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Monthly Roundup
Economic Update
Syed Ahmeduzzaman

          Although the country enjoys a reasonably stable macro-economic condition the government has fallen into a whirlpool of messy supply management sending a wrong signal to the populace.
The country is currently reeling from the impact of a sharp rise in oil price in the international market, appreciation of US dollar in a jittery foreign exchange market, nagging power failures and fertiliser short-supply.
The reaction of the people is negative and it might deepen with lingering of the problems.
The people have been hard hit by higher prices of food and other essentials whose supply is dependent on imports. Besides, discontent is brewing among the people living in the countryside for scanty supply of fertiliser, fuel oil and electricity. They also bear the brunt of higher transport cost.
The current annualised inflation rate, fuelled by higher food prices, reached nearly eight per cent hurting the people, especially those belonging to fixed-income group.
They are questioning the government's sagacity in handling the current power crisis. They are also perturbed about the government's ability to foresee the load of electricity consumption, the rate of which is one of the lowest in the world. The government has been blamed for failing to contribute further to the power generation.
The management now looks resigned as it fails to come up with any solution to the problem which, many say, will aggravate due to absence of any practical move.
Analysts say the government has utterly failed to ride on its achievements made in maintaing a favourable foreign exchange reserve, surplus current account balance and restricting money supply.
The government seems trying to shore up its badly dented management, caused by both internal and external factors.
Despite having foreign exchange reserves of nearly $2.9 billion the government has resorted to short-term borrowing from a foreign bank, which many believe is not a bad idea. The government needs to mobilise foreign exchange to foot the oil import bill, which might jump from around $1.0 to nearly $2.0 this year.
Despite higher trade deficit the country's current account balance recorded a surplus of $75 million in July-November period of fiscal 2005-06, thanks to increased inflow of remittances sent by Bangladeshis working abroad.
The July-November trade deficit was recorded at $1.12 billion compared with $1.08 billion in the same period of 2004-05. Exports were worth $3.982 billion against imports of $5.102 billion.
Workers' remittances were recorded higher at $1.762 billion during the period compared with $1.4 billion previously.
However, the overall balance of payment showed a deficit of $369 million during the period against a surplus of $484 million previously. This is mainly due to a deficit in financial account of $219 million and a negative adjustment in errors and omission.
Foreign aid disbursement was significantly lower at $251 million during July-November period compared with $693 million previously.
However, the government's budget deficit financing rose significantly during the period to Tk 47 billion against Tk 36.57 billion in July-November, 2004-05. Of which foreign financing stood sharply lower at Tk 3.35 billion compared with Tk 30.32 billion.
The outstanding domestic debt at the end of November, 2005 increased by Tk 42.73 billion or 7.05 per cent to Tk 649 billion.
The total revenue collection during July-December period increased by Tk 17.65 billion or 13.8 per cent to Tk 142.42 billion compared with Tk 145.42 billion previously. The 2005-06 revenue collection target has been fixed at Tk356.52 billion.
The government's outstanding borrowing through national savings department certificates at the end of November, 2005 stood at Tk 370.63 billion, recording an increase of Tk 5.66 billion or 1.55 per cent over June, 2005.
Domestic credit recorded a marked increase of Tk 125.55 billion or 8.51 per cent during July-November, 2005, against the rise of 57.48 billion in the same period of the previous year. The rise in domestic credit during the period was due mainly to the rise of public sector credit by Tk 66 billion or 17.9 per cent.
Broad money recorded an increase of Tk 86.84 billion or 5.73 per cent during July-November, 2005 against the rise of Tk 71.33 billion or 5.3 per cent in the same period of the previous year.
Food stock with the government marginally increased to 0.75 million tonnes at the end of November from 0.738 million tonnes in June, 2005. The imports of rice and wheat were recorded at 1.011 million tonnes during the period compared with 1.235 millions previously. The total production of foodgrains in 2005-06 has been set at 30.615 million tonnes against 26.3 million tonnes in the previous year.
The general index of industrial production stood higher at 321.64 during July-October period, 2005, recording an increase of 13.3 per cent over the same period of 2004.


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