1 Selected Macroeconomic Indicators 29 August, 2012 Bangladesh 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. 2 Rabiul_MPD

3 Rabiul_MPD Broad Money(M2) (In crore taka) June 2011June (+21.36) (+17.38) Broad money growth path has been around the program level reflecting a restrained monetary stance. Programme & actual development : Growth

4 Rabiul_MPD Domestic Credit (In crore taka) June 2011June (+28.25) (+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

5 Rabiul_MPD 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 billion for FY12. Govt. start FY13 with a repayment of loan, as a result, credit to Govt.(net) stood at Tk billion in 31 st July 2012 against the credit of Tk billion of the corresponding time of FY12. Programme & actual development : Growth

6 Rabiul_MPD Private Sector Credit (In crore taka) June 2011June (+25.84) (+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.

7 Rabiul_MPD CPI inflation (Base : FY96=100) CPI inflation at national level (Base : FY96=100) June 2011July 2011June 2012July 2012 On Average Basis On Point to Point Basis The annual average rate of inflation (12-month annual average) and the rate of inflation on point to point decreased in July 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 CPI inflation (Base : FY96=100) 8 Rabiul_MPD

Interbank Call Money Rates 9 Rabiul_MPD 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 10 Rabiul_MPD Interest rate spread remained widened slightly to 5.6% in June 2012 after 3 months of continuous fall.

11 Rabiul_MPD Public Finance : NBR Tax Revenue During FY12 NBR has collected revenue of Tk crore which is percent higher than the tax received over FY11 and 2.8 percent above the annual target for FY12.

12 Rabiul_MPD Public Finance: NSD certificates (In crore taka) July-June, June 2011July-June, June, 2012 Net sale Outstanding Government borrowed less through NSD certificates in June 2012.

13 Rabiul_MPD External Sector-Import Payments (Million US$) July-June June 2011July-June June (+41.79) (+32.28) (+5.30) (-24.24)

14 Rabiul_MPD Sectors/Commodities July-June, July-June, % changes A. Consumer goods B. Intermediate goods C. Industrial raw materials D. Capital machinery E. Machinery for misc.industry F. Petroleum & petro.products G. Others Total ( 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%).

15 Rabiul_MPD Export Shipments (In Million US$) July-June July 2011July-June July (+41.49) (+28.63) (+5.93) (+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.

Movement of Taka and Indian Rupee against US$ 16 Rabiul_MPD Exchange rate has stabilized since mid February Taka looks more stable than the Indian rupee in recent time.

17 Rabiul_MPD Remittances (In Million US$) Jul.-June July 2011Jul.-June, July (+6.03) (+18.46) (+10.24) (+17.55) Remittance receipts during FY12 increased by percent compared to the same period of FY11. Remittance in July 2012 increased by 17.6 percent riding on the upcoming Eid festival.

18 Rabiul_MPD FOREX Reserves of BB (Million US$) June 2011July 2011June 2012July 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, R July-May, P Trade balance Services Primary Income Secondary Income Current account balance Capital account Capital transfers Financial account i) Foreign direct investment(net) ii) Portfolio investment(net) iii) Other investment(net) MLT loans MLT amortization payments Errors and omissions Overall balance Reserve assets Bangladesh Bank(net) Assets Liabilities Balance of Payment (BoP) 19 Rabiul_MPD (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, Rabiul_MPD

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 crowded out; 21 Rabiul_MPD

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). 22 Rabiul_MPD

Thank you all for attention