All indicators of the country's economy are comforting: Bangladesh Bank

Staff Correspondent,
All indicators of the country

All indicators of the country

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Bangladesh Bank said that almost all the indicators of the real sector of the economy of Bangladesh are in a comfortable position.

These things were said in a press release sent by the central bank on Tuesday (November 21).

According to the notification, the foreign sector of the economy of Bangladesh has recently come under a lot of pressure due to the impact of various adversities including the Covid-19 pandemic, the Russia-Ukraine war and the continuous increase in policy interest rates in the developed world. However, almost all indicators of the real sector of the Bangladesh economy are in a comfortable state.

The circular also said that as a result of Bangladesh Bank and government policy support, the situation of rural economy especially agricultural production and small and medium industries is in a good condition. Also, industrial production, as revealed by the Industrial Production Index, is witnessing good growth.

Bangladesh Bank said that the government's increase in production-oriented and development-oriented expenditure has played a helpful role in keeping the economy moving. On the other hand, the government's revenue has also increased considerably due to various revenue collection measures. As a result of various measures taken by Bangladesh Bank and Bangladesh Government, the growth of national income of Bangladesh is expected to remain satisfactory in the fiscal year 2023-24.

It appears that the GDP growth rate will be more than 6.5 percent in the current financial year as a result of the ongoing extensive economic activities in the industry and service sector along with the implementation of various infrastructural mega projects of the government and the increase in agricultural production to the desired level.

In the circular, the central bank said, despite the good growth of exports and remittances in the prevailing economic situation, due to the very rapid increase in import costs, strong pressure has been observed recently on the foreign sector of Bangladesh, especially the foreign exchange reserves and exchange rates. In addition, the country experienced high inflation due to rising global commodity prices, devaluation of the Bangladeshi Taka and domestically adverse effects of seasonal weather and supply chain disruptions leading to increased production costs.

Bangladesh Bank has taken multi-pronged measures to mitigate pressure on exchange rate and foreign exchange reserves, including controlling inflation. Among them, increasing the policy interest rate, raising the limit on the interest rate of deposits and bank loans and making them market-oriented, not giving loans to the government by overprinting money, taking measures to control import costs and increase export income and remittances, market-oriented foreign currency exchange rates, foreign exchange market supervision including checking import prices. It is noteworthy to increase and take measures to meet the cost of import of necessary goods from the reserves of Bangladesh Bank.

According to Bangladesh Bank, a surplus of about 1 billion US dollars has been observed by September after overcoming the deficit of about 3.3 billion dollars last year. However, there is still a slight deficit in the overall foreign exchange balance due to the emergence of a deficit situation from an earlier comfortable surplus in the financial account. It is expected that the foreign exchange balance will soon return to a comfortable state, which will be more helpful in bringing stability to the currency exchange rate along with preservation of Bangladesh's foreign exchange reserves.

According to the regulatory body of the financial institutions of the country, due to the adoption of timely and effective policy of Bangladesh Bank, the current exchange rate is very consistent with the actual effective exchange rate index. In this case, if the central bank of the United States does not raise or lower its policy interest rates in the future, it will play an important role in bringing stability to our exchange rate.

Regarding the foreign exchange status, the central bank said that the current reserves are about 20 billion US dollars according to IMF BPM-6, which can cover about 4 months of import expenses. It is comfortable for any economy by international standards.

On the other hand, Bangladesh Bank is giving utmost importance to controlling inflation and maintaining its expectations. At the same time the government has reduced its spending in unproductive sectors. Increased scope and coverage of social safety nets (eg 1 crore family cards, truck sales etc.) to mitigate the impact of inflation on the poor.

The inflationary situation is expected to improve rapidly as a result of the contractionary policy measures of the Bangladesh Bank and the Bangladesh Government and supportive policies for production and investment. It should be noted that Bangladesh Bank will continue its efforts to reduce the country's inflation to 8 percent on a point-to-point basis by the end of January and to 6 percent by the end of June.

Bangladesh Bank believes that after the formation of the government through the next general elections, the economic situation will improve rapidly and the country's economy will turn around by the end of the financial year.

The central bank's circular also said that both the Bangladesh Bank and the government are taking various measures in the financial and revenue sectors to boost the country's economy by addressing the recent macroeconomic challenges.

With the improvement in the global economic situation, it is expected that stability in the foreign sector of the country's economy and a comfortable situation in the inflationary situation will soon return through the increase in the country's exports and remittance flows. In the rapidly changing global geo-economic context, Bangladesh will become a stronger economy by increasing its capacity to take advantage of global opportunities. 


The price of sugar increased by Tk. 20 per kg

Staff Correspondent,
Photo: Collected

Photo: Collected

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The Bangladesh Sugar and Food Industry Corporation (BSFIC) has set the maximum retail price of government mill sugar at Tk. 160 per kg by increasing Tk. 20 per kg. Apart from this, from now on, the mill gate selling price of 50 kg of bagged sugar of the corporation has been fixed at Tk. 150 (one kg) and at dealer level at Tk. 157 (one kg).

BSFIC informed this in a circular on Thursday (February 22).

It is said that the sale price of sugar produced by BSFIC has been re-fixed in line with the international and domestic market price of sugar. Government's cooperation is needed to control the sugar market on the occasion of fasting in the market.

Besides, the selling price of 1 kg of packaged sugar in mill gate or corporate super shops of the corporation has been set at Tk. 155 and the maximum retail selling price in various super shops, basements and markets of sugar industry buildings has been set at Tk. 160.

It should be noted that some companies are selling government sugar at high prices in the market. The company has fixed the price of sugar in a packet of sugar at last Tk. 140 per kg.


Orders to increase electricity, oil and gas prices are coming

Serajul Islam Siraj, Special Correspondent,, Dhaka
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photo: Collected

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The price of electricity may increase soon, the price of oil and gas may also increase in the near future. State Minister for Power, Energy and Mineral Resources Nasrul Hamid has said that the price of electricity has increased at the consumer level, but gas will be increased only for electricity generation.

The State Minister said on Tuesday (February 20) afternoon that we want to adjust the prices as soon as possible. Consumer-level prices of electricity may increase marginally. Those who are big customers may have higher prices. We do not want to subsidize self-reliant consumers.

Nasrul Hamid also said that the dollar rate has become the biggest problem. Earlier, the dollar was available at Tk. 78, now it is around Tk. 120. About Tk. 40 are being spent on one dollar. It has created a huge deficit. Although the prices remained unchanged in the international market, due to the increase in the value of the dollar, price adjustments became necessary.

Last on January 30, 2023, the electricity price was increased by executive order at the consumer level. 3 weeks before that on January 12 the gazette was published with an average increase of 5 percent.

Since the formation of Bangladesh Energy Regulatory Commission in 2005, the organization has been determining the price of electricity. On November 21, 2022, the wholesale price of electricity was increased by 19.92 percent to Tk. 6.20 per unit. After that, the distribution companies requested to increase the price of electricity at the customer level. BERC initiated the process following the application of the distribution companies. On January 8, the preparations for the announcement of the new rates were almost completed. But BERC was stopped midway and prices were increased by executive order. It is said that the process of extending the executive order is going on.

On the other hand, in February 2023, the Division of Energy and Mineral Resources increased the price of gas in an executive order. And through public hearing, Bangladesh Energy Regulatory Commission increased the price of gas in June 2022. Preparations are underway to raise gas prices again.

In response to a question, the State Minister said that according to the previous announcement, the price of fuel oil will be linked to the international market from March. The new rates will be implemented from the first week. If the price increases in the international market, the price will increase, and if it decreases, it will decrease.

If adjusted according to the current international market price, will the price increase or decrease? In response to such a question, he said; if the duty is imposed according to the commercial envisage of oil import, the price will increase slightly. And if quantity based duty is considered then the price may not increase.

In the recent past, furnace oil, widely used in power generation, was priced at 300 dollars per ton. At the import level, 15 percent VAT, 5 percent advance tax (AT) and 10 percent duty together would amount to 35 percent duty amounting to 105 dollars. That is, the price of the product with duty was like 400 dollars. The price of that furnace oil went up to 700 dollars per ton, while a duty of about 35 per cent was still levied. It had to pay a duty of 245 dollars per ton which is close to the price of the previous product. Due to this, the price of the product skyrocketed.

For this reason, the Ministry of Power, Energy and Mineral Resources has been demanding for a long time to break the value-based VAT structure and introduce a quantity-based VAT. A quantity based framework is followed in many countries. There is a tug-of-war between the NBR and the ministry on pursuing the matter in Bangladesh as well.


International tender for offshore oil and gas exploration on March 7

Serajul Islam Siraj, Special Correspondent,, Dhaka
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photo: Collected

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Chairman of Petrobangla Janendra Nath Sarkar has confirmed to that an international tender will be floated for oil and gas exploration in the sea on March 7.

Earlier this month, the Chairman of Petrobangla confirmed that the tender will be called in March. He said, 6 months time will be given for submission of bid documents. We want to finalize PSC (Production Sharing Contract) in November or December. Before this, road-shows will be held in different countries.

What about companies like American multinationals Exon Mobil and Chevron who have shown interest in the past? In response to such questions, the Chairman of Petrobangla said, we are moving towards competitive rates. Here the company whose proposal is good and those who are considered qualified will get the job.

According to Petrobangla sources, PSC has been made attractive to attract multinational companies. The price of gas has been fixed in the previous PSCs, but this time the price of gas has not been fixed. The price of gas will rise with the international market price of Brent Crude. The price of gas per thousand cubic feet is equal to 10 percent of Brent crude. That is, if the price of Brent crude is 80 dollars, the price of gas will be 8 dollars which in the existing PSC had a fixed rate of 5.6 dollars and 7.25 dollars in shallow and deep sea respectively. Brent crude prices will be averaged over the entire month.

Along with the price, the share ratio of the government has also been lowered. According to Model PSC-2019, the proportion of Bangladesh will continue to increase with the increase in gas production. And the shares of multinational companies continue to decrease. Bangladesh's share will rise from 35 to 60 percent in the deep sea and 40 to 65 percent in the shallow sea. However, if the contractor does not get gas by digging a well within two years of the stipulated time or if it is not commercially extractable, there is an opportunity to increase the share by 1 and 2 percent respectively. In case of gas sale, the first proposal should be given to Petrobangla, if Petrobangla does not want to take it, the foreign company will get the opportunity to sell gas to a third party. With the update of PSC, many giant companies including US companies Chevron, Exxon Mobil have become interested in investing in offshore oil and gas exploration. They have already held several meetings with Bangladesh.

On Tuesday (February 20), the delegation of Exxon Mobil met with the Minister of State for Power, Energy and Mineral Resources Nasrul Hamid.

When the State Minister was asked about the meeting, he said that Exxon Mobil had first written a letter asking for a block lease in sea. A few days later he expressed his interest in doing a 2D seismic survey. Asked whether they are interested in participating in the bidding round. The Exxon Mobil delegation wanted to speak.

After settling the maritime boundary disputes with Myanmar in 2012 and India in 2014 in the international court, the ownership of a total of 1 lakh 18 thousand 813 square kilometers of sea area was established by Bangladesh. A decade later, the success of the sea border did not come to fruition, especially in terms of mineral resources. Energy experts believe that the solution to the dire energy crisis of the country is hidden under this huge body of water because Myanmar has got huge gas reserves next to the block of Bangladesh. It is believed that the doors of possibilities are going to open through the new tender.

On the other hand, the Energy and Mineral Resources Division decided to conduct a comprehensive multi-dimensional survey in the vast sea area. The Norwegian company TGS and France's Schlumberger Consortium prepared their report. Eric M. Walker, managing director and CEO of Chevron Bangladesh recently told the media that Chevron is checking all that information.


Govt, S Alam Group partnering up to build $4 billion oil refinery in Chattogram

Staff Correspondent
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In a bid to continue the country’s development, the Government of Bangladesh is partnering with S Alam Group to build an oil refinery in Chattogram.

Under the partnership, the state-owned Eastern Refinery (ERL) will team up with the Chattogram-based conglomerate to build its long-planned second unit.

The development comes after S Alam Group in October last year sent in a proposal to the Prime Minister's Office to build the refinery on an 80-20 equity basis on the land owned by ERL in Chattogram.

On 5 February this year, the energy division wrote to the Bangladesh Petroleum Corporation (BPC), the parent company of ERL, informing it about the potential joint venture with the S Alam Group.

"It's still at a very primary stage," BPC Chairman ABM Azad said.

"We have submitted the proposal and the roadmap to set up the refinery. The government has agreed as well and constituted a committee," he added.

ERL Managing Director Md Lokman said, "We sent our final proposal to the energy division long ago for it to place before the Ecnec."

About $4 billion (over Tk 40,000 crore) of investment will be needed to build the refinery, said Subrata Kumar Bhowmick, an executive director of S Alam Group.

Meanwhile, a seven-member negotiation committee, headed by BPC Director (Operations) Md Khalid Ahmed, was formed on 14 February and was given a month to complete the negotiation.

The committee also includes three BPC officials, three ERL officials and the managing director of Padma Oil.

According to the ministry, negotiations will be completed after completing the technical and financial analysis, the modality of the joint venture, the management strategy and the equity portion.

At present, Bangladesh has a demand for around 70 lakh tonnes of petroleum products; of this, 80% are imported in refined forms owing to inadequate refining facilities.

Bangladesh has to pay huge amounts of foreign currency to import petroleum products.

Previous attempts to expand the country's oil refining capacity fell through because of a lack of financing.

ERL's bid to build the second unit in keeping with the growing demand for petroleum products as a result of stable economic growth was conceived in 2012.

The second unit was supposed to have the capacity to refine 30 lakh tonnes of oil, according to the initial proposal by the ERL; the estimated cost for the project was Tk 13,000 crore then.

However, the project has been in limbo since then due to funding issues.

The government had tried to secure foreign loans for the project but its attempts did not succeed.

It prompted the government to decide to build the refinery on its own, with 70% of the project cost coming from the ministry in the form of loans to the BPC.

The rest of the amount will come from BPC.

Following the subsequent revisions, the cost went up to Tk23,736 crore last year.

According to the latest development project proposal, the finance division had agreed to spend Tk16,142 crore and the BPC agreed to spend Tk7,100 crore.

It was yet to be decided how the rest of Tk493 crore would be mobilised.

S Alam Group said the refinery will have the capacity to refine up to 50 lakh tonnes of oil.

Although ERL's original plan has not been abandoned yet, sources said the government is considering S Alam Group's proposal of implementing the project under the joint venture.

It comes on the heels of its decision in November last year to open the fuel oil market to the private sector.

Another Bangladeshi conglomerate, Bashundhara Group has expressed interest in becoming the first private refinery owner.