 2012

33657.50

(+41.79)

2910.40

(+32.28)

35441.80

(+5.30)

2493.80

(-24.24)

2011-12

2010-11

-30

-20

-10

0

10

20

30

40

50

60

70

Jul.

Au

g.

Sep

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Oct

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No

v.

Dec

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Jan.

Feb

.

Mar

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Ap

r.

May

Jun

.

Growth of import payments (y-o-y % changes)

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Sectors/Commodities July-June, 2010-11 July-June, 2011-12 % changes

A. Consumer goods 4934.29 4243.27 -14.00

B. Intermediate goods 2785.73 3342.75 20.00

C. Industrial raw materials 15033.30 14455.40 -3.84

D. Capital machinery 2778.82 2189.04 -21.22

E. Machinery for misc.industry 3192.70 3653.66 14.44

F. Petroleum & petro.products 3085.45 4671.25 51.40

G. Others 6772.06 4480.45 -33.84

Total 38582.35 37035.82 -4.01

(In Million US$)

•LC opening for petroleum & petro. products registered the highest y-o-y growth (51.40%) during July-June, 2012 due to sharp increase in import for power plants

•Largest decline in LC opening was in capital machinery (-21.22%) followed by consumer goods(-14.00%).

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Export Shipments

(In Million US$)

July-June 2010-11 July 2011 July-June 2011-12 July 2012

22928.22

(+41.49)

2339.52

(+28.63)

24287.66

(+5.93)

2439.08

(+4.26)

Export growth slowed to single digit (5.93%) in FY12.

Except of few, all the export items registered positive growth in FY2012 with some high value items including woven garments and leather.

2011-12

2010-11

July 2012

-20

-10

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r.

Ap

r.

Ma

y

Jun

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Export Growth (year on year % changes)

Movement of Taka and Indian Rupee against US$

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Exchange rate has stabilized since mid February 2012. Taka looks more stable than the Indian rupee in recent time.

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IRS

vs.

US

D

IRS against USD

72

74

76

78

80

82

84

BD

T v

s. U

SD

BDT against USD

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Remittances

(In Million US$)

Jul.-June 2010-11 July 2011 Jul.-June, 2011-12 July 2012

11650.32

(+6.03)

1015.58

(+18.46)

12843.42

(+10.24)

1193.77

(+17.55)

Remittance receipts during FY12 increased by 10.24 percent compared to the same period of FY11. Remittance in July 2012 increased by 17.6 percent riding on the upcoming Eid festival.

2011-12

2010-11

July 2012

800850900950

100010501100115012001250

Jul.

Au

g.

Sep

.

Oct

.

No

v.

Dec

.

Jan

.

Feb

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Mar

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Ap

r.

May

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Jun

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Mil

lio

n U

S$

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FOREX Reserves of BB

(Million US$)

June 2011 July 2011 June 2012 July 2012

10911.55 10381.26 10364.43 10569.76

The gross foreign exchange reserves, without ACU liability is equivalent to 3.45 months import cover based on the preceding 12 months import payments average .

Items July-May, 2010-11R July-May, 2011-12P

Trade balance -7498 -7957Services -2200 -2374Primary Income -1290 -1452Secondary Income 11353 12537Current account balance 365 754Capital account 443 429

Capital transfers 443 429Financial account -1853 -641

i) Foreign direct investment(net) 703 1061ii) Portfolio investment(net) -22 157iii) Other investment(net) -2534 -1859

MLT loans 901 1236 MLT amortization payments

665 728

Errors and omissions 298 -531Overall balance -747 11Reserve assets 747 -11

Bangladesh Bank(net) 747 -11 Assets -967 -545 Liabilities -220 -556

Balance of Payment (BoP)

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(In million US$)

Balance of Payment (BoP) contd..

Trade deficit increased to USD7957 million during July-May, FY12 compared to the deficit of USD7498 million during the same period of FY11.

Due to a increased inflow of workers remittances the current account balance recorded a surplus of USD754 million during the first eleven months of FY12.

Despite a financial account deficit of USD641 million, a capital account surplus of USD429 million and a current account surplus resulted in a surplus of USD11 million in overall balance during July-May, 2011-12.

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Looking ahead Inflation is expected to ease in coming months aided by the

reasonable price of food in the international markets, and

expected successive good production of food grains along

with high level of stock holding. In parallel, restrained

monetary stance will continue until average inflation is in

single digits;

As public sector credit growth declined sharply, there is

scope for increasing private sector credit growth for

productive investment. BB has already ensured liquidity

support for banks, so that productive credit growth is not

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Looking ahead contd..

Remittance inflow is expected to maintain growth as out-of-

country jobs for Bangladeshi workers increased in recent time;

The Govt.’s expected release of Sovereign Bond & increased

the rate of interest on existing Wage Earners’ Development

Bonds. These steps will improve BOP situation as well as

investment scenario.

BB is going to be started road shows to encourage the

expatriate Bangladeshi to send home more money. The road

shows will also display bonds meant for Non -resident

Bangladeshi (NRBs).

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Thank you all for attention