A research work of the Bangladesh Bank (BB) has found that the country's high inflation has positive relationship with its remittance earning.

The positive relationship implies that higher inflation in home country, which reduces the purchasing power of migrants' families, induced the migrants to send more remittance to Bangladesh.

Interestingly, the country's remittance earning has been growing along with high inflationary pressure on the economy over the last few years.

The study said if domestic inflation goes up by 1.0 per cent, remittance inflow increases by 0.29 per cent.

The research, coordinated by Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh (PRI), used monthly remittance data from 1980 to 2011.

The study used data of the Bangladesh Bank, the Bangladesh Bureau of Statistics, the Ministry of Finance, and the Bureau of Manpower, Employment and Training.

Mr Ahsan said: "The relationship between inflation and remittance inflow should be positive, and our study has found the same."

Remittance, which emerged as the key driver of economic growth, can help improve the country's development prospects, maintain macro-economic stability, and mitigate impact of adverse shocks.

Nurunaher, a joint director of the BB research unit and a researcher of the study, told the FE: "Remittance is very sensitive to inflation."

She, however, said abnormally high inflation might decrease remittance inflow, as it represents more risk and uncertainty in the home country, comparing with the host countries.

The aim of the study, recently released by the central bank, was to investigate whether the macro-economic variables of the home and host countries can affect the remittance inflow to Bangladesh.

The researchers said it is really tough for the country to maintain the rising trend of remittance in the face of low wages as well as the decreasing demand of migration in the labour importing nations, mostly the Middle-East countries.

The study suggested that Bangladesh has to strive hard to maintain its commendable liaison record with the labour-importing countries, especially the Middle-Eastern ones and Malaysia.

The other factors to affect remittance earnings are exchange rate, wage rate, and regulatory as well institutional arrangements, made by the government.

However, another study, conducted by Palli-Karma Sahayak Foundation (PKSF), found that there is negative relation between inflation and remittance.

One more study, conducted by leading manpower exporting country Mexico, also found that there is little relationship between inflation and remittance.

Financial Express/Bangladesh/ 4th April 2012

Bangladesh Bank has advised the people not to transact with unapproved financial institutions that are active across the country.

A handout issued by the central bank said that many unauthorised organisations ask the people to invest in their businesses by offering high rate of profits, but the people might be cheated in such transactions with these firms.

The central bank is concerned as some organisations are running banking business throughout the country, although they don’t have any approval from the Bangladesh Bank, said the officials.

High official sources in the Bangladesh Bank told daily sun that the central bank will take necessary measures in this regard if they are formally instructed by the Ministry of Finance.

The Daily Sun/Bangladesh/ 2nd April 2012

As part of its digitization drive, Bangladesh Bank (BB) is well on the way to automate its business processes with a view to providing better services to people and strengthening its oversee job.

The IT Department of BB has so already initiated to develop 80 software to achieve the goal of digital central banking, BB sources said.

The automation process of BB is going on under a Central Bank Strengthening Project (CBSP), which commenced in 2003 with the financial assistance of World Bank.

But the project gained momentum in last one and half years and is expected to be completed by December 31, 2012, said the BB sources.

Under the CBSP project, bank-wide connectivity has already been established and all 10 offices of BB are now connected in a single-network through local and wide area networks.

The central bank officials are now sharing various banking applications on enterprise resource planning, enterprise data warehouse, electronic fund transfer (EFT), among others, through this network. Around 3,000 computers are now connected with the network while a secured disaster recovery site has also been established at Mirpur for data recovery.

An Enterprise Resources Planning (ERP) system under the project is now in full operation in BB offices under which BB officials can see their salary slip, account balance, status of loan and advance, different sorts of personal information at their own desks through the intranet system.

The Daily Sun/Bangladesh/ 2nd April 2012

Bangladesh Bank yesterday asked people not to transact with unauthorised financial institutions.

In a notice the central bank said: “Some institutions are operating business in different districts under various names and collecting money from people, luring them by prospect of getting high interest and attractive profits.”

The warning came following media reports on illegal banking operations by Destiny 200 Ltd.

“People are being requested not to make any investment in these organisations because there is a possibility of being cheated and these institutions have no approval from the appropriate authorities,” the BB statement added.

The Daily Star/Bangladesh/ 2nd April 2012

The government has decided to increase the size of next fiscal year’s budget by 7.2 percent with no cut in the subsidy and Annual Development Programme (ADP) allocations.

The decisions came from a budget management resource committee meetings held at the ministry of finance in the capital yesterday, which also projected to keep inflationary pressure within eight percent.

In the meet, the Gross Domestic Production (GDP) growth target has also been fixed at above seven percent, which some of the participants in the discussions termed ambitious in the backdrops of the global economic situation and the domestic earning and investment projections, a senior government official who attended two consecutive meetings on fiscal coordination and on budget management.

Finance minister AMA Muhith presided over the meetings.

The source also said the government wants to increase the revenue earnings to a maximum level next fiscal to maintain the budget deficit within 5.1 percent. In the current 2011-12 fiscal, deficit has crossed five per cent of the budget size, he added

“In the meeting, the National Board of Revenue (NBR) has been asked to prepare a report on the new scopes of revenue earnings in the next fiscal year”.

The NBR was also asked to submit reports on revenue earnings before the next budget resource committee meeting, he added.

Prime Minister’s economic affair adviser Mashiur Rahman , NBR Chairman Nasiruddin Ahemd , Economic Relation Division secretary Iqbal Mahumund , Bangladesh Bank governor Atiur Rahman, Statistics Division secretary Riti Ibrahim and planning secretary Bhuiyan Shafiqul Islam, among others, attended the two consecutive meetings.

Meeting sources said size of the next 2012-13 fiscal year’s budget will be slightly below Tk 2 trillion.

According to mid-term budgetary framework estimation, the size of the next budget will be Tk 1.89 trillion with a deficit of Tk 508.9 billion. The size of current fiscal year’s revised budget is Tk 1.61 trillion.

Meeting sources said finance minister has asked the revenue board to increase its earnings to ease the government’s fiscal pressure. Bangladesh Bank was asked to strictly monitor the banking sector to implement government government’s policy for the banking sector.

Member of the budget management committee said yesterday’s meetings also emphasised on more investment in the agriculture and energy sectors in next fiscal as like the present fiscal year. Besides, the meetings also decided to give adequate subsidy to agriculture sector for keeping agriculture sector growth above four per cent.

Meeting sources said the total subsidy in the next fiscal may be fixed at Tk 400 billion, from the initially allocated Tk 200 billion for the current fiscal.

But the amount of subsidy in the current fiscal has increased to Tk 470 billion in the middle of the fiscal, sources said.

Earlier, the power division sought Tk 100 billion as subsidies to the government for smooth supply of electricity across the country in next fiscal. The government allocated a subsidy of Tk 50 billion to the sector for the current fiscal.

The next fiscal year’s development budget will be over Tk 500 billion, creating subsidy pressure. But the government scale up its revenue collection between Tk 1.14 trillion and Tk 1.20 trillion to offset the pressure, meeting sources said.

The Daily Sun/Bangladesh/ 29th March 2012